New Jersey’s Assembly Financial Institution and Insurance Committee approved legislation last Friday that would prohibit merchants from charging “checkout fees” to consumers who use a credit card.
The legislation was sponsored by Assembly Democrats Gary S. Schaer, Vincent Prieto, Connie Wagner, Troy Singleton, Peter J. Barnes III, Daniel R. Benson and Angela Jimenez, according to The Paramus Post.
“This is just another swipe at the hard-working families of New Jersey,” Schaer said, The Paramus Post reports. “Credit cards have become an essential element of the family budget. Added surcharges are simply not reasonable to consumers who are counting every penny to make it through.”
New Jersey joins 10 other states, including New York, that have enacted similar legislation. Retailers could begin charging the fee last month, which is the result of a recent settlement between Visa, MasterCard, merchants and banks. In 2005, retailers filed a class-action lawsuit against the card companies, alleging that they colluded with banks to fix interchange rates unreasonably high. Under the settlement, which also involves a temporary reduction in the interchange rate, Visa and MasterCard agreed to change their policies to allow retailers to charge the new fee, which can range between 1.5 percent and three percent of the total purchase.
“Additional fees nowadays can mean a decrease in how much a consumer can spend on their families using their credit card,” Prieto said, according to The Paramus Post. “The amount of the surcharge may seem minuscule on paper, but in the family budget 1.5 to [three] percent could add up to a shorter grocery list or less to spend on gas. The legislation helps consumers take a stand against increased fees on already high credit card transaction costs.”
Some consumer advocates have expressed concern that the fee encourages New Jersey consumers to spend in New York, where the fee is prohibited.
“Consumers are the lifelines to rebuilding New Jersey business and economy,” Barnes said, The Paramus Post reports. “We must encourage consumer spending and help New Jersey families make every dollar in their budget count.”
The proposal was amended to allow the current practice of charging different prices for cash and credit transactions at gas stations, and the measure will proceed to Assembly Speaker Sheila Y. Oliver, who will decide when a floor vote will be held.