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Businesses Can’t Profit From Credit Card Surcharges, Must Tell Customers, Under New NJ Law

by Karin Price Mueller, NJ Advance Media for

This story is being republished under a special NJ News Commons content-sharing agreement related to COVID-19 coverage. Link to story:

Restaurants and other businesses that levy credit card surcharges and pass them on to customers cannot profit from the charges in New Jersey under a new law Gov. Phil Murphy signed recently.

The law—which takes effect immediately—also requires businesses to post information about the charges before a consumer pays for a service.

“As our post-pandemic economy continues to grow and evolve, we too must adapt to best safeguard New Jersey consumers against unfair practices,” Murphy said in a statement. “All residents and visitors doing business in New Jersey deserve the utmost transparency with respect to their transactions, especially given the affordability challenges experienced by our low- and moderate-income families.”

Credit card surcharges, which are typically about 3 or 3.5 percent of a purchase, are increasingly passed on to consumers by companies that incur the fees from credit card companies when they offer credit cards as a payment method. As higher inflation and supply chain issues have affected more businesses’ bottom lines, they have been passing the cost of using a credit card back to the consumer.

“If credit card users are going to be charged a surcharge fee, they should know before they pay,” state Assemblyman Paul Moriarty, D-Gloucester, a sponsor, said after the bill (A4284) passed both houses of the Legislature earlier this year. “This bill assures that consumers know before they buy, and it also prohibits retailers from charging a surcharge that exceeds the costs they incur for processing your credit card.”

Under the new law, businesses are required to offer “clear and conspicuous” notifications to consumers at a business’ entrance and at the point of sale, including with electronic kiosks or mobile purchases.

Restaurants, specifically, have to post notifications on their menus.

Also under the law, the state Division of Consumer Affairs is permitted to inspect any business’ account books or other records to make sure the business is complying with the law.

“At a time when affordability is New Jerseyans’ number one concern, adding this unknown charge is not fair, not honest and not acceptable because most people don’t even know what they are paying for,” said state Sen. Gordon Johnson, D-Bergen, who sponsored the Senate version of the legislation.

Consumers who believe a business is in violation of the law can file an online complaint with the Consumer Affairs on its website or by calling 800-242-5846.