The Colorado attorney General has released some guidance on the recent adoption of the Credit surcharge law that we passed a session ago
Please see here for the opinion and consumer alert:
Please see the opinion letter and consumer alert we issued to try to help.
The purpose of the bill was to conform Colorado’s prohibition on any surcharge law (excepting city and county governments) with Recent freedom of speech cases at the supreme court. The bill in its essence repealed the prohibition only for credit card transactions and left gift cards, Debit Cards etc. alone, So in reality nothing changed for those payment methods, that didn’t already exist or was prohibited under Colorado Law.
From the bill summary: https://leg.colorado.gov/bills/sb21-091
Under current law, a seller, lessor, or company issuing a credit or charge card is prohibited from imposing a surcharge against a person who elects to pay for a sales or lease transaction by using a credit or charge card. The act:
- Repeals the prohibition; and
- Limits the maximum surcharge amount per transaction to 2% of the total cost to the buyer or lessee for the sales or lease transaction or the merchant discount fee, which is defined as the actual fee that a seller or lessor (merchant) pays its processor or service provider to process the transaction.
A merchant is required to display notice regarding the surcharge on the merchant's premises or, for online purchases, before an online customer's completion of the sales or lease transaction.
The act clarifies that a merchant is prohibited from applying the surcharge to cash or check payments, debit card payments, or payments made by redemption of a gift card.
If a merchant imposes a surcharge in violation of the act, the merchant is subject to liability as a creditor under the "Uniform Consumer Credit Code".
So previous to this bill’s passage any surcharge imposed by any non-government entity in Colorado was a in violation of the law….importantly the law allowed for Cash or debit discounting – but the retailers who backed the bill are trying to provide additional options for merchants to combat ever increasing interchange fees.
The main reason debit was excluded was that the Federal government instituted pricing caps on Debit transactions for issuers that make up about 95% of the debit market – this was known as the Durbin amendment. So the regulated debit market has increased since that time.
Here is the actual bill language:
5-2-212. Surcharges on credit transactions - enforcement - definitions. (1) (a) Except as otherwise provided in sections 24-19.5-103 (3) and 29-11.5-103 (3), C.R.S., no A seller or lessor in any sales or lease transaction or any company issuing credit or charge cards may impose a surcharge on a holder BUYER OR LESSEE who elects to use a credit or charge card in lieu of payment by cash, check, or similar means IN ACCORDANCE WITH SUBSECTION (1)(C) OF THIS SECTION. (b) A surcharge is any additional amount imposed at the time of the sales or lease transaction by the merchant, seller, or lessor that increases the charge to the buyer or lessee for the privilege of using a credit or charge card.