Credit card surcharge law gets little enforcement attention on Long Island

Earlier this year, New York’s Division of Consumer Protection notified local governments of a new law that limited the ways in which merchants can charge credit card fees and enlisted municipal authorities to help crack down on violators.

On Long Island, at least, it appears that many local officials have yet to pitch in.

The towns of East Hampton, Islip, Hempstead, Babylon, Southampton, Riverhead and Suffolk County told Newsday they are still reviewing what steps to take, three months after the state said they could join in the law's enforcement.

Huntington’s town board has declined to prosecute violators, and authorities in Oyster Bay and Shelter Island said they would leave enforcement to the state or county.  

"We're a small town," Shelter Island Town Attorney Stephen Kiely said. "We just don't have the necessary resources to participate."

Nassau County said it planned to investigate reports of surcharge violations, but a county spokesperson did not respond to requests about whether it has received any complaints in the past several months.

The towns of Southold and Brookhaven did not return multiple calls and emails from Newsday asking about their plans related to credit card surcharges.  

To be sure, the law does not require local governments to take an active role in policing illegal credit card surcharges; it merely says that they may do so. New York Assemb. Amy Paulin (D-Scarsdale), who sponsored the credit card surcharge law, said she was not concerned by the lack of activity on the town level.

“The county consumer protection departments have the authority,” Paulin said. “If I were to make a complaint, it would be to them.”

Some Long Island residents said they are frustrated with what they see as a lack of consequences for businesses that continue to post fees illegally.

“You have to ask, what else are they not enforcing?” said Howard Gordon, a Huntington attorney. “If there’s a health department or building code violation, are they not enforcing that too?”

Post the highest (credit card) price

For more than a decade, merchants have been allowed to pass along credit card processing fees to customers by adding a separate charge — usually about 3% to 5% — on the bill.

During the past few years, state courts limited how they could do it. Courts ruled that if a business was going to add a surcharge, they needed to do so in the most transparent way possible. That meant merchants must post “the total dollars-and-cents price” for items on the menu or in their store.

State lawmakers updated the state’s General Business Law last year to provide merchants with more clarity.

It informed businesses they could not just post the cash price for an item if credit card users were charged more. They couldn’t charge customers more than what the credit card company was charging in processing fees, and they couldn't mask surcharges as “admin” or “service” fees on the receipt.

They could, however, post both cash and credit card prices. And they could post the credit card price and offer a discount for cash buyers.

Paula O'Brien-Soler, director of New York’s Division of Consumer Protection, sent local authorities a letter in January with guidance about the law and how to enforce it. Besides the state, O'Brien-Soler said the credit card surcharge law “may be enforced concurrently by the director or commissioner of a municipal consumer affairs office, or by the town attorney, city corporation counsel, or other lawful designee of a municipality or local government.”  

The law appears to be slow catching the attention of New York businesses, with many so far neglecting to heed its new directives. The Division of Consumer Protection has received 155 complaints statewide since February about surcharge violations. That’s more than the number of complaints the division recorded in all of 2020 or 2021.

Paulin said consumers should be patient. Most businesses want to do what’s right, she said, but it will take time for them to get informed and figure out the best way to take action.

"I’d encourage residents to call and complain when they see these violations, and that’s going to lead to the enforcement they’re hoping to occur," she said.