Two Supreme Court decisions this week.

The U.S. Supreme Court made two key decisions this week. One pertains to litigation involving merchants, card networks and banks. The other pertains to New York’s state law prohibiting merchants from adding a surcharge to credit card payments. 

First, on March 27, 2017, the Court declined to hear a bid by merchants to essentially resurrect the lawsuit settlement, finalized in 2013, involving MasterCard, Visa, and some banks. The settlement was later negated (in June 2016) by the U.S. Second Circuit Court of Appeals, based on their perspective that merchants were not properly represented.

To summarize this saga:

  • Initial settlement of interchange lawsuit in 2012; as one result, MasterCard and Visa began to allow surcharging in the United States in January 2013 (as long as merchants adhered to specific rules)
  • Final approval of the settlement at the end of 2013
  • Merchants appealed; the appeal ruling in 2016 favored merchants, negating the settlement
  • In 2017, U.S. Supreme Court declines to get involved

Back to square one. We can expect ongoing litigation between merchants and card networks related to card acceptance fees. 

Next, on March 29, 2017, the U.S. Supreme Court concluded New York’s no surcharge law regulates speech because it regulates the communication of prices. They remanded the Court of Appeals to analyze NY’s law as a speech regulation and determine whether it is unconstitutional, violating the First Amendment.

For more information, visit the Surcharge News webpage.


About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

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Surcharging arguments in Supreme Court.

Tuesday, January 10, marks when the U.S. Supreme Court will hear arguments pertaining to a case by a group of New York merchants who claim New York’s “no surcharge” law violates their First Amendment free speech rights. Ronald Mann, a professor of law at Columbia, provided an argument preview last week, digging into the merchants’ claim and New York’s defense. Below is an excerpt from his post and the link to the complete content, which I encourage you to read.

Update

Visit the Surcharge News webpage to see the March 29, 2017, Supreme Court outcome.


In Review

When I reported last year that the U.S. Supreme Court (“Court”) agreed to hear this case, I observed what could happen if the merchants are successful. Specifically, it sets the stage for the removal of “no surcharge” laws in the handful of states, including New York, that have such laws. This would not necessarily lead to a pike in merchants surcharging for credit card use, but it is certainly something to watch. It could be days or weeks before the Court renders a decision. Stay tuned to Recharged Education! 

The surcharge battle has been a long one. We now await the outcome of the case presented to the U.S. Supreme Court.

The surcharge battle has been a long one. We now await the outcome of the case presented to the U.S. Supreme Court.

Excerpt from Ronald Mann's Post

Argument preview: Merchants bring payment-card interchange wars to the Supreme Court

The remarkable volume of amicus briefs underscores the high stakes in play: twelve in support of the merchants, ten in support of New York, and one (from the United States) in support of neither party. In part, the variegated interests reflect the cross-cutting concerns that the litigation raises. Because the case turns on the doctrinal framework for assessing commercial speech under the First Amendment, First Amendment scholars are concerned, weighing in with dueling amicus briefs on each side of the case. Because a central debate in the case involves the idea that consumers react differently to “discounts” and “surcharges,” behavioral economists have a lot to say; competing groups of economics scholars also chime in on both sides of the matter. Consumer advocates concerned about the market power of credit-card networks appear in support of the merchants. Other consumer advocates join state governments in supporting New York, attempting to ensure that states are free to adopt consumer-protective pricing regulations. And that doesn’t even get to the briefs from businesses with a relatively direct interest in the question as a matter of profit and loss.

Access the complete content, including his conclusion on the main thing to watch.


About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

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Breaking news involving surcharging.

The U.S. Supreme Court has agreed to hear an appeal initiated by a group of New York merchants who claim New York’s “no surcharge” law violates their First Amendment free speech rights. 

Update

Visit the Surcharge News webpage to see the March 29, 2017, Supreme Court outcome.

If the merchants are successful, it sets the stage for the removal of “no surcharge” laws in the handful of states that have such laws. This would not necessarily lead to a pike in merchants surcharging for credit card use, but it is certainly something to watch. End-user organizations who rely on state “no surcharge” laws today (when dealing with merchants who want to apply a surcharge) may have to rethink their strategy in the future.

See the related webpage on surcharge news for background about the evolving state laws, including what has occurred in New York and elsewhere.

What is the future of surcharging, especially in states that currently have laws prohibiting this practice?

What is the future of surcharging, especially in states that currently have laws prohibiting this practice?


About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

Subscribe to the Blog

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