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