Good Question: Are you being overcharged illegally?

August 06, 2018 08:06 AM

Several local store owners don't seem to know the answer to our latest Good Question.

Pat Taney was asked if customers who pay with a credit card can legally be charged extra because they're not paying with cash. The answer is no according to New York State Business Law 518.


"That law states that a merchant cannot impose a surcharge for someone using a credit card," said Robert Brenna Jr. with Brenna Boyce Law Firm in Rochester.

News10NBC took our undercover camera to a couple of stores in Rochester, bought some items, and tried to pay with a credit card.

At one of our first stops at a store on Portland Avenue, a clerk told us there was a 50 -cent 'credit card fee.'

When we told him that is against state law, he refused to believe us and charged us the fee for our items. That store owner is in direct violation of the law and although rarely prosecuted, there are tough penalties if found guilty.

"It appears there has only been one prosecution, but the potential is for a year in jail or a $500 fine or both," Brenna said. "It's what's called an unclassified misdemeanor."

But soon those fees could be legal. The issue has been battled in court, clearing one hurdle in the nation's highest court.

"It went up to the U.S. Supreme Court, which determined this was a first amendment free speech issue," Brenna said.

Justices ruled store owners should be allowed to communicate the charge to customers, but the high court did not decide if the charge itself is legal. They left that decision up to the Second U.S. Circuit Court of Appeals in Manhattan, which is still deciding the case.

The big reason there is such a battle? Store owners are charged merchant fees every time a card is swiped. Even if the card is declined, they face fees.

Those charges can be as high as 2 percent of the sale plus a flat fee of about 5 cents to 10 cents every time a card is swiped. Store owners feel they are well within their right to recoup those costs, passing it off to the customer.

Many consumers can understand that. But in the case where News10NBC crews were charged 50 cents for the so-called 'credit card fee' at the Portland Avenue store, it was on a bill of $1.64. That 50-cent fee is much higher than the percentage and flat fee the merchant is being charged to swipe the card. So, by our calculation, he's making money off the illegal fee.

You may notice several other local stores set a minimum amount purchase for a credit card. That is legal.

"Under state law, there can be a minimum imposed such as we don't want to process a credit card for anything under $10," Brenna said.

Another thing you may see, is a store offer a discount if you pay with cash -- this is also legal.

But again, charging an extra fee because you use a card is currently not legal. That could change depending on how the lower court in Manhattan rules.

"They now have to decide that case with that Supreme Court free speech decision in mind," Brenna told News10NBC.

No word on when that decision will come from the lower court.

If you have a question you'd like Pat to answer, send him an email at


Pat Taney

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