A Surcharge For Using Plastic in Pennsylvania
Our Pittsburgh lawyers defend civil litigation cases, including credit card debt cases. We attack the items of damages claimed, such as “late fees” as improper penalties charged, as contrary to contract law.
But what about surcharges?
There are merchants who charge a surcharge or a minimum change, such as $7.00 or $10.00. First, why would a merchant do such a thing, just for the customer using Bank of America plastic, for example, to pay? Isn’t that contrary to business? For example, at a convenience store, the average purchase might only be $5.00 for gum, or a soda. Wouldn’t a surcharge kill business?
The simple fact is, credit card companies charge businesses a fortune for the luxury of accepting a credit card purchase. In fact, a business can expect to pay Visa, or Mastercard, or Discover, or American Express (Amex) at least three (3) percent for every transaction. This gouges profits from small businesses trying to make a living on small margins.
Issuers of Plastic: The Corrupt Robin Hood
Charging the merchant 3 percent on each transaction, the credit card company takes from the “rich” — the small business. It then gives a portion of the money to the “poor,” the customer, via “cash back” deals for the credit card holder.
That’s right, only a portion. Most “cash back” deals involve 1.5 percent, or 2 percent “cash back. There could be more, on certain purchases (like gasoline) where the credit card company uses its massive power to strike a deal with petroleum suppliers, to gouge their profits, as well. As such, the creditors act like a greedy robin hood, pushing plastic in the hands of people with questionable credit (“What’s in your wallet?”), so the creditor can continue to exploit everyone in the stream of business.
Parenthetically, creditor greed has also helped drive the current crypto-craze. Merchants are seeking ways to get paid electronically on large purchases — such as speculative cryptocurrency — just to avoid paying three percent on every sale to a creditor that adds no real value.
Merchants Aren’t Amused by the Credit Card Companies
The merchants — often mom-and-pop businesses who are barely surviving — know what the creditors (and consumers) are doing. The creditors are taking cash from merchants and giving it “back”(?) to consumers. With this, the merchant may feel fully justified — if not economically obligated — to charge a surcharge to consumers for the use of plastic. Likewise, the merchant will charge a minimum amount for each transaction, to offset the additional paperwork for each transaction and/or fees for renting the credit card processing equipment from the creditor.
Is it Legal in Pennsylvania to Charge a Surcharge for Plastic Usage?
Several states make it expressly illegal for a merchant to charge a surcharge to a consumer. However, Pennsylvania is not one of them. Nevertheless, our Pittsburgh lawyers always look for ways to help consumers. Here, we’ve identified a few avenues to protect consumers.
Unfair Trade Practices and Consumer Protection Law
Pennsylvania has enacted its Unfair Trade Practices and Consumer Protection Law (UTPCPL) to protect consumers from deceptive and unfair practices on the part of a business. It may be a violation of the UTPCPL for a business to charge a consumer a surcharge for using a credit card, especially when the charge is not clearly agreed to by the consumer.
Third Party Beneficiary Status
In law school “Contracts” class, many students’ eyes glazed over when the professor spoke about “third party beneficiaries” in relation to contracts. Fortunately, our lawyers were paying attention! You see, normally, a contract only concerns the parties to it, unless the intent of the contract is to benefit a third party. Then, the third party can pursue his rights as the intended third party beneficiary.
Here, for any business that accepts credit cards, there exists a contract between the merchant and the credit card company (“creditor company”). The creditor will often restrict the merchant from charging a surcharge to consumers, as this may reduce the number of credit card transactions from which the credit card companies profit. As such, here, the consumer is arguably the intended third party beneficiary. With this breach of contract, the damages or harm to the consumer may be very low. However, this may also fall under the UTPCPL, allowing the recovery of treble (or triple) damages and attorney fees.
Defending a Credit Card Company Lawsuit
The fact of surcharges can also be used to defend a lawsuit by the creditor company. Often, the creditor will be too busy counting all the money it receives off every transaction in the world (hundreds of billions of dollars). The creditor often neglects to keep track of its contracts with each of the millions of credit card holders. Plus, the creditor mainly care about shoving credit cards into everyone’s wallet, in any way possible: at a kiosk at the mall, online, via regular mail. Thus, it’s common for the credit card company to lose track of these various contracts.
Now what?
Without a written contract, the creditor cannot (successfully) sue the card holder for “breach of contract.” Instead, its recovery will be limited to a claim for “unjust enrichment,” i.e., the degree the consumer had been “enriched” by using the card. Only, a surcharge paid by the consumer — for the luxury of using a high interest card — offsets the “enrichment” to the consumer. As such, a good defense lawyer will scrutinize every claim by a creditor for non-payment. We look at every line of every statement when a consumer is sued.
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