Credit Card Surcharge Unallowable in California and 9 other States

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Have you ever done business with someone who said you would need to pay an extra 3% for using a credit card vs paying cash?  Did you know that retailers in the state of California cannot add on a surcharge fee for using a credit card?  In fact, if they do, you as the consumer are entitled to 3 times the amount of the surcharge plus attorney’s fees and costs if you have to take it to court.

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There are also several other states that don’t allow the surcharges. Check the individual Civil Codes in your state to verify the language. Currently, there are laws limiting surcharging in: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas

I addressed this in my blog post about Fair And Reasonable but did not include the entire statute from the California code.

I have had this come up a lot lately so thought I would share the entire statue. For the other states mentioned I shared a portion of their statutes in the previous post.  Head over to that post to see those statutes.

Here is the entire statute which completely outlines your rights.  If you are a retailer in the state of California or other states that do not allow surcharges, you might want to familiarize yourself with this as well.

1748.1.(a) No retailer in any sales, service, or lease transaction with a consumer may impose a surcharge on a cardholder who elects to use a credit card in lieu of payment by cash, check, or similar means. A retailer may, however, offer discounts for the purpose of inducing payment by cash, check, or other means not involving the use of a credit card, provided that the discount is offered to all prospective buyers.

(b) Any retailer who willfully violates this section by imposing a surcharge on a cardholder who elects to use a credit card and who fails to pay that amount to the cardholder within 30 days of a written demand by the cardholder to the retailer by certified mail, shall be liable to the cardholder for three times the amount at which actual damages are assessed. The cardholder shall also be entitled to recover reasonable attorney’s fees and costs incurred in the action.

A cause of action under this section may be brought in small claims court, if it does not exceed the jurisdiction of that court, or in any other appropriate court.

(c) A consumer shall not be deemed to have elected to use a credit card in lieu of another means of payment for purposes of this section in a transaction with a retailer if only credit cards are accepted by that retailer in payment for an order made by a consumer over a telephone, and only cash is accepted at a public store or other facility of the same retailer.

(d) Charges for third-party credit card guarantee services, when added to the price charged by the retailer if cash were to be paid, shall be deemed surcharges for purposes of this section even if they are payable directly to the third party or are charged separately.

(e) It is the intent of the Legislature to promote the effective operation of the free market and protect consumers from deceptive price increases for goods and services by prohibiting credit card surcharges and encouraging the availability of discounts by those retailers who wish to offer a lower price for goods and services purchased by some form of payment other than credit card.

(f) This section does not apply to charges for payment by credit card or debit card that are made by an electrical, gas, or water corporation and approved by the Public Utilities Commission pursuant to Section 755 of the Public Utilities Code.

Eldonna Lewis Fernandez
Eldonna Lewis Fernandez
Veteran negotiation and contracts expert Eldonna Lewis-Fernandez, author of “Think Like a Negotiator,” has over 30 years of experience crafting killer deals both stateside and internationally, many in excess of $100 million. She’s currently the CEO of Dynamic Vision International — a specialized consulting and training firm that helps individuals hone negotiation skills — as well as a nationally regarded keynote speaker, session leader and panelist on the Art of Negotiation. Eldonna may be reached online at


  1. So are you saying that we cannot pass on the transaction fees we are charged, say from PayPal or other merchant services? Are these considered surcharges?

    It appears from above (d) that passing on merchant transaction fees is not the same as credit card surcharges.

    • Eldonna Fernandez says:

      Yes that is exactly what I am saying. You cannot “pass on” those fees. That is adding a charge to a client for using a credit card and unallowable. However, if your service costs say $200 and the credit card fee is $10, you can say the cost of the service is $210 and there is a discount for cash payment.

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