Connecticut has amended its credit card surcharge law, effective as of May 24, 2022, that imposes important disclosure requirements in order for companies to offer discounts to customers who choose to pay in cash rather than by credit card. [1]
What is a Surcharge?
A surcharge is “an additional charge or fee that increases the total amount of a transaction for the privilege of using a particular form of payment.” [2] Although credit card surcharges are prohibited in Connecticut, discounts are permissible under certain circumstances as noted herein.
In order to offer a cash discount, the listed price must be the credit card price.
The following examples illustrate what is permissible and what is not permissible: [3]
A person would like to sell a product for $10 in cash and $10.30 if one pays by credit card.
- One is not permitted to list the prices separately as “$10.00 cash” and “$10.30 credit”
- One is not permitted to list the price as “$10 with a 3% card surcharge/convenience fee/transaction fee”
- Rather, one must display the price as $10.30 as the regular price and provide the customer with notice that there is a discount off of the regular price if the product is paid in cash
What Does the Amended Law Require?
Under the amended law, notice of a cash discount must be given to customers before a transaction is completed. [4]
The amended law requires companies to provide clear and conspicuous notice to customers regarding the form of payment if the company chooses to offer discounts for cash. For example:
- If a transaction is being made in person, then the notice must be displayed on the premises.
- If a transaction is online, including on phone applications, then notice must be given before completion of the transaction.
- If a transaction is being completed orally, like on a telephone call, then there must be verbal notice of a discount before the completion of payment. [5]
The Meaning of “Clear and Conspicuous” Notice
Although there is no guidance within the amended law as to what constitutes a “clearly and conspicuously” placed notice, the Federal Trade Commission (FTC) has issued important guidance that may be of value.
According to the Guidance document, one should consider: the prominence of the notice, whether the notice is unavoidable, and whether the language of the notice is understandable to customers. [6]
For instance, a grocery store may find that placing notice of a cash discount on or next to a cash register is the best way to comply with the law. Whereas an online retailer may aim to place the notice right before an item is entered into a “shopping cart” in prominent text. [7]
The FTC advises that if transactions are online then the notice be available without the need to “scroll.” Necessary disclosures, such as that in the amended law, should not be incorporated into a terms of use. [8]
To ensure the notice is prominent and read, one should consider both the color and the size of the text. For instance, the FTC advises against disclosures that blend in with a general body of text, or do not contrast prominently with the background. [9]
Enforcement
Violations of the disclosure requirements or other parts of the amended law are deemed violations of the Connecticut Unfair Trade Practices Act “CUTPA”), Conn. Gen. Stat. § 42-110a et seq., which provides for government enforcement by the Commissioner of the Consumer Protection and the Attorney General, who possess the authority to obtain administrative (DCP) or court ordered (AG) injunctive relief, restitution and/or civil penalties. CUTPA also authorizes private persons, in appropriate circumstances, to obtain one or more of the following, including in the form of class actions: injunctive relief, compensatory damages, punitive damages, and a reasonable attorney’s fee.
Verbum Sat Sapienti Est. [10]
This article was co-authored by Summer Associate Fizza Alam.
[1] Conn. Pub. Acts No. 22-104, § 36, amending Conn. Gen. Stat. § 42-133ff.
[2] Id., § 36(a)(6)
[3]See Expressions Hair Design v. Schneiderman, 117 N.E.3d 730, 732 (N.Y. 2018) and Expressions Hair Design v. Schneiderman, 137 S. Ct. 1144, 1151 (2017).
[4] Conn. Pub. Acts No. 22-104, § 36(a)(7), amending Conn. Gen. Stat. § 42-133ff; This prohibition extends to the leasing or renting of property. However, the law does not apply to the payment of 1) fees, costs, or other charges to authorized state agencies; 2) tax and penalty payment to revenue state and municipalities; or 3) fees, cost and other charge payments to the Judicial branch.
[5] Id., § 36(c)(1).
[6] Federal Trade Commission, .com Disclosures How to Make Effective Disclosures in Digital Advertising (March 2013), at p. i., available at https://www.ftc.gov/system/files/documents/plain-language/bus41-dot-com-disclosures-information-about-online-advertising.pdf
[7] Id. at ii.
[8] Id.
[9] Id. at 17-18.
[10] “A Word to the Wise is Sufficient.”