Expressions Hair Design v. Schneiderman: Credit Card Surcharge Case
Expressions Hair Design is a case about thelegality of state bans on surcharging credit card transactions and what those laws sayis if, for example, the merchant’s price is $100, the merchant cannot charge more tocustomers who choose to pay with a credit card, even though credit cards are quite expensiveto accept and even though the merchant is paying an out-of-pocket cost for that.
So the challengers say that this is just a simple restriction on speech, and the key to thechallenger's’ position is that discounts are permissible, so it’s perfectly finefor a merchant to say, “Here’s our price, and if you pay with cash, we’ll give youa 3% discount,” but if they instead said, “Here’s our price, and if you pay witha credit card, we charge you a 3% surcharge,” that all of a sudden becomes a crime, andnow, of course, as a matter of math and economics, those two scenarios are pretty much exactlythe same, but the state is saying you can call it a cash discount, but you can’t callit a credit card surcharge.
What Expressions Hair Design and its supportingamici are saying is this is just a straight-up regulation of the words we can use to communicatea message about how we price our products.
And then the defendants are Eric Schneiderman,who is the Attorney General of New York and then, I think city and county officials fromNew York City and Long Island.
So Schneiderman, he argues that this isn’tspeech at all and this is actually the argument that the 2nd Circuit embraced in the decisionbelow – that this isn’t speech at all, so the First Amendment doesn’t even comeinto play, because it’s just economic regulation.
It’s just regulation of prices.
So, for example, if a state has a law thatsays no one can charge more than $3 a gallon for gasoline, if a company then advertisedgasoline for $3.
05, that wouldn’t be protected by the First Amendment, because it’s anunlawful price, and you're making an offer to engage in an unlawful transaction.
It’s undisputed that a merchant can chargedifferent prices for credit card transactions and cash transactions, and the only questionis whether you're allowed to label that as a cash discount or a credit card surcharge.
the regulation has everything to do with thelabel being placed on the speech, and nothing to do with the prices themselves.
If Expressions wins, it would mean that themand all companies would be able to charge a higher price to customers who choose forthe convenience of paying with a credit card.