Merchants Use First Amendment in Florida Surcharge Law Fight
Earlier this month, merchants used the First Amendment to gain a victory to strike down Florida’s prohibition against credit card surcharges, while retaining the right to offer discounts on cash purchases.
Florida merchants argued before the 11th Circuit Court of Appeals that the Florida law violated their right to freedom of speech under the First Amendment, because the law controlled their speech by preventing them from calling a price difference a “surcharge” rather than a “discount.” The 11th Circuit agreed and struck down the surcharge ban law on constitutional grounds.
Despite a preliminary court settlement between merchants, and the payments networks and nine major credit card issuers that allows merchants to surcharge credit card transactions, 11 jurisdictions—California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma, Texas and Puerto Rico—continue to ban credit card surcharging. The 11th Circuit’s decision suggests that a constitutional-based challenge to state laws that prohibit surcharges may be an effective strategy for merchants.
This strategy, however, has met with mixed results. For example, a challenge to New York’s surcharge law on the same grounds resulted in an initial victory for merchants but they lost on appeal. Similar challenges to California’s and Texas’ surcharge laws resulted in a victory in the former and a defeat in the latter for the merchants involved. (All three cases likely will be appealed.) It’s also worth noting that, to date, the challenges appear to be restricted to prohibitions on surcharges for credit card transactions and do not include debit card transactions.