Thursday, August 16, 2018
Politics

Florida court strikes down law on credit card surcharges

TALLAHASSEE — Pointing to the First Amendment, a federal appeals court has struck down a Florida law that bars businesses from imposing a "surcharge" on customers who pay with credit cards.

The 11th U.S. Circuit Court of Appeals, in a 2-1 decision Wednesday, sided with four small businesses that faced potential prosecution for telling customers they would face additional costs for using credit cards.

A key part of the ruling focused on part of Florida law that allows businesses to offer discounts to customers who pay with cash — but bars surcharges for credit-card transactions. Judge Gerald Tjoflat wrote that the First Amendment "prevents staking citizens' liberty on such distinctions in search of a difference."

"Tautologically speaking, surcharges and discounts are nothing more than two sides of the same coin; a surcharge is simply a 'negative' discount, and a discount is a 'negative' surcharge,'' Tjoflat wrote in the 30-page ruling, joined by Judge David Bryan Sentelle. "As a result, a merchant who offers the same product at two prices — a lower price for customers paying cash and a higher price for those using credit cards — is allowed to offer a discount for cash while a simple slip of the tongue calling the same price difference a surcharge runs the risk of being fined and imprisoned."

But Chief Judge Ed Carnes wrote a stinging dissent, contending that a state law was "being struck down by a federal court for no good reason."

Carnes described a scenario in which a store could put a $100 sticker price on an item and surprise a customer at the cash register by charging $103 because of a credit card surcharge.

"It does not matter whether the store characterizes the difference in price as a credit card surcharge, a cash discount, or both,'' Carnes wrote. "The merchant can speak in any way he chooses so long as he does not ambush the credit card-using customer with a higher price at the register. What matters is when, from the customer's perspective, the merchant adds the additional amount to the price because a credit card is used, not how the merchant describes it."

The majority overturned a ruling by a federal district judge, who last year agreed with arguments made by Attorney General Pam Bondi's office and dismissed the case.

The lawsuit was filed in 2014 by four businesses that had received "cease-and-desist" letters from the state related to alleged violations of the credit card surcharge law, according to the appeals court ruling. The businesses were Dana's Railroad Supply in Spring Hill, TM Jewelry LLC in Key West, Tallahassee Discount Furniture in Tallahassee and Cook's Sportland in Venice.

The credit card surcharge law says violators can face second-degree misdemeanor charges.

"Based on the belief that it is more effective, transparent, and accurate to do so, all four of the businesses wish to call the price difference a credit-card surcharge rather than a cash discount,'' Tjoflat wrote.

In the dissent, Carnes said government can regulate "economic conduct" without violating constitutional free speech rights. He wrote that "a surcharge openly posted on the store shelf is permissible, while one that comes up for the first time when the customer is paying for her purchase is not. Prescribing when a business can add an additional amount to its price controls the timing of conduct and not the speech describing that conduct. The Supreme Court has long held that the government can regulate economic conduct — including the prices charged by merchants — without violating the First Amendment."

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