Texas’ law banning extra fees when you pay with a debit or credit card is about to get trashed

[Elderberry]

Denton RC by Dave Lieber 7/28/2018

The other day I had to pay a surcharge because I bought something with a credit card. The vendor charged an extra fee. I thought that was illegal in Texas.

It is. But probably not for long.

What do you mean?

Well, believe it or not, the Texas law has gone all the way to the U.S. Supreme Court and now it’s back in federal court in Austin. Observers are waiting for it to be overturned.

Wait, Watchdog, start at the beginning.

OK, so back in the 1980s, Texas and other states passed laws, pushed by credit card companies, to make it illegal for merchants to charge more to customers who pay with credit cards. Texas also added debit cards to the mix.

Was that pro-consumer or pro-credit card company?

It looked like it was designed to help consumers, but really, the credit card companies didn’t want us to know about their swipe fees. They figured if we heard about the higher swipe fees, we’d pay cash to save money. So the state banned surcharges, but then made it legal to offer a lower cash discount.

What are swipe fees?

That’s the cost to a merchant (or a customer if it’s passed on) of the card company’s fee to handle a plastic card transaction. Some say swipe fees are an invisible tax that consumers pay to banks and credit card companies.

Are Texas violators punished?

There’s much confusion surrounding enforcement. Complaints about credit card surcharges were sent to the Office of Consumer Credit Commissioner. And complaints about debit cards went to the Texas Department of Banking. Violators got warning letters, but that was it.

No fines?

Well, the Texas Legislature updated the law last year. They added a $500 fine and gave enforcement power to the state attorney general’s office.

More: https://www.dentonrc.com/news/the_watchdog/the-watchdog-texas-law-banning-extra-fees-when-you-pay/article_1f7bf9b8-45f3-55e8-b103-ac519e75a23e.html

[Sanguine]

I like paying with a debit or credit card because it's easy for me to track and record my spending.  But, it costs somebody something to do that vs. me using cash.  Right now, the expense is spread out to all customers.  Makes sense that it would cost the actual user a bit more instead of charging everyone extra.

[Wingnut]

I like paying with a debit or credit card because it's easy for me to track and record my spending.  But, it costs somebody something to do that vs. me using cash.  Right now, the expense is spread out to all customers.  Makes sense that it would cost the actual user a bit more instead of charging everyone extra.

My rents always asked the stores if they offered a cash discount when they lived in Texas. Mainly on larger purchases.  Sometimes the stores would offer up to 2.5% off.  In municipalities that charged 8.5% sales tax it helped take a bite out of those high taxes.

[endicom]

I like paying with a debit or credit card because it's easy for me to track and record my spending.  But, it costs somebody something to do that vs. me using cash.  Right now, the expense is spread out to all customers.  Makes sense that it would cost the actual user a bit more instead of charging everyone extra.

Yup.