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Credit Card Surcharges

California has a law, California Civil Code section 1748.1, that prohibits “retailers” from adding a surcharge when a consumer chooses to use a credit card instead of paying by cash. A retailer is someone who sells goods or services or anything else of value, but it does not include government entities and public agencies, such as the state, a city, or a county. Electric, gas, and water companies may also impose a surcharge that allows them to recover the reasonable expenses they incur by customers using credit cards and debit cards, but only if the charge is approved by the Public Utilities Commission.

Although retailers may not add a surcharge when you use a credit card, they can provide a discount to customers who pay cash. For example, the California Court of Appeal found that section 1748.1 was not violated when a gas station posted two sets of prices with a lower price for cash customers where the cash discount was related to the extra costs the gas station incurred in credit card sales. (The case is Thrifty Oil Co. v. Superior Court (2001) 91 Cal.App.4th 1070.)

The law that prohibits surcharges, but allows discounts, does not offer details on how the discounts must be disclosed or how large they can be. The law also doesn’t specifically mention debit cards. However, California law does prohibit a merchant from engaging in activity that is unfair or deceptive. So, for example, if the cash discount option is not fully disclosed prior to your committing yourself to the goods or services, or if it does not clearly explain the merchant’s policies regarding debit cards, the merchant may be violating California law.

If you know of a merchant that you think is improperly charging people extra for using credit cards you may file a complaint with the Attorney General at http://oag.ca.gov/contact/consumer-complaint-against-business-or-company. But you should be aware that this office is responsible for protecting the collective legal interests of the people of California. Due to our role in consumer litigation on behalf of all of the people of our state, we are not empowered to represent private individuals, whether or not they are citizens of California. If you are interested in pursuing personal restitution from a company, you may wish to consider other options such as filing a small claims suit (for individual claims up to $10,000) or consulting with a private attorney who could directly represent your interests.

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