On Aug. 18, 2023, New Jersey Gov. Phil Murphy signed into law a bill (A4284) that limits the surcharges merchants may charge their customers who choose to pay for goods or services using a credit card and requires disclosure of the surcharge (the Act). The Act became effective immediately and appears to be the first of its kind in New Jersey. Because the Act incorporates the penalty provisions of the New Jersey Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 et seq.,—which can be significant—it is essential that merchants act right away to bring their practices in line with the Act's requirements.

Background

When merchants accommodate customers by allowing them to pay using a credit card, that service is not free. Merchants are typically required by contract to pay a small percentage of the cost to the credit card issuer and/or the network that manages the credit card processing system. Some merchants prefer not to absorb that cost and will instead increase the price charged to the customer. That increase in price is commonly called a surcharge. For example, if dinner at a restaurant costs $75, and the cost to the restaurant for taking a credit card is 3% or $2.25, then charging for the dinner and the surcharge could be $77.25 if the merchant merely passes on the credit card processing cost.