news.cuna.org/articles/107791-appeals-court-ruling-on-surcharges-a-victory-for-cus

Federal appeals court ruling on surcharges a victory for CUs

September 30, 2015

NEW YORK (9/30/15)--In a victory for credit unions, a federal appeals court Tuesday reversed a ruling that would have allowed merchants to add surcharges to credit card transactions.

CUNA has argued that such surcharges would shift the costs of using the electronic payments system to consumers and financial institutions, while allowing merchants to continue to receive the benefits of participating in the system.

The 2nd U.S. Circuit Court of Appeals said in its ruling that the law does not violate the retailers' free speech or due process rights under the U.S. Constitution, as they had argued.

In the case, Expressions Hair Design et al v. Schneiderman, five merchants, including a Brooklyn ice cream parlor and a hair salon near Binghamton, said the law violated their First Amendment free speech rights by prohibiting them from telling customers about the extra costs of paying with credit cards.

In Oct. 2013, in the District Court fo the Southern District of New York, U.S. District Judge Jed Rakoff agreed, saying the law "perpetuates consumer confusion" by blocking merchants from educating people about those costs. Retailers including Kroger Co, Safeway Inc. and Walgreen Co and consumer advocacy groups including the U.S. Public Interest Research Group supported the New York merchants.

CUNA has filed briefs in three similar cases involving surcharges, but not in the New York case.

In March, CUNA filed an amicus brief in a Florida case being considered by the U.S. Court of Appeals for the Eleventh Circuit. The case, Dana's Railroad Supply v. Bondi, also involved a First Amendment challenge to the ban on merchants surcharging users of credit cards. CUNA urged the court not to allow merchants to shift their costs for using the electronic payments

In an amicus brief filed in August by CUNA in the Texas Western District Court, CUNA made similar arguments. The case, Rowell et al v. Pettijohn, involves a group of merchants challenging a Texas state law that prohibits merchants from imposing a surcharge on a buyer who uses a credit card.

CUNA made the same argument in a Sept. 11 brief filed in the Ninth Circuit Court. Italian Colors Restaurant et al. v. Harris, which involves a group of merchants challenging a California state law prohibiting merchants from imposing a surcharge on buyers using a credit card. California Attorney General Kamala Harris has asked the Ninth Circuit to overturn a federal judge’s March ruling that struck down the ban on surcharges.