credit.jpgHow do credit card surcharges work? My local liquor store charges 50 cents if you use your card to make a purchase, but I’ve also been to places that charge a buck, etc. What’s the deal?

All credit card surcharges are illegal in the state of California, according to California Civil Code Section 1748.1, which states: “No retailer in any sales, service, or lease transaction with a consumer may impose a surcharge on a cardholder who elects to use a credit card in lieu of payment by cash, check, or similar means.”

Interestingly, “A retailer may, however, offer discounts for the purpose of inducing payment by cash, check, or other means not involving the use of a credit card, provided that the discount is offered to all prospective buyers.”

But, of course, most retailers would prefer to charge more money than less, and most people don’t know surcharges are illegal. Did you? I didn’t, and neither did most of the people I spoke with while researching this – from friends to spokespeople for the DA’s and the City Attorney’s office.

So what do you do if you’re being illegally charged? Both Visa and Mastercard told me the best thing to do is file a report (Consumerist put together an extensive credit card contact information guide for this purpose; check it out here).

Then, according to The Merchant Account Blog, “The issuer passes the message down to the business’s processor, who then tells the business to stop. If more complaints are received, fines are assessed ($10,000 – $20,000 for the first offense), and then the business is shut down and placed on the TMF list by the issuer. They are then prohibited from accepting credit cards by just about every processor in the world until they get off the list.”

Since California is one of 10 states with laws against illegal surcharges, you can take also take a retailer to small claims court if they continue to charge you illegally:

Any retailer who willfully violates this section by imposing a surcharge on a cardholder who elects to use a credit card and who fails to pay that amount to the cardholder within 30 days of a written demand by the cardholder to the retailer by certified mail, shall be liable to the cardholder for three times the amount at which actual damages are assessed. The cardholder shall also be entitled to recover reasonable attorney’s fees and costs incurred in the action.

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