The Required Notice of Intent to Surcharge

Ronald A. Clifford, Esq.
September 14th, 2012

Upon preliminary approval of the class action lawsuit proposed settlement between vendors and VISA and MasterCard, vendors will obtain the right to surcharge their customers for interchange fees incurred as a result of a credit card transaction. However, vendors should be aware of timing and notice requirements regarding the same.

As a starting point, the right to surcharge will begin sixty days after preliminary approval of the proposed settlement by the District Court.  However, before the vendor begins taking advantage of the right to surcharge, certain notices must be provided to the vendor’s customer and VISA and/or MasterCard, and these notices must be given within certain time limits of the beginning of the surcharging.

The settlement agreement provides that a vendor who wishes to surcharge must, within thirty days prior to the surcharge to the customer, give advanced notice of intent to impose a surcharge to the relevant credit card company chosen for the transaction and to the customer.

The notice must provide clear disclosure to the vendor’s customers of the vendor’s surcharging practices, at the point of interaction or sale with the customer, in a manner that does not disparage the brand, network, issuing bank, or the payment card product being used.

Further, the information on the vendor’s surcharging practices at the point of interaction must include: (i) the amount of any surcharge that the vendor imposes, (ii) a statement that the surcharge is being imposed by the vendor, and (iii) a statement that the surcharge that the vendor imposes is not greater than the applicable Visa or MasterCard Credit Card Cost of Acceptance, which is in effect a calculated average interchange rate.

Lastly, the vendor should provide clear disclosure of the dollar amount of the surcharge on the transaction receipt provided by the vendor to the customer.

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