The case involves several New York businesses that want to inform customers that using a credit card costs more
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A New York hair salon that wanted to let customers know they would be charged more for paying with plastic has taken its case to the U.S. Supreme Court, Stateline reports. Expressions Hair Design displayed signage at its register to inform customers paying with credit cards that an additional fee would be added to their bill to cover the transaction cost. However, in New York, it’s illegal for businesses to charge more for credit card purchases—but those retailers are allowed to offer a discount for cash purchases.
“All these laws are really doing is regulating speech in a way that favors credit card companies because it masks the costs of credit to consumers,” said Deepak Gupta, the Expressions attorney. Basically, the law states “you can say the glass is half full, but you can’t say it’s half empty.”
However, New York Attorney General Eric Schneiderman sees the law as not restricting speech but keeping businesses from jacking up posted prices. That’s not a view shared by seven behavioral economics professors, who wrote a friend-of-the-court brief for the retailers.
“When consumers are offered a small discount for paying in cash, they are often willing to ignore it for the sake of convenience, treating the discount as a lost opportunity cost,” the brief stated. “When consumers are asked to pay a premium on top of the perceived base price, however, they perceive it as an out-of-pocket cost.”
Neither MasterCard nor Visa have taken a position on this case, both declining to comment. Nine other states have similar laws on the books: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, Oklahoma and Texas. Expressions Hair Design v. Schneiderman will be heard by the high court in early 2017.
