Ann Lee, Damian Conforti, and Joshua Bauchner from our Hospitality Services Law Practice Group provide crucial insights and practical advice for restaurant owners and other hospitality businesses in their latest article for the New York City Hospitality Alliance, here.
In response to evolving consumer protection standards, New York has implemented significant updates to its credit card surcharge laws, effective February 11, 2024. Previously, New York law prohibited sellers from imposing a surcharge on customers who chose to pay with a credit card. However, the amended § 518 of the New York General Business Law now permits businesses to apply surcharges on credit card transactions, provided they meet strict new disclosure requirements. This change is part of New York’s broader effort to protect consumers and promote transparency and fairness in transactions.
Key Points for Restaurant Owners and Hospitality Businesses:
1. Clear Disclosure: Businesses must clearly display both the highest price a consumer might pay using a credit card and the lower price for other payment methods at the point of sale. This ensures customers are fully aware of any additional charges before completing their purchase.
2. Surcharge Limits: The surcharge amount cannot exceed the fee charged to sellers by the credit card company. For example, if the credit card company charges a 4% fee, the surcharge cannot be more than 4%.
3. Posting Requirements: Surcharge information must be posted wherever prices are displayed, including price tags, menus, and online checkout pages. For physical stores and restaurants, this includes having clear notices on menus and at the point of sale. Online businesses must display surcharge details prominently on the checkout page before the transaction is completed.
4. Penalties for Non-Compliance: Violations of the surcharge law can result in significant penalties, with each infraction incurring a civil penalty of up to $500. Local governments and municipalities have the authority to enforce these regulations, leading to multiple layers of oversight and potential penalties. Non-compliant businesses may also face costly legal battles.
Steps to Ensure Compliance:
1. Post Clear Notices: Ensure that all surcharge information is clearly posted at the point of sale and on any pricing displays.
2. Disclose Online: For online transactions, include surcharge information prominently on the checkout page.
3. Limit Surcharges: Do not charge more than the fee imposed by the credit card company.
4. Maintain Records: Keep detailed records of all surcharges and be prepared for possible inspections.
New York’s updated law aims to balance the need for businesses to cover their costs with consumers’ rights to transparency and fairness. By following these guidelines, businesses can ensure they remain compliant while maintaining trust and transparency with their customers.
For more detailed guidance and examples of compliant practices, businesses can refer to the official notice from the New York State Division of Consumer Protection. For additional information about Mandelbaum Barrett’s Hospitality Practice Group, please visit our website.