In recent months, several states have passed or proposed new laws addressing the types of card transactions that can be surcharged and disclosure requirements.
New Louisiana Law Prohibits Surcharging on Debit Card Transactions Effective August 1st
On June 2nd, Louisiana Governor Jeff Landry signed a new law prohibiting merchants from imposing surcharges on debit card transactions effective August 1, 2026. Rules regarding surcharges on credit card transactions remain unchanged.
Under the new law, customers who believe a surcharge was illegally added to their debit card transaction must provide written notice to the merchant who will have 30 days to cure the violation and reimburse the customer. The customer is not allowed to pursue a lawsuit against the merchant if the violation is cured within the 30-day period. Customers can only file lawsuits in cases where the violation is not corrected in the allotted cure period or in instances of willful or repeated violations by the merchant.
The law also authorizes Louisiana's Attorney General to bring civil actions against merchants that violate the law; merchants that do not comply with an administrative or court order related to a surcharge violation may face civil penalties of up to $500 per violation. Additionally, the Attorney General is required to establish a toll-free telephone number and an electronic reporting system where consumers can report suspected debit card surcharge violations. Funds collected through fines and civil penalties will be used for consumer protection and education efforts.
New Jersey Advances Bill Prohibiting Surcharges on Debit and Gift Card Transactions
On May 4th, the New Jersey Senate Budget and Appropriations Committee advanced a bill prohibiting surcharges on debit and gift card transactions.
In a statement, the bill's co-sponsor Senate Majority Leader M. Theresa Ruiz said "New Jersey residents should not be penalized for choosing a more convenient way to pay, especially when they are using their own money rather than borrowing on credit. Prohibiting businesses from [sur]charging debit or gift card transaction fees and strengthening enforcement will help protect consumers, promote fairness, and put more money back into families' pockets when they go out and support the community."
"Too many New Jersey residents are being wrongfully charged when they use a debit card to pay for their everyday expenses," said co-sponsor Senator James Beach, "Businesses often add an extra charge for customers using credit cards to offset the transaction fees they must pay to card issuers. These fees should not be applied to individuals using debit cards, which cost businesses next to nothing to process. This is a simple, commonsense consumer protection measure we can put in place now to save people money every single day."
New Jersey law prohibits merchants from adding surcharges to credit cards transactions that exceed the merchant's cost of acceptance. This bill would amend state law to prohibit the addition of surcharges to debit card and gift card transactions and to implement enforcement standards. Violations would be considered an unlawful practice under the New Jersey Consumer Fraud Act and would be punishable by a fine. The Attorney General could also issue cease-and-desist orders, assess damages, and affected parties could be awarded treble damages and costs.
On June 18th, the bill was unanimously passed by the New Jersey Senate (40-0) and it was referred to the NJ Assembly Commerce and Economic Development Committee for consideration.
Rhode Island Bill Would Require Clearer Surcharging Notices/Disclosures
On January 9th, Rhode Island Representative Deborah Fellela proposed a bill that would amend the state's Unfair Sales Practices law to require merchants to clearly disclose any fees or surcharges that are added when customers pay by credit card.
In a statement Fellela wrote that while surcharges help small businesses seeking to offset costs, they can vary from business to business, creating confusion for the consumer. She said, "This bill would require an explanation that is clearly visible, rather than one that's disguised by fine print."
The bill requires surcharge notices, including the surcharge percentage, to be posted in a conspicuous, clearly visible spot where customers pay for their purchases. Restaurants would be required to include the notice on their menus. Failure to provide the required notice would be considered an unfair or deceptive trade practice and would be subject to enforcement under the Unfair Sales Practices law.
In February, the bill was considered by the House Corporations Committee which recommended the measure be held for further study.
Verisave's Take:
While merchants who choose to surcharge card transactions welcome the ability to offset card processing costs, customers do not like it, and some find it confusing. Studies have shown that customer satisfaction declines when merchants impose surcharges and some call them "junk fees". The Louisiana law and the New Jersey and Rhode Island bills are interesting because they address topics already covered by Visa and Mastercard surcharging rules which prohibit surcharging debit and gift card transactions and establish disclosure guidelines including signage at the point of sale. These legislative developments coupled with similar laws other states have passed are evidence that some merchants are not consistently following guidelines and that customers are increasingly confused and frustrated. Surcharging credit cards in a compliant manner is complicated because of the web of sometimes conflicting card network rules and state laws which govern the practice. Any merchant who feels surcharging is right for their business needs to keep up with changing laws to stay compliant.
