1365 views | 33 | Last updated on Oct 24, 2018 Consumer Protection
The imposition of surcharges for using a credit card or a debit card is regulated by chapter 604A of the Texas Business and Commerce Code. Section 604A.0021 regulates surcharges for the use of a credit card, and its subsection (a) states the following:
(a) In a sale of goods or services, a seller may not impose a surcharge on a buyer who uses a credit card for an extension of credit instead of cash, a check, or a similar means of payment.
Section 604A.002 regulates surcharges for the use of a debit card or a stored value card, and its subsection (a) states the following:
(a) In a sale of goods or services, a merchant may not impose a surcharge on a buyer who uses a debit or stored value card instead of cash, a check, credit card, or a similar means of payment.
Note that both of those sections have additional subsections that exempt certain entities, so it is important to review the text of the statutes as a whole.
We also receive questions about businesses that provide discounts for cash purchases. The Texas Attorney General published this page on credit cards that states:
It is illegal for businesses in Texas to charge extra for paying with a credit card. (But businesses can discount the retail price for customers who pay with cash.)
We often receive questions asking who qualifies as a merchant or a seller and who qualifies as a buyer. Because we are not able to interpret the law, we can only point you to section 604A.001 since it defines some of the terms used in chapter 604A. The library cannot determine if the law is being violated in a specific situation.
In June of 2016, the Texas Attorney General issued an opinion that discusses the law in relation to convenience fees and third-party payment processors (KP-0095). As the Attorney General website states, an Attorney General opinion is a “written interpretation of existing law,” but Attorney General opinions “cannot resolve factual disputes.”
In March of 2017, the United States Supreme Court issued an opinion in case No. 15-1391 [PDF] (Expressions Hair Design et al. v. Scheiderman, Attorney General of New York, et al.). This case dealt specifically with a credit card surcharge law from New York. The New York Times published an article that discusses the impact of this decision.
Rowell v. Paxton, case number 1:14-cv-00190 in the Western District of Texas, is an ongoing federal case about the Texas statute. You can find a copy of the case's docket entries on the CourtListener.com website or via PACER.gov.
Section 604A.003 describes the penalty for violations:
A person who knowingly violates Section 604A.002 or 604A.0021 is liable to the state for a civil penalty in an amount not to exceed $500 for each violation.
That section goes on further to state that the “attorney general or the prosecuting attorney in the county in which the violation occurs” may bring a suit to recover the civil penalty, but it is important to read the entire statute as it describes other requirements before filing suit.
The Attorney General's website has information about the use of credit cards, and they ask that you file a consumer complaint with their office if you feel that a business is charging extra for credit card purchases.
Note: Senate Bill 560, which went into effect on September 1st, 2017, changed the laws relating to credit card surcharges. Previously, the Office of Consumer Credit Commissioner (OCCC) enforced the law on credit card surcharges, but that is no longer the case.