Business & Economy

California can't prevent credit card surcharges, court rules

Photo by Pure Metal Cards/Richard J. Buckley via Flickr Creative Commons

A federal appeals court says California can't prevent five businesses from charging additional fees to customers who use credit cards.

The 9th U.S. Circuit Court of Appeals said Wednesday a 1985 state law that banned credit card surcharges violated the businesses' free speech rights.

The case dealt with swipe fees that merchants must pay credit-card issuers each time a customer charges a purchase. The state attorney general's office says surcharges at the cash register mislead customers about a product's true cost.

The 9th Circuit disagreed, noting that the law allowed the businesses to charge cash customers less. The court said the businesses only wanted to communicate the difference as a surcharge for credit card users rather than a discount for cash users.

The California attorney general's office said it was evaluating its options.