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January 4, 2018

US appeals court rules against California credit card surcharge ban

The Ninth US Circuit Court of Appeals in San Francisco has ruled against a California law that prohibits retailers from charging extra for customers using credit cards.

The court said that the law, which was passed in 1985, violates the free speech rights of the five businesses that filed the complaint.

The complaint involved swipe fees that merchants had to pay credit-card issuers whenever a customer charges a purchase. It was argued that surcharges at the cash register mislead customers regarding the original cost of a product.

The ruling is limited to these businesses and noted that the law enables less charges to the customers paying with cash. It supported a district court’s judgment passed in 2015 stating that surcharge ban was unconstitutional.

The three-judge panel said: “The higher cost is a result of credit card fees, and referring to the price differential as a discount prevents retailers from accurately conveying that causal relationship.

“Imposing a surcharge rather than offering a discount is no more misleading than calling the weather warmer in New Orleans rather than colder in San Francisco.”

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