Credit Card surcharges have been allowed in New Jersey since 2013. Prior to 2013, businesses were not permitted to charge a fee for acceptance of a credit card. This prohibition spurred businesses to bring a class action lawsuit against Visa and Mastercard. The settlement of the lawsuit allowed businesses to pass the cost of fees they were charged by credit card companies and payment processors onto their customers. As part of the settlement, certain rules must be followed before a surcharge can be charged to a customer, namely:

1. Display a sign at the point of sale, alerting customers about the credit card surcharge.
2. Tell the customer about the surcharge before they make the purchase.
3. The surcharge must be a separate line item on any receipt, both in-person and online.
4. Credit card companies must be notified 30 days in advance that a business is implementing a policy of charging a surcharge.
5. The amount of the surcharge must not be more than 4% or the actual cost to the business for processing the payment, whichever is smaller. (Effective April 15, 2023, VISA has limited the maximum surcharge to 3%.)

Credit Card surcharges are not illegal under the New Jersey Consumer Fraud Act if they are disclosed to the customer. In 2019 (in response to the proliferation of credit card surcharges), New Jersey enacted legislation to prohibit retail establishments from requiring a “buyer to pay using credit or to prohibit cash as payment in order to purchase the goods or services.” A person selling or offering for sale goods or services at retail must accept legal tender when offered by the buyer as payment unless there is an applicable exemption under the law. See P.L. 2019, c.50, approved March 18, 2019 (N.J.S.A. 56:8-2.33).

Violators of the law face a civil penalty of up to $2,500 for a first offense and up to $5,000 for a second offense. The law ramped up its civil penalty structure by making third and fourth violations, an unlawful practice under the New Jersey Consumer Fraud Act (CFA). See N.J.S.A. 56:8-2.33(b).

With a third and fourth violation of the law deemed an unlawful practice under the CFA, violators face significantly higher civil penalties. A first offense carries monetary penalties of up to $10,000 and up to $20,000 for a subsequent offense. Additionally, there would be exposure to cease and desist orders by the Attorney General, the assessment of punitive damages, and the awarding of treble damages.

The Office of Consumer Protection of the Division of Consumer Affairs (the Division) has deemed it a violation of N.J.S.A. 56:8-2.33 for a person to prohibit a buyer from using cash, refusing cash payment due to a buyer’s failure to use exact change and requiring a buyer to only use electronic payment methods (such as an app or an in-store kiosk) when making a purchase in-person at a physical retail location.

Charging surcharges on credit card purchases has an impact on the definition of “sales price” and creates a responsibility for retailers to ensure that a sign is displayed at the point-of-sale alerting customers about the credit card surcharge. In New Jersey, “sales price” is defined as “the total amount of consideration, including cash, credit, property, and services, for which personal property or services are sold, leased or rented, valued in money, whether received in money or otherwise, without any deduction for the following:

1. The seller’s cost of the property sold
2. The cost of materials used, labor or service cost, interest, losses, all costs of transportation to the seller, all taxes imposed on the seller and any other expense of the seller
3. Charges by the seller for any services necessary to complete the sale
4. Delivery charges”

Under the definition of “sales price,” a credit card surcharge is clearly a cost to the seller that has been passed on to the buyer and is a part of the total sales price of the merchandise. The requirement to post a sign displaying that a retailer charges a credit card surcharge and disclosing the total selling price has been the source of enforcement actions by the Division. The CFA prohibits the sale of any merchandise at retail unless the total selling price of such merchandise is plainly marked by a stamp, tag, label or sign, either affixed to the merchandise or located at the point where the merchandise is offered for sale.

In 2022, and more recently in February 2023, the New Jersey Attorney General announced that the Division of Consumer Affairs issued cease and desist letters to businesses alerting them of their duty to disclose total selling price, including surcharges to consumers for using credit cards, debit cards or pre-paid cards. The Division expressed the view that “New Jersey consumers deserve to know exactly how much they will be paying when they go to a store and be able to pay however they can.”

For retailers, including auto dealers, the emergence of credit card surcharges and the enactment of P.L. 2019, c. 50 has added a new area ripe for enforcement actions from the New Jersey Attorney General’s Office and the Division of Consumer Affairs.

Retailers must pay attention to the requirements for charging a credit card surcharge, especially the requirement to display a sign at the point-of-sale alerting customers about the credit card surcharge, as well as the requirement to tell the customer about the surcharge before they make the purchase. These actions will satisfy the requirement of posting the total selling price for merchandise and keep retailers compliant.

Greyson Hannigan is NJ CAR’s Director of Legal & Regulatory Affairs and can be reached at ghannigan@njcar.org.