TRENTON, N.J. — The New Jersey Senate has approved legislation that would prohibit businesses from imposing surcharges on debit card and gift card transactions, a measure supporters say would protect consumers from improper fees on everyday purchases.
The bill, sponsored by Senate Majority Leader M. Teresa Ruiz, D-Essex/Hudson, and Sen. James Beach, D-Camden/Burlington, would amend state law to ban sellers from charging surcharges on debit card and gift card transactions and establish enforcement standards for violations.
“Families continue to face rising costs, and fees on everyday transactions only add to the strain on household budgets, especially for those who rely on debit cards as their primary form of payment,” said Majority Leader Ruiz (D-Essex/Hudson). “New Jersey residents should not be penalized for choosing a more convenient way to pay, especially when they are using their own money rather than borrowing on credit. Prohibiting businesses from charging debit or gift card transaction fees and strengthening enforcement will help protect consumers, promote fairness, and put more money back into families’ pockets when they go out and support the community.”
Current federal law caps interchange fees for debit card transactions, and major card issuers such as Visa and Mastercard prohibit merchants from charging debit card surcharges. However, lawmakers said reports indicate some merchants continue to apply fees to debit card purchases because of confusion about existing regulations or payment software that automatically applies surcharges to all card transactions.
“Too many New Jersey residents are being wrongfully charged when they use a debit card to pay for their everyday expenses,” said Senator Beach (D-Camden/Burlington). “Businesses often add an extra charge for customers using credit cards to offset the transaction fees they must pay to card issuers. These fees should not be applied to individuals using debit cards, which cost businesses next to nothing to process. This is a simple, commonsense consumer protection measure we can put in place now to save people money every single day.”
Under current New Jersey law, businesses may not impose a credit card surcharge that exceeds the actual cost of processing the transaction. The legislation would expand consumer protections by specifically prohibiting surcharges on debit card and gift card purchases.
Violations would be considered unlawful practices under the New Jersey Consumer Fraud Act. Businesses found in violation could face fines, cease-and-desist orders issued by the attorney general, punitive damages and other penalties. Consumers affected by violations could also be awarded treble damages and legal costs.
The bill now advances for further consideration in the legislative process.
