Prohibits the imposition of a surcharge by a seller in a sales transaction on a holder who uses a debit card.
Ayes (61): Adams, Addabbo, Alesi, Aubertine, Bonacic, Breslin, DeFrancisco, Diaz, Dilan, Duane, Espada, Farley, Flanagan, Foley, Fuschillo, Golden, Griffo, Hannon, Hassell-Thomps, Huntley, Johnson C, Johnson O, Klein, Krueger, Kruger, Lanza, Larkin, LaValle, Leibell, Libous, Little, Marcellino, Maziarz, McDonald, Montgomery, Nozzolio, Onorato, Oppenheimer, Padavan, Parker, Peralta, Perkins, Ranzenhofer, Robach, Saland, Sampson, Savino, Schneiderman, Serrano, Seward, Skelos, Smith, Squadron, Stachowski, Stavisky, Stewart-Cousins, Thompson, Valesky, Volker, Winner, Young
Excused (1): Morahan
TITLE OF BILL: An act to amend the general business law, in relation to prohibiting the imposition of a surcharge by a seller in a sales transaction on a holder who uses a debit card
PURPOSE: This legislation would prohibit merchants from imposing surcharges on consumers who elect to pay with a debit card and would clarify that merchants may offer discounts to induce consumers to make payments with means other than credit cards.
SUMMARY OF PROVISIONS: This legislation would create six subdivisions in section 518 of the general business law, allowing merchants to offer discounts to induce customers to make payments with means other than debit or credit cards. Further, any franchisor or electronic payment system that collects a fee for payments using debit cards shall reimburse all affected merchants for the fees and fines collected and may be liable for a civil penalty of twice the fee or fine levied.
JUSTIFICATION: One of the core tenets of the consumer experience is that the stated price of an item as advertised is the actual price paid at checkout. This fundamental consumer protection has been recognized by governing bodies around the world, and is a core element in New York's deceptive acts and practices statute. It is inexcusable to allow retailers to use the lure of lower advertised prices to entice customers and then to charge them more.
Retailers are currently prohibited from imposing surcharges on consumers who use credit cards. This prohibition must be updated and extended to debit cards. Electronic payment allows consumers to conveniently, securely and responsibly manage their finances. Surcharges and checkout fees hurt consumers and must be outlawed.
Retailers enjoy the same benefits from debit card use as they do from credit card use. For example, lines move faster because customers don't have to pullout their checkbook or fumble for cash. In addition, customers spend more, and the payments are immediately guaranteed. Bad check losses are eliminated.
Allowing retailers to surcharge would force customers to pay for the benefits that merchants receive, shifting 100 percent of the cost of electronic payments to consumers. In fact, surcharging could essentially become an unearned profit center for retailers. The benefits and savings that cards offer will be undermined if retailers are allowed to surcharge and drive consumers to use cash and checks.
LEGISLATIVE HISTORY: This is a new bill.
FISCAL IMPLICATIONS: None.
EFFECTIVE DATE: One hundred twentieth day after it shall have become a law.
STATE OF NEW YORK ________________________________________________________________________ 7267--C IN SENATE March 26, 2010 ___________Introduced by Sens. SCHNEIDERMAN, FOLEY, HUNTLEY, KRUEGER, MONTGOMERY, PERALTA -- read twice and ordered printed, and when printed to be committed to the Committee on Consumer Protection -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee -- reported favorably from said committee and committed to the Committee on Rules -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the general business law, in relation to prohibiting the imposition of a surcharge by a seller in a sales transaction on a holder who uses a debit card THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Section 518 of the general business law, as added by chap- ter 160 of the laws of 1984, is amended to read as follows: S 518.
[Credit]PAYMENT card surcharge prohibited. 1. No seller in any sales transaction may impose a surcharge on a holder who elects to use a credit card OR DEBIT CARD in lieu of payment by cash, check, or similar means. FOR PURPOSES OF THIS SECTION, "DEBIT CARD" INCLUDES A PREPAID CARD OR OTHER MEANS OF ACCESS TO PREPAID FUNDS THAT MAY BE USED TO INITIATE ELECTRONIC FUNDS TRANSFERS AND MAY BE USED WITHOUT UNIQUE IDENTIFYING INFORMATION SUCH AS A PERSONAL IDENTIFICATION NUMBER TO INITIATE ACCESS TO PREPAID FUNDS. 2. NOTHING IN THIS SECTION SHALL PROHIBIT ANY SELLER FROM: A. OFFERING DISCOUNTS TO A BUYER TO INDUCE THE BUYER TO PAY BY CASH, CHECK, DEBIT CARD, OR SIMILAR MEANS RATHER THAN BY CREDIT CARD OR DEBIT CARD, IF SUCH DISCOUNTS ARE OFFERED TO ALL PROSPECTIVE BUYERS AND DISCLOSED CLEARLY AND CONSPICUOUSLY; OR B. IMPOSING A SURCHARGE ON A HOLDER WHO, IN CONNECTION WITH A CREDIT CARD OR DEBIT CARD TRANSACTION, RECEIVES CASH BACK BEYOND THE PURCHASE AMOUNT OF THE SALES TRANSACTION, BUT SUCH SURCHARGE MAY ONLY BE APPLIED IF DISCLOSED CLEARLY AND CONSPICUOUSLY TO THE HOLDER PRIOR TO THEEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD16246-13-0 S. 7267--C 2
COMPLETION OF THE TRANSACTION AND ONLY APPLIED TO THE AMOUNT OF CASH BACK PROVIDED BY THE SELLER. 3. NO PERSON MAY PROHIBIT A SELLER FROM: A. OFFERING DISCOUNTS TO A BUYER TO INDUCE PAYMENT BY CASH, CHECK, DEBIT CARD OR SIMILAR MEANS RATHER THAN BY CREDIT CARD OR DEBIT CARD IF SUCH DISCOUNTS ARE CONSISTENT WITH THE REQUIREMENTS OF THIS SECTION; OR B. IMPOSING A SURCHARGE ON A HOLDER WHO, IN CONNECTION WITH A CREDIT CARD OR DEBIT CARD TRANSACTION, RECEIVES CASH BACK BEYOND THE PURCHASE AMOUNT OF THE SALES TRANSACTION, BUT SUCH SURCHARGE MAY ONLY BE APPLIED IF DISCLOSED CLEARLY AND CONSPICUOUSLY TO THE HOLDER PRIOR TO THE COMPLETION OF THE TRANSACTION AND ONLY APPLIED TO THE AMOUNT OF CASH BACK PROVIDED BY THE SELLER. 4. AN ELECTRONIC PAYMENT SYSTEM MAY NOT, DIRECTLY OR THROUGH ANY AGENT, PROCESSOR, OR MEMBER OF SUCH SYSTEM, IMPOSE ANY REQUIREMENT, CONDITION, PENALTY, OR FINE IN A CONTRACT WITH A SELLER RELATING TO THE DISPLAY, AT THE POINT OF SALE, OF PRICING FOR GOODS OR SERVICES OFFERED BY SELLER, INCLUDING A DISPLAY RELATING TO A DISCOUNT TO INDUCE PAYMENT BY CASH, CHECK, OR SIMILAR MEANS. THIS PROHIBITION SHALL NOT APPLY WITH RESPECT TO THE DISPLAY OF PRICING FOR GOODS OR SERVICES IN ADVERTISE- MENTS. 5. Any seller who violates the provisions of this section shall be guilty of a misdemeanor punishable by a fine not to exceed five hundred dollars or a term of imprisonment up to one year, or both. 6. IF AN ELECTRONIC PAYMENT SYSTEM IMPOSES A FINE ON AN ACQUIRER THAT RESULTS IN THE PAYMENT BY A SELLER THAT VIOLATES ANY PROVISION OF THIS SECTION, THE ELECTRONIC PAYMENT SYSTEM SHALL BE LIABLE TO THE SELLER FOR THE AMOUNT OF ANY SUCH FINE PAID BY THE SELLER, AND, IN ADDITION, SUBJECT TO A CIVIL PENALTY UP TO TWICE THE AMOUNT OF SUCH FINE. S 2. This act shall take effect on the one hundred twentieth day after it shall have become a law.