Report a Business for Charging a Credit Card Fee

Reporting Non-Compliant Credit Card Surcharging

The rules for charging a fee to use a credit card are strict. Here’s how to report businesses who are charging to use a credit card improperly. However, before filing a report, it’s important to make sure that the business you want to file a report about is applying surcharges in a non-compliant way.

Visa’s Policies for Credit Card Surcharging

In order for a business to comply with Visa’s rules for charging customers a fee for credit card use, the business must do the following:

Correct Implementation

Businesses must notify Visa of their intent to surcharge credit card transactions at least 30 days before beginning the practice. Additionally, their equipment must be programmed to separate the surcharge as a clearly labeled line item on the customer’s receipt. Surcharging must also be limited to only credit cards because it is a violation to add surcharges for debit cards and prepaid cards. We have seen several complaints from consumers of this last policy not being implemented correctly as it requires the processor to program the machines to recognize the different types of cards.

Alternatively, businesses can also post different prices on merchandise for cash versus credit cards. This is known as “dual pricing” in the credit card processing industry and is most often seen at the gas pump.

Signage and Notification

Businesses that apply fees for using credit cards must post proper signage to alert customers of surcharging before a sale occurs. These signs must be posted at all entries to the business as well as all points of sale and must be clearly visible. The language must clearly indicate that the fee is being charged by the business and not by Visa. If using dual-pricing, all merchandise must be clearly labeled with cash price and card price. For online businesses, consumers must be clearly alerted to the fee prior to checking out.

Visa Fee Calculation

This part of the policy seems to be the most violated. Visa’s policies state that the fee must not exceed the actual cost to the business and that it cannot exceed 3% of the sale, or whatever state laws limit the maximum fee (Colorado limits the fee at 2%). The issue with this policy is that, in most cases, it does not appear that the actual fee to the business is communicated back to the business owner’s equipment. This means the actual fee cannot be calculated. In lieu of complying with policy, many processors simply set the fee at to a fixed rate without disclosing to the business that such a practice violates Visa’s policies. Additionally, many of these processors are setting the fixed fee higher than 3% which puts the business at risk of penalties and legal fines. In the the worst of cases, businesses could lose their ability to accept credit cards by overcharging a surcharge.

Sneaky Processor Surcharge Arbitrage

Another shady aspect of fixed rate surcharging is regarding who is keeping the difference in the fee when the actual cost is less than the fixed rate. For example, if a the actual cost to a business for accepting a particular credit card is 2% but the credit card machine is collecting a surcharge of 3%, where does that 1% difference go? It often goes to the processing company that manages the business’ credit card processing. Due to this, processors are highly incentivized to mark the surcharge up as high as possible. Moreover, they rarely disclose this fact to the business or the customer.

See: Visa’s Surcharging Policies

Mastercard’s Policies for Credit Card Surcharging

Mastercard’s policies resemble that of Visa’s with a one main exception:

Mastercard Fee Calculation

Mastercard allows businesses to surcharge its credit cards as either an average cost to the business across all of Mastercard’s different card products, or a maximum fixed rate of 4%. Businesses can also charge the exact cost of the particular card that is being transacted. Since such information is rarely communicated back to the business, most opt to charge the maximum of 4%. Again, this maximum fee must also be in compliance with state laws.

See: Mastercard’s Surcharging Policies

American Express and Discover Surcharging Policies

Surprisingly, American Express provides almost no guidance or policies regarding surcharging. In fact, they don’t even require it to be a line item on the customer’s receipt. They also do not impose a fee cap but encourage businesses to comply with state laws. Discover appear to handle surcharging in much the same way.

Illegal Credit Card Surcharging

Charging fees for using a credit card is illegal in several states and heavily restricted in a few others. As of April 15th, 2023, Connecticut, Maine, Massachusetts, and Oklahoma have outright bans on credit card surcharges. As mentioned earlier, Colorado limits the maximum fee to 2% of the sale amount. See our complete list of state laws regarding credit card surcharging.

If you believe that a business is illegally adding credit card fees, you can report them to your state’s Attorney General.

How To Report Businesses That Are Charging Improper Credit Card Fees to Visa and Mastercard

Before resorting to filing complaints against a business, please keep in mind that your actions can cause fines and penalties to be levied upon the business. In some cases, Visa imposes a $5,000 fine for the first offense of improper surcharging. In today’s difficult business climate, these fines could have serious implications for many business owners. We recommend to first contact the business owner to express your concerns regarding their surcharging practices. You may even want to refer them to our article, “Charging Your Customers to Use Credit Cards is a Bad Idea,” to help them understand the how they may be harming the future of their business. If all else fails, here is how you can report a business for charging to use credit cards incorrectly:

Visa

The easiest way to report a business for surcharging a Visa credit card improperly is to call the customer service line associated with the credit card used to make the purchase. Additionally, you can file a complaint directly with Visa by reporting a purchase issue here.

Mastercard

Mastercard recommends that consumers call the customer support line of your credit card to report improper surcharges. Additionally, you can call Mastercard’s direct customer support line at (800)-627-8372.

Bottom Line

Credit card fees are very annoying and no one likes to be surprised by them. Businesses are required to comply with state laws and card brand policies to do it correctly. We always recommend resolving your grievance directly with a business before resorting to formal complaints. In fact, you can help businesses save on fees by referring them to our list the best low-cost credit card processing companies. By helping them save on processing fees, you may be able to encourage them to stop adding surcharges.