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What Are Illegal Credit Card Fees?

A credit card charge is a fee added on top of your credit card transaction. Some businesses choose to add card fees to their customers’ bills to help them offset the credit card processing fees they have to cover. However, not all credit card fees are legal.

The legality of a credit card fee depends on multiple factors, including the state you reside. All credit card surcharges are outlawed in Puerto Rico, Connecticut, and Massachusetts. However, it is illegal to charge a credit card fee on non-credit card transactions in every state. Failing to follow protocols on credit card fees can also lead to illegality.

Read on to learn more about illegal credit card fees.

When are credit card fees legal?

Every time a business accepts and processes your credit card transaction, it must pay the appropriate processing fee to the financial institution. To compensate for these processing fees, some merchants enforce a fee on credit card transactions.

A credit card surcharge is, therefore, an optional fee added by a business when customers pay via credit card. Unless restricted by the governing state law, these fees are legal. However, companies that opt to include surcharges must keep up with specific protocols for full transparency.

What are illegal credit card fees?

Businesses must follow major credit card institutions’ rules and regulations when implementing credit card fees. While slight variations exist among the different brands, some overriding general rules exist. Here’s a breakdown of circumstances when charges may count as illegal credit card fees:

When Customers Are Not Notified Of The Surcharge

A business must ensure clients are aware of their intention to surcharge. The intention should not be hidden or immersed in a lengthy contract and disguised in the fine print. The notice must be plainly written out.

Businesses can display a sign at their establishments or include it in the invoice. Every surcharge should be separately listed on the invoice with a clear label. The practice ensures clients clearly see they have been charged an additional cost for paying via credit card.

The credit card fee should be on the payment page when customers use online credit card payment methods.  An undisclosed credit card fee can constitute a deceptive, unfair trade practice.

When The Credit Card Fee Is Greater Than The Processing Fee

Any profit-making surcharges are considered illegal credit card fees. Businesses cannot charge a credit card fee greater than the transaction processing fee. Many major credit card companies also have rules limiting the amount businesses can charge on the customer’s credit card. In most cases, surcharges cannot exceed 3%.

When A Credit Card Fee Is Imposed On Non-credit Cards

Surcharge fees are limited to transactions processed with credit cards. Surcharges imposed on other cards are illegal credit card fees. Even when a business processes a customer’s debit card as a credit transaction, it is still unlawful to implement a charge.

Were you illegally charged? Speak to an attorney today

It is essential to understand any fee associated with paying via credit card. The understanding will help you track your expenditure and have your personal finances in order. If you suspect a business illegally charging credit card fees, speak to an attorney and file a complaint.

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