A group of merchants sued the New York Attorney General last month to enjoin a law they claimed prohibited them from using the label “surcharge” to describe additional fees for credit card purchases (see our prior post). The Attorney General Friday moved to dismiss, and argued that the merchants had misinterpreted the law:
The dictionary definition of the word “surcharge” is “a charge in excess of the usual or normal amount: an additional tax, cost, or impost.” Webster’s Third New International Dictionary 2299 (unabridged ed. 1981); see also Black’s Law Dictionary 1579 (9th ed. 2009) (“an additional tax, charge, or cost, usu. one that is excessive”). Using that definition, a seller violates § 518 only when it charges its “usual” or “normal” price — that is, its posted, or most prominently displayed, price — to consumers paying with cash, check, or similar means, and then an “additional” charge over and above that normal price to consumers paying with a credit card. In other words, as long as the seller displays the cash price and credit card price with equal prominence, it does not violate § 518, since the cash price cannot be said to be the sole “usual” or “normal” price. But a seller does violate § 518 if, for example, it conceals the additional charge for using a credit card until after consumers have commenced a purchase. . . . General Business Law § 518 is directed at misleading commercial speech. A low advertised price with no mention of a credit card fee would lead most consumers to believe that that price applied to credit card purchases. It is not hard to imagine that such an advertised price could induce a driver with no cash in her wallet to pull off the highway into a gas station, or a shopper with no cash in his wallet to stand in a long line at a retail store — only to learn at the pump or register about a credit card surcharge that, had it been displayed prominently, they would have been willing and able to avoid, either by stopping at an ATM or by choosing a competitor.