By Thomas G. Wolfe, J.D.
Recently, the U.S. Supreme Court was asked to review whether New York’s credit card “no surcharge” law constitutes an unconstitutional abridgement of free speech under the First Amendment to the Constitution.
The petition to the Supreme Court, which was filed on May 12, 2016, as Expressions Hair Design v. Schneiderman, notes that, along with New York, nine other states have enacted laws that “allow merchants to charge higher prices to consumers who pay with a credit card instead of cash, but require the merchant to communicate that price difference as a cash ‘discount’ and not as a credit-card ‘surcharge’.” Accordingly, the petition asks whether New York’s and other similar state laws banning credit card surcharges “unconstitutionally restrict speech conveying price information” or whether those state laws “regulate economic conduct” instead.
In the underlying Expressions case, the U.S. Court of Appeals for the Second Circuit upheld the constitutionality of New York’s credit card “no surcharge” law. Similarly, in alignment with the Second Circuit’s decision, the Fifth Circuit determined earlier this year that a Texas “no surcharge” law was a permissible economic-pricing regulation that did not implicate the free-speech protections of the First Amendment.
However, in November 2015, the Eleventh Circuit struck down Florida’s credit card “no surcharge” law as an unconstitutional abridgement of free speech. Consequently, the petition underscores this split among the federal circuits. Stay tuned.
For more information about constitutional issues affecting the financial services industry, subscribe to the Banking and Finance Law Daily.
