When you first think about it, simply putting a price on an item in a store might not seem like "speech." But when it comes to credit card surcharges (where retailers pass swipe fees charged by credit card companies to consumers), the issue becomes a little more murky.
And the Supreme Court is trying to clear it up. After retailers sued over a New York law that makes credit card surcharges illegal, the Court ruled that the law "regulates speech," and therefore the statute might violate merchants' First Amendment rights. Here's a look at the decision.
Credit card companies regularly charge retailers "swipe fees" when they accept credit card payments, and these fees can be as high as 3% per transaction. Most retailers attempt to pass these fees on to customers, either in the form of overall higher prices, or in a "single-sticker regime," posting a cash price and an additional credit card surcharge.
The Second Circuit Court of Appeals ruled that single-sticker pricing is illegal under New York's General Business Law §518, which prohibits retailers from imposing "a surcharge on a holder who elects to use a credit card in lieu of payment by cash, check, or similar means." Noting that Section 518 fails to address whether retailers may give discounts to customers who use cash, claiming that a law that prohibited single-sticker pricing but allowed cash discounts was unconstitutionally vague.
The Vagaries of Speech
The Supreme Court didn't quite buy the vagueness argument, which asserts that a person of ordinary intelligence must be able to determine who is regulated, what conduct is prohibited, or what punishment may be imposed under a law in order for that law to be constitutional. Instead, the Court ruled that the retailers could not raise a successful vagueness claim because their speech had so clearly been curtailed.
New York's credit card surcharge statute, according to the Court, told retailers "nothing about the amount they are allowed to collect from a cash or credit card payer. Instead, it regulates how sellers may communicate their prices. In regulating the communication of prices rather than prices themselves, §518 regulates speech."
Whether that regulation violates retailers' free speech rights under the First Amendment may now be left for the Second Circuit Court of Appeals to decide, as the Supreme Court simply vacated the lower court's previous ruling, and remanded the case back down.
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