Retailers in Ohio now allowed to add up to 4% surcharge to credit card purchases

Some states (not Ohio) have laws prohibiting or restricting credit-card surcharges.
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Jan 28, 2013
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Starting today, retailers could potentially add up to a 4 percent surcharge to every purchase made with a credit card, according to Consumer World, an online guide run by a former assistant attorney general in Massachusetts.

Historically, merchants have been prohibited from credit-card surcharges because of a ban on the practice contained in contracts that banks and credit-card companies have with sellers. But according to Edgar Dworsky, founder of ConsumerWorld.org, that changed in November when a federal judge approved a settlement in an anti-trust case.

Part of the settlement, eliminating the ban on surcharges, goes into effect today, Jan. 27.

Surcharges are not expected immediately but consumer advocates worry that over time, they could become common.

“This outrageous, new fee should make every shopper think twice before plunking down a credit card,” Dworsky said. “If a national sales tax of 2, 3 or 4 percent were being proposed, everyone would be up in arms. Yet, nearly the equivalent of that — an up to 4 percent credit-card surcharge pushed by retailers — has flown under the radar with seemingly little scrutiny, criticism or concern ... ’’

Under the new rules:

• Sellers will only be allowed the extra charges for the actual costs of processing credit-card transactions (typically 1.5 to 3 percent) or 4 percent, whichever is less.

• Complicated rules allow retailers to choose the cards where a surcharge will apply. American Express says while its agreements allow surcharges, a clever provision will likely mean no surcharges can be applied to AMEX cards.

• Debit cards and prepaid cards will not be subject to a surcharge. (On this point, it is worth noting that debit cards might have similar fraud protections to credit cards. If fraud occurs, your money is taken out immediately from your account and it will take longer to get it back.

Consumer­World says shoppers who switch to debit cards give up an important federal protection if the purchase involves defective merchandise or is never received. And those with premium credit cards could lose valuable benefits such as a double manufacturer’s warranty, collision damage on rental cars or points/miles/cash back.)

• Brick-and-mortar retailers will have to post a notice at the store’s entrance advising customers that a surcharge applies on purchases made with a credit card. However, only at the point of sale, must there be a disclosure of the exact percentage. The receipt must also itemize it.

• Online retailers only have to disclose that a surcharge will be imposed on the page where credit cards are first mentioned.

• Some states (not Ohio) have laws prohibiting or restricting credit-card surcharges.

Dworsky said he hopes more states will pass legislation to ban credit-card surcharges and that the Consumer Financial Protection Bureau will consider regulations to head off possible abuse.

Fake sweepstakes

The Better Business Bureau is warning the public to be careful of letters that seem to be from Publishers Clearing House and claim the recipient has won a grand prize of $2 million or more.

“Not only are letters popping up in mailboxes, but some people report receiving phone calls from individuals pretending to be from Publishers Clearing House as well,” the bureau said.

Here’s how the scam works: The letters have the official logo of the sweepstakes and claim the recipient has won over $2 million dollars and instruct consumers to immediately contact a claims agent.

Some letters also include a check for as much as $5,900 with instructions to call a claims agent. To receive the prize, the consumer is instructed to cash the check and wire a portion of that, up to $4,000, to PCH. The check is fraudulent and any money sent by wire transfer cannot be recovered. Victims also might face penalties to their bank.

Other fake PCH offers come by phone or email and claim funds are needed in advance to pay for insurance before winnings can be received.

In this instance, consumers are instructed to put at least $400 on a Green Dot Money Pak Card from their local Walmart or Walgreens, for example, and give the money card number to the “official” claims agent before winnings will be delivered.

The BBB suggests:

• Look up the PCH phone number yourself and give it a call. The phone number for Publishers Clearing House, according to its website, is 800-392-4190. The Canton BBB is 330-454-9401, the Akron BBB number is 330-253-4590 or 800-825-8887.

• PCH will never send out winning notices by email or phone calls. It notifies winners by mail or in person.

• Businesses in Alabama, California, Kansas and West Virginia discovered that their checks — which included their name, address and account number — were reproduced as part of this fraud in the past.

———

By Betty Lin-Fisher - Akron Beacon Journal (MCT)

©2013 the Akron Beacon Journal (Akron, Ohio)

Visit the Akron Beacon Journal (Akron, Ohio) at www.ohio.com

Distributed by MCT Information Services

Comments

Windy

HEARD OVER A STORE'S PA: "Attention shoppers . . . Please bend over while swiping your credit card at checkout. Your government, in its infinite wisdom, has created another innovative way to screw you. Thank you for your cooperation and have a nice day!"

ladydye_5

Time to go back to good OLD CASH!!!

Estrella Damm

Will not shop at any stores that add these charges.

whatyougoingtodo

dont charge...no fee

Contango

"Allowed" doesn't mean "will."

I've read that many retailers will not impose the credit card fee - bad for business.

sorryhog

I will avoid any store that levies charges.

KnuckleDragger

The only ones likely to add the surcharge are small mom and pop businesses. The large retailers already came out saying that they would just absorb the fee. Another decision made by our government that will likely hurt the small business.

rickross2

I would definitely charge the fee. They pay a percentage to the card company, why wouldnt they? If they quit accepting cards maybe the cost of goods would go down. LOL...Every Gas Station in Florida offers a cash price on fuel. Usually 4 cents cheaper than card price. Cirlce K in Clyde gives you 3 cents off per gallon if you pay cash. I HATE using a card. This world was built on cash. The Government wants us to use nothing but cards so they know what everyone has at all times.

Kottage Kat

Sunrise in Norwalk used to give 5 cents
Not sure if they still do

Contango

Re: Credit cards

Depends on the amt., but I've pretty much always liked usin' other people's money (OPM) for thirty days or so.

I used to directly own stock in Visa (V). Since they get a cut on every transaction, it was kinda like owning a piece of a tollbooth.

R-E-L

The CC companies are the ones making the money hand over fist. It's true that large retailers can better handle processing fees. You can be sure they negotiate with the CC companies for better rates based on their higher volumes.
As a "mom & pop" retailer, I can tell you that those fees add up real fast and cut into profit. When you as a consumer use a credit card that you get cash back on or other perks, guess who pays for that in higher fees? That's right, not VISA, it's the retailer. There is a fee scale and those cash-back cards cost the retailer more to process!
For now, we won't charge our customers the extra fees, but will definitely be considering a discount for our cash customers.

Contango

R-E-L writes:

"...guess who pays for that in higher fees? That's right, not VISA, it's the retailer."

Ultimately all taxes and fees are paid by the end user - the customer.

The financial institution (bank, etc), that issued the card takes the lion's share of the fees on each transaction. The credit card company receives a stipend.

arnmcrmn

Times have changed and more and more people use debit cards/credit cards to make purchases. Larger retail places make so many transactions and have such bigger profit margins on all merchandise that they can afford to eat what little a CC company charges. Mom and Pap's places are different. For instance, many will charge a flat fee for using a credit card to offset some of the loss (like 50 cents) because if someone was to buy a carton of cigs, they are only making 20-25 cents, and if a credit card company is taking 10-15 cents of that profit, it adds up overtime and really cuts into the minimal profit on some items.

Also do not forget, because of competition, many companies will try to get your business and charge just fractions of a percent on purchases. If you feel your card company is charging your business to much for transactions, look around. You can find a better deal.

Brock Lee

prices goin up

44846GWP

I pay cash 95% of the time, you tend to spend less that way. If I do charge, I pay it all off with the first bill. If I can't pay it off in one month, I don't buy it. Unlike some people who take a five year, 0% car loan, thinking they got a deal! lol!