TALLAHASSEE, Fla.–A Florida law that regulates how merchants process credit card swipe fees and which had the backing of credit unions is a violation of the First Amendment, according to a ruling by the U.S. Court of Appeals for the Eleventh Court.
By a 2-1 vote, the court struck down a Florida statute that makes it a misdemeanor to impose a “surcharge” on a customer for using a credit card, but expressly allows the offering of a "discount" for paying in cash. According to legal analysts, the ruling appears to create a circuit split, and the U.S. Supreme Court could get involved. Earlier, the Second Circuit in September upheld a similar New York law.
In the decision, the majority wrote that "attempting to read Florida's no-surcharge law as a regulation of economic conduct rather than as a restriction on speech casts the judicial Theseus into the depths of a lexical labyrinth." In the dissent, Chief Judge Ed Carnes said the statute should be interpreted prohibit only a surprise price increase at the cash register if a customer uses a credit card, not price differences made clear on the shelf. "
The Florida attorney general's office has defended the statute as protecting consumers. CUNA has also weighed in to back the law, arguing that credit card use is an issue of security and convenience for consumers, creating more business for merchants. In its amicus brief, CUNA had said credit cards help underwrite programs beneficial to consumers, such as free checking accounts.
The law had been challenged by a group of small Florida retailers, consumer advocates, public interest groups, and major retailers that included Walgreens and Publix Super Markets. In its amicus brief, consumer groups said the Florida law prevented retailers from effectively communicating to consumers that using a credit card costs more than paying cash because merchants pay transaction fees to the credit card issuer. Consumers react more strongly to a "surcharge" than a "discount" and thus are more likely to change their behavior if the term "surcharge" is used, the consumer groups said.