One moment...

Blogs / Knowledge Network Community Blog / SCOTUS Rules Statute Banning Credit-Card Surcharges Regulates Speech

SCOTUS Rules Statute Banning Credit-Card Surcharges Regulates Speech

Expressions Hair Design v. Schneiderman is the Supreme Court’s first First Amendment free speech ruling since Reed v. Town of Gilbert, Arizona (2015), where the Supreme Court defined content-based speech very broadly and held it is subject to strict (usual fatal) scrutiny. The Court didn’t cite to Reed in its opinion in this case.  

The Court held unanimously that a New York statute prohibiting vendors from advertising a single price and a statement that credit card customers must pay more regulates speech under the First Amendment. The State and Local Legal Center (SLLC) filed an amicus brief in this case arguing this law doesn’t violate the First Amendment because it regulates conduct rather than speech.

When customers pay with a credit card merchants must pay a transaction fee to the credit card company. Some merchants want to pass this fee along to credit card customers. But a New York statute states that “[n]o seller in any sales transaction may impose a surcharge on a [credit card] holder who elects to use a credit card in lieu of payment by cash, check, or similar means.” Twelve states have adopted credit-card surcharge bans.  

The Supreme Court agreed that this statute prohibits Expressions Hair Design from posting a single price—for example “Haircuts $10 (3% or 30 cent surcharge added if you pay by credit card).” The sticker price is the regular price so sellers may not charge credit card customers an amount above the sticker price that is not also charged to cash customers.    

According to Chief Justice Roberts, writing for the Court, this statute regulates speech and isn’t a typical price/conduct regulation, which would receive less protection under the First Amendment. “What the law does regulate is how sellers may communicate their prices. A merchant who wants to charge $10 for cash and $10.30 for credit may not convey that price any way he pleases. He is not free to say “$10, with a 3% credit card surcharge” or “$10, plus $0.30 for credit” because both of those displays identify a single sticker price—$10—that is less than the amount credit card users will be charged. Instead, if the merchant wishes to post a single sticker price, he must display $10.30 as his sticker price.”

The Supreme Court left it to the lower court to decide whether this statute actually violates the First Amendment and whether the statute allows merchants to use a two-sticker pricing scheme (Haircut $10 cash; $10.30 credit card).  

Agreeing with the lower court, the SLLC amicus brief argued that no-surcharge laws regulate prices and not speech. The SLLC brief also argued that the Supreme Court’s decision in Reed v. Town of Gilbert, Arizona (2015)should not impact how the Court views speech versus conduct.

Charles Rothfeld, Andrew Pincus, Paul Hughes, and Michael Kimberly, Mayer Brown wrote the SLLC brief which the following organizations joined:  National Governors AssociationNational Association of CountiesNational League of CitiesUnited States Conference of MayorsInternational City/County Management Association, and International Municipal Lawyers Association.

Posted by

Related Topics

Public Policy