Author Topic: Supreme Court to Decide If It's OK to Call It a Surcharge  (Read 8615 times)

Wayward Son

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Supreme Court to Decide If It's OK to Call It a Surcharge
« on: January 10, 2017, 03:23:37 PM »
I came across this this analysis of the Supreme Court case of Expressions Hair Design v. Schneiderman, where they will decide if businesses can say that they will charge a surcharge for a credit card purchase, or if they can only say that they will give a cash discount. :)

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In many of these states, though, retailers are allowed to give discounts for customers who pay cash. In New York, for example, listing a sticker price of $32 for a haircut and offering a $2 discount for consumers who pay with cash is legal, but charging $30 for the cut and imposing a $2 surcharge on credit card transactions is not.

But does that law violate businesses’ free speech rights? Today, the plaintiffs in a Supreme Court case called Expressions Hair Design v. Schneiderman will argue that it does. At the heart of the struggle is whether — and how — merchants should be able to tell consumers about the swipe fees. Should stores be able to advertise a lower price and then add a surcharge at the cash register for buyers who want to use plastic, as the case’s plaintiffs are pushing for? Or should they have to build the swipe fee into the price?

Banning surcharges is necessary, according to the state, because it protects consumers against unfair practices by businesses, which might hide extra fees inside what they claim to be a credit card surcharge and pocket the difference. But the merchants claim that being forced to engage in these linguistic gymnastics is a violation of their First Amendment free speech rights. Although the state is claiming that the law simply regulates prices, the businesses are arguing that the statute is prohibiting them from communicating with their customers. They say that the difference between a surcharge and a discount is semantic and that the only thing that really separates the two is a label.

Somehow, the idea that it will take the Supreme Court to decide that saying you're charging $2 more for credit card purchase is illegal, while saying you're charging $2 less for cash is not, is a bit ludicrous. 

And filing this suit on free speech grounds--excuse me?  ???  Our ability to criticize the government and speak the truth means that Joe's Bar has the inalienable right to say that it costs you $2 to use a credit card?  ::)

What has this country come to?  :o

Pete at Home

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #1 on: January 10, 2017, 03:39:10 PM »
Why wouldn't it?   Why would the first amendment not prevent legislators from interfering with corporate truth-telling?

Seriati

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #2 on: January 10, 2017, 03:43:39 PM »
You can see how it got there though.  The only "adds on" that the government currently allows are for taxes and governmental fees, and even there if you look closely at your cable or telephone bill they are often hidden in the cost.  Could you imagine the crisis it would cause if a gas station could advertise $1 gasoline, then separately add the $1.50 per gallon of government taxes?

People aren't really used to the idea that using a credit card has a cost associated with it, they are poor at recognizing parasitic charges.  As it is now merchants largely eat the credit card charges, if they switch to "surcharges" I seriously doubt that they'll lower the price give that fee to the consumers.

Wayward Son

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #3 on: January 10, 2017, 03:48:28 PM »
I don't think it would necessarily not interfere with the first admendment, but it seems like a pretty trivial use of the law.

Saying you are charging $2 more to make a purchase one way, or $2 less in the opposite way, is logically equivalent.  To favor one expression over the other is pretty silly to begin with.

But then to say that not having the right to use one of those expressions is like impeding our right to criticize those in high power is hyperbole, too.  ::)  I mean, come on!  People have died to preserve our right to free speech.  Do you think they died to preserve Expressions Hair Design to say, "There is a $2 surcharge on credit card purchases" instead of "There is a $2 discount for cash purchases?"  :P

"I may disagree with what you say, but I'll defend to my death your right to use the word 'surcharge' instead of 'discount!'"  ::)

D.W.

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #4 on: January 10, 2017, 03:48:41 PM »
The only reason for such a law is the credit card lobbies were successful in getting the law to bury their fees from view.  We treat 'plastic' as cash today and never consider that the services cost the vendors in fees (think modem connection) and equipment (magnetic reader/keypad/chip reader/phone scanner, security to protect all this data, and so on). 

While a vendor COULD hide an up-charge and call it a credit card fee, it's the reverse that is taking place more often than not.  The credit card companies don't want you to realize they are the reason your item/service costs a little more.  It's now the cash payment that allows the vendor to profit a little more.
« Last Edit: January 10, 2017, 03:56:04 PM by D.W. »

Gaoics79

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #5 on: January 10, 2017, 04:22:21 PM »
Seriati to play devil's advocate, when retailers discriminate against credit card users, it is bad for customer morale and in my view is bad for business. So when a mom and pop convenience store tells me "cash only" but I am free to go withdraw $20 from the ABM (and eat a $3 service fee) to pay for my $1.25 candy bar, you can guess who is not getting my business and which store I am avoiding in the future.

But to the next point, it seems to me the ubiquity of credit cards must be a supercharge to the retail economy, as it is well understood that consumers spend much more with easy credit than they do if they must pay cash, especially physical cash. It's basic psychology. More credit card use must be a good thing for retailers.

So yes, the cc companies impose the burden of an added cost on the retailers, but where would they be without easy credit? Retailers that penalize credit card use may be killing the goose that lays the golden egg, no?

TheDrake

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #6 on: January 10, 2017, 04:55:57 PM »
Most retailers can structure the fee in. I think most of those announcing a surcharge are ones that resent the fees, not ones trying to give discounts to cash people, thus why they demand to expose the surcharge. If you don't like the fees, then by all means stop taking cards.

The legality I will entirely sidestep, as that is less interesting to me than why merchants can't just build this into their pricing seamlessly. Merchants need to stop looking at each customer's micro-purchase and trying to figure out how to make each transaction profitable, and rather focus on periodic margin overall.

To jason's point, I will say that anyone who only gets $20 from an ATM that isn't their home bank is a silly person, as are people who aren't always trying to carry $20 in cash.


Pete at Home

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #7 on: January 10, 2017, 05:09:56 PM »
Seriati to play devil's advocate, when retailers discriminate against credit card users, it is bad for customer morale and in my view is bad for business. So when a mom and pop convenience store tells me "cash only" but I am free to go withdraw $20 from the ABM (and eat a $3 service fee) to pay for my $1.25 candy bar, you can guess who is not getting my business and which store I am avoiding in the future.

But to the next point, it seems to me the ubiquity of credit cards must be a supercharge to the retail economy, as it is well understood that consumers spend much more with easy credit than they do if they must pay cash, especially physical cash. It's basic psychology. More credit card use must be a good thing for retailers.

So yes, the cc companies impose the burden of an added cost on the retailers, but where would they be without easy credit? Retailers that penalize credit card use may be killing the goose that lays the golden egg, no?

Let the market bear that out, then.  In the mean time, it's protected speech, or should be.  If I want to sacrifice my profits to make a statements about gouging credit cards, that's what the first Amendment's for, not freaking porn.  Don't get me wrong, 1a does protect porn, but that's a side effect.

Seriati

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #8 on: January 10, 2017, 05:13:09 PM »
D.W., you wrote what I thought I wrote, which is why I liked it.

Seriati to play devil's advocate, when retailers discriminate against credit card users, it is bad for customer morale and in my view is bad for business. So when a mom and pop convenience store tells me "cash only" but I am free to go withdraw $20 from the ABM (and eat a $3 service fee) to pay for my $1.25 candy bar, you can guess who is not getting my business and which store I am avoiding in the future.

The point though Jasonr is not to discriminate but to disclose.  They wouldn't make you go get cash and eat a fee, instead your $1.25 candy bar would be marked up at the register by the actual fee your credit card company charges to the vendor.  If it's $0.50 per transaction it would total $1.75 (plus tax - presumably on the whole $1.75, as I'm not aware there is a sales tax deduction for the credit fees), if it's 4% (which is probably low, given that some rewards programs occasionally give that much back) then it would be $1.30 - presumably plus tax.

Can you explain why its fairer for the vendor to get different amounts of revenue based on your convenience in payment methods?  It's clearly to the government's benefit, as I have no doubt they've been accruing tax on the fee adjusted total rather than on the product cost (which is also a reason they are fighting allowing it to be called a surcharge).

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But to the next point, it seems to me the ubiquity of credit cards must be a supercharge to the retail economy, as it is well understood that consumers spend much more with easy credit than they do if they must pay cash, especially physical cash. It's basic psychology. More credit card use must be a good thing for retailers.

shrug, maybe.  It certainly adds a big chunk of debt financed spending (though I'm not convinced that's truly a good thing).  Pyrtolin's old arguments that we'd be better off using equity financing make a lot sense on that point (even if they didn't make sense on how we'd get that equity financing).


D.W.

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #9 on: January 10, 2017, 05:23:01 PM »
I just didn't read yours before bashing reply.  it chirped "warning others have posted" at me...

Seriati

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #10 on: January 10, 2017, 05:52:40 PM »
Umm.. I meant, it was what I meant to write (but failed to do!)

Gaoics79

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #11 on: January 10, 2017, 07:12:19 PM »
Seriati as I see it from a consumer's standpoint, differential prices for credit cards is a bush league move that is a massive turnoff to customers and a deterrent to credit card use. It is something you see in mom and pop retailers or shady vendors - not in a modern reputable store. It is as much about protecting the credit card brand and its universality as anything, as well as the consistency of the retail experience. I am surprised credit card companies can't block this practice and make non discrimination a condition of using their brand and accepting their cards.

And my point stands - retailers feast on the bounty of abundant credit and universality of plastic over cash. Do they really want to go back to a time when customers needed to have cash equal to their purchase in hand? I say the aggregate benefit of credit card fees must massively compensate for any losses.

TheDeamon

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #12 on: January 11, 2017, 03:48:43 AM »
D.W., you wrote what I thought I wrote, which is why I liked it.

Seriati to play devil's advocate, when retailers discriminate against credit card users, it is bad for customer morale and in my view is bad for business. So when a mom and pop convenience store tells me "cash only" but I am free to go withdraw $20 from the ABM (and eat a $3 service fee) to pay for my $1.25 candy bar, you can guess who is not getting my business and which store I am avoiding in the future.

The point though Jasonr is not to discriminate but to disclose.  They wouldn't make you go get cash and eat a fee, instead your $1.25 candy bar would be marked up at the register by the actual fee your credit card company charges to the vendor.  If it's $0.50 per transaction it would total $1.75 (plus tax - presumably on the whole $1.75, as I'm not aware there is a sales tax deduction for the credit fees), if it's 4% (which is probably low, given that some rewards programs occasionally give that much back) then it would be $1.30 - presumably plus tax.

IIRC most point of sale service providers charge a base fee + percentage thereafter. Sometimes it is specific to the CC branding itself. At one point, I seem to recall VISA being fee + percentage, while MasterCard was just a fee, not sure about American Express. But that difference was enough of one to make some state universities twitchy about which cards people could use to charge their semester's tuition against, because of the differences in the fees they'd have to pay in return going from one to the other.

Pete at Home

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #13 on: January 11, 2017, 09:55:47 AM »
Seriati as I see it from a consumer's standpoint, differential prices for credit cards is a bush league move that is a massive turnoff to customers and a deterrent to credit card use. It is something you see in mom and pop retailers or shady vendors - not in a modern reputable store. It is as much about protecting the credit card brand and its universality as anything, as well as the consistency of the retail experience. I am surprised credit card companies can't block this practice and make non discrimination a condition of using their brand and accepting their cards.

And my point stands - retailers feast on the bounty of abundant credit and universality of plastic over cash. Do they really want to go back to a time when customers needed to have cash equal to their purchase in hand? I say the aggregate benefit of credit card fees must massively compensate for any losses.

Yes, that's why prostitution and illegal drug sales are lagging in this poor economy ;)

Seriati

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #14 on: January 11, 2017, 10:19:29 AM »
Seriati as I see it from a consumer's standpoint, differential prices for credit cards is a bush league move that is a massive turnoff to customers and a deterrent to credit card use. It is something you see in mom and pop retailers or shady vendors - not in a modern reputable store.

How much of your view is influenced by "how things have always been done"?  I honestly don't see a reason that the costs should be hidden, or in a three way transaction that the "right" answer is for the merchant to always eat the cost.  They literally can not "bake it in" without being complicit in overcharging their cash paying customers on occasion.

I think I'm also influenced by knowing that the history of this involves the credit card companies actively lobbying for laws and regulations to suppress these kinds of adjustments, and their contracts with vendors are often non-negotiable on agreeing not to disclose the payment as a surcharge.  That leaves a vendor with the principled choice of alienating every customer whose come to rely on a credit card, or else caving into the demand.

I'm not trying to suppress the use of credit, but I don't see any reason a consumer shouldn't be given the clear choice of using cash to get a discount or paying for the convenience of using credit cards.

I also don't see the history of credit card companies with respect to at risk communities as a glowing endorsement of their practices.  How many students have been issued more than 10 cards?  How many poor people have cards that they've had maxed for years and are only able to make the minimum payments?  A one time cash windfall that leads to a never ending annuity to the credit card company does not match with your idea of how this credit benefits the economy, in fact its a drag as it pulls more money out of the poor community than it initially put in.  How different really, for the extremely poor, is that from pay day lending?

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It is as much about protecting the credit card brand and its universality as anything, as well as the consistency of the retail experience. I am surprised credit card companies can't block this practice and make non discrimination a condition of using their brand and accepting their cards.

That's kind of the issue, they've been incredibly aggressive in their contracts on suppressing a vendors ability to even tell consumers the amount of the fee, and they've lobbied to good effect as well.  Can you name any other third party payments that don't have to be disclosed to a consumer?  Why do credit card companies get a special secrecy right that other vendors or providers of financial services do not?

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And my point stands - retailers feast on the bounty of abundant credit and universality of plastic over cash.

Is that really a good thing?  Many people use credit to shift income over time, which just changes the timing of when the money hits the economy but not the amount, in exchange a parasitic organization bleeds out a percentage of all those transactions and removes the capital from that local economy.

The only place where this "feast" is even plausibly a gross benefit to the economy, is for people who run up debts and only pay the debt service.  Credit cards are very low down on the scale of most cost efficient sources of credit.  Like I said, this essentially nothing more than the economy issuing an annuity to the credit card company, which would not be able to stay in business if they weren't removing more than the put in.  Looks like a long term negative, not a positive.  Maybe I'm misanalysing the real term trend here, but I'm not seeing how.

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Do they really want to go back to a time when customers needed to have cash equal to their purchase in hand? I say the aggregate benefit of credit card fees must massively compensate for any losses.

Access to capital is vital.  I'm just not sure I agree that our "American" solution of that coming primarily through the least efficient forms of debt is the right answer.  Anything that shows people the real costs would, to me, be a real improvement, even if nothing else changes.
« Last Edit: January 11, 2017, 10:21:52 AM by Seriati »

TheDrake

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #15 on: January 11, 2017, 10:28:41 AM »
As a libertarian, I want to agree that the owners should say or do anything they please. But then, I also believe that the credit card companies should be able to say or do anything they please. So, when these two free entities negotiate the agreement that says, for us to process payments at your location, you must do A, B, C. I don't think the government should wipe out the opportunity to do so.

Would any agreement including non-disclosure of rates, etc, survive such an interpretation?

Personally, any business that sets a minimum for credit card use, a surcharge for credit use, or a discount for cash is begging for me to go somewhere else. And I'm well aware of the costs already, I don't need them to educate me. I'll try to use cash for small purchases on my own without them waving a stick at me.



Pete at Home

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #16 on: January 11, 2017, 11:38:40 AM »
I think it's a defect in the language when being a "libertarian" means placing a coercive contract above freedom of speech.  Ultimately this case is about transparency. 

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Would any agreement including non-disclosure of rates, etc, survive such an interpretation?

If not, would that be a bad thing?  Governments exist to secure our rights, and freedom of speech is more fundamental than freedom to contract.  If surcharges are a bad business model, then let the market show that.

D.W.

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #17 on: January 11, 2017, 11:45:48 AM »
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Governments exist to secure our rights, and freedom of speech is more fundamental than freedom to contract.
  I suppose that depends on the benevolence of your leaders.  I have an easier time imagining a decent life where I need to watch what I say or risk offending the crown, than one where contracts are not offered or honored and people just take as much as they can get away with before being punished by someone mightier than they...

Pete at Home

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #18 on: January 11, 2017, 11:53:51 AM »
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Governments exist to secure our rights, and freedom of speech is more fundamental than freedom to contract.
  I suppose that depends on the benevolence of your leaders.  I have an easier time imagining a decent life where I need to watch what I say or risk offending the crown, than one where contracts are not offered or honored and people just take as much as they can get away with before being punished by someone mightier than they...

How long do you suppose it would take for contracts to be dishonored, if speech against powerful contract breakers could be prohibited?

The need to honor contracts is an outgrowth of freedom of speech.  Freedom of contract means the right to form a contract.

D.W.

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #19 on: January 11, 2017, 12:17:58 PM »
I'm glad we have both.  I'd have to think about it more than you if ordered to select one.

Pete at Home

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #20 on: January 11, 2017, 12:42:39 PM »
I'm glad we have both.  I'd have to think about it more than you if ordered to select one.

WHen I said speech should trump contract, I wasn't proposing that we do away with either. only in the very narrow area where they conflict.

Seriati

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #21 on: January 11, 2017, 12:47:33 PM »
D.W., not sure you're really responding to Pete at Home in the way you think.  Would it be okay for two people to sign a contract to refuse to testify about a crime that harmed a third person?  Why do you think the "collusive" agreement between a credit card company and vendor should trump any right of the consumer?  Normally, we don't honor contracts that are deliberately crafted against public policy. 

I've seen estimates of these fees as anywhere from 1.5% to 6% of the cost of the transaction.  Do you think its fair that you are paying extra sales tax because that fee is hidden?  If you offered to perform a service for someone for $10,000 (based on your costs, and needs), is really reasonable that because they choose to use a credit card instead of a check that you have to pay potentially $600 of that amount to a third party?  That you can't even tell the person, that you'll take a check for $10k, but will have to add $600 if they want to use their credit card?

D.W.

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #22 on: January 11, 2017, 12:47:46 PM »
What I mean Pete, is you seem quite convinced that speech is the more important.  I'm not.  I didn't mean you wanted to take one away...

D.W.

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #23 on: January 11, 2017, 01:04:00 PM »
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Would it be okay for two people to sign a contract to refuse to testify about a crime that harmed a third person? 
OK?  I encourage it.  Evidence of a crime always makes prosecution go more smoothly.  You’re losing me on this line of explanation.

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Why do you think the "collusive" agreement between a credit card company and vendor should trump any right of the consumer?
First, it would be customary to explain how what I said leads to this, but I’ll try to follow you on this leap as best I can.

I don’t believe the rights of the consumer have been infringed upon.  They are being overcharged because they are having a (potential but high probability) charge passed along to them by the vendor so that this vendor can pay for the credit card service.

Do we have “the right” to know that price would be lower if not for the fee the credit card company charges?  I don’t see that we do.  This is the market in action.  If the total cost is too high, we as a customer don’t buy it or go to a competitor. 

Should the vendor have “the right” to offer us a lower “cash only” option and explain to the customer that this is the ACTUAL cost and the only reason the cost is typically higher is the almost constantly ignored (but accepted) fee tacked on by the credit card company?  A fee, they are not allowed to pass directly onto you and are contractually obligated to absorb, there by driving their own pricing up?  Yes, I think the vendor should have that right, and will have that right at the end of this case.

I was only making the absurdist point (IMO) that if I had to chose to live under a system with only one of those two rights (contract or speech) I am not as sure as Pete on the ramifications of such societies and my comfort within then.  It was an aside, not informative as to the issue at hand.

Pete at Home

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #24 on: January 11, 2017, 01:09:16 PM »
What I mean Pete, is you seem quite convinced that speech is the more important.  I'm not.  I didn't mean you wanted to take one away...

What I mean specifically, and I suspect you will agree when you think it through, is that speech about contracts is more important to the preservation of an honest contract economy, than enforcing contractual silence about contracts.

There are contracts that actually insert terms like you can't complain publicly if your contracting partner cheats or defrauds you, but have to go to silent litigation.

Transparency, consent, and reasonableness are fundamental for a functioning economy of contracts.  by voiding pound of flesh clauses, and gag clauses, we not only make for a freeer society, but also a society where contracts can thrive, where people don't need to run to an expensive lawyer every time they add a gismo to their browser.

D.W.

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #25 on: January 11, 2017, 01:12:10 PM »
I'm not disagreeing with that.  I was talking about a system devoid of one of those.  Your post above requires both and only questions priorities.  Either way, I was making a flippant point you seem to be trying to expand upon or extrapolate from. 

I had no point as it relates to this topic...  It was a nonsense hypothetical.

Pete at Home

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #26 on: January 11, 2017, 01:20:51 PM »
We cross posted on the last point, so confusion clarified.

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Do we have “the right” to know that price would be lower if not for the fee the credit card company charges?  I don’t see that we do.  This is the market in action.  If the total cost is too high, we as a customer don’t buy it or go to a competitor. 

I agree the customer doesn't have "the right" to know, but has IMO the right to negotiate with the seller to know.  In other words, a contract that prohibits the seller from giving a price breakdown, violates the customer's potential right as well as the seller's right.

Seriati

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #27 on: January 11, 2017, 01:31:59 PM »
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Would it be okay for two people to sign a contract to refuse to testify about a crime that harmed a third person? 
OK?  I encourage it.  Evidence of a crime always makes prosecution go more smoothly.  You’re losing me on this line of explanation.

Maybe I'm misunderstanding.  You'd be okay with the mafia entering into contracts with witnesses that prohibit said witnesses from testifying?  What possible reason would a state have for enforcing such a contract (remember, contractual validity is expressly a creation of a state, and is intended to serve the interests of the state and/or the public).

D.W.

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #28 on: January 11, 2017, 01:35:19 PM »
I don't think the customer enters into it.  Other than being the motivation for the current contractual arrangement.

We as customers feel entitled to make purchases with cash or plastic.  We do not accept that paying with plastic should cost us extra.  We let ourselves believe that all those technical knicknacks and phone / data lines required and PC's with security to protect our credentials from being stolen is somehow all the responsibility of the credit card companies.  We don't see it as a burden on the vendor.

This was, after all, the intent of the credit card companies.  That we treat it not only as "the same as" money, but as even more convenient than money.  Maybe even "less real" than cash.  We find it easier to overspend with plastic.  Even if we had our whole paycheck in cash in that wallet (most of us) would be hesitant to spend it all in one go putting our monthly budget at risk.  Charging it though?  "That's different!"


What is up for debate, is if the vendor has the right to remind us, or educate us, that the "standard cost" is inflated to allow for the use of those credit cards that are so ubiquitous.  They are prohibited contractually from soliciting your participation in a boycott of those credit cards.  They want to inform you (as a form of protest against those credit card companies) that you are entitled to a lower price if you both cut out this invisible middle man.

Should they be permitted to do so?  I think so.  They aren't however championing MY rights as a customer.  They are either attempting to use me as leverage to negotiate smaller fees paid to the credit card company, or are feeling guilty for "ripping off" their cash customers.  The market has already shown we were cool with absorbing this fee.  Just as most vendors are cool with the occasional windfall of a high amount cash transaction.

D.W.

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #29 on: January 11, 2017, 01:36:35 PM »
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Maybe I'm misunderstanding.
You are.  I'm saying that such a contract is meaningless if it is evidence of conspiracy to commit a crime.  I'm OK with letting criminals entrap themselves.

Nothing in my hypothetical or the one you suggested makes a contract negate other laws.

Pete at Home

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #30 on: January 11, 2017, 01:38:43 PM »
I know other vendors that simply don't allow a credit card to be used for less than $10

D.W.

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #31 on: January 11, 2017, 01:40:01 PM »
Several of our gas stations have a separate listing for "cash".  They don't post it as a discount or the other fee as a surcharge. 

TheDrake

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #32 on: January 11, 2017, 02:09:40 PM »
The transaction is part of the product. To make it look like a "tax" is to deny the real benefits it provides against theft, fraud, transaction record, etc. I still say that if merchants really, really, hate the contract terms, they should go cash only and use their market power to get the credit companies to change their terms.

I think you should be allowed to negotiate to limit your own speech, and you should be held to it. Even when I hate it, like the myriad settlements of IP lawsuits that include gag orders. Or non-disparagement clauses. All these have been challenged and upheld under first amendment, AFAIK.

If that is onerous, then don't take the severance or don't settle your lawsuit. Lose or win, you have not have bartered away the ability to say what a terrible person/entity your antagonist is.

Also, if fees are completely passed on, then aren't the credit card users actually subsidizing the cash customers by absorbing the hidden costs of having to go to the bank for change and make deposits?

Fenring

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #33 on: January 11, 2017, 02:16:00 PM »
If retailers are overwhelmingly pressured to accept such agreements then the public doesn't have the choice to pay the fees or not; i.e. to use their credit card or not knowing its added cost. It kind of sounds like a price fixing scheme where the market as a whole raises prices by some percentage to accommodate the credit card companies. Contracts between businesses and CC companies aren't even negotiated in good faith anyhow, because if all CC companies have the same policy to charge a fee then the retailer is stuck and is forced into the contract. The two do not have equal negotiating power here, and there is no 'union' of small companies that I know of that collectively bargains with CC companies and banks.

CC companies supposedly make their money from interest payments, so it seems like nothing more than fleecing businesses and the public to charge a fee on top of that. We are well past the point where credit cards can be regarded as a luxury item that is fancy to have; it's basically essential now, and I think the system has not yet been set up to recognize this.

Seriati

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #34 on: January 11, 2017, 02:19:24 PM »
This was, after all, the intent of the credit card companies.  That we treat it not only as "the same as" money, but as even more convenient than money.  Maybe even "less real" than cash.  We find it easier to overspend with plastic.  Even if we had our whole paycheck in cash in that wallet (most of us) would be hesitant to spend it all in one go putting our monthly budget at risk.  Charging it though?  "That's different!"

It's actually worse than that though.  The credit card companies offer us "rewards" and cash back programs to make us think we're actually benefiting by their presence.  In fact all of those rewards are paid for by their adding the price to each transaction we enter into on their card.

Effectively, because they have colluded to prevent you as the consumer from seeing the real costs, they can now add a payment on top to make it look as if the credit card is cheaper on net.  If you have a choice between paying 100% cash, or getting 1% cash back from paying credit, you actually have an incentive being provided to harm the vendor and yourself in favor of the credit card company that has been poorly disclosed.

If you think this is legitimate then explain why the balance of our disclosure laws and rules go the other way?  The idea in almost all other contexts is that the consumer has to be provided material information or else the vendor faces liability, yet here they are not permitted to share it or face liability (NY, for instance can punish a vendor with a $500 fine or a year in jail for applying a credit surcharge).

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What is up for debate, is if the vendor has the right to remind us, or educate us, that the "standard cost" is inflated to allow for the use of those credit cards that are so ubiquitous.
What is up for debate is if a contractual gag order should be allowed to trump your right to receive material information about a purchase, and a vendor's right to convey it.

What should be up for debate is whether a contract to insert a hidden cost should be permissible.  Would it be okay for an activist group to enter into a contract with a vendor that causes a donation to their cause to be included in the price of every product and bars the vendor from disclosing it?  Does it matter if its the NRA? or Planned Parenthood?  Or the Society to abuse small animals?

Could someone market their meat as raised humanely, but not disclose that there is a mandatory payment included in the price that goes to a group advocating the legalization of dog fighting?

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They are prohibited contractually from soliciting your participation in a boycott of those credit cards.

They are also prohibited from encouraging you to use a card that charges 1.5% instead of 6% by agreeing  to split the savings with you.

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They aren't however championing MY rights as a customer.  They are either attempting to use me as leverage to negotiate smaller fees paid to the credit card company, or are feeling guilty for "ripping off" their cash customers.  The market has already shown we were cool with absorbing this fee.  Just as most vendors are cool with the occasional windfall of a high amount cash transaction.

There's no doubt they are pursuing their own interests, they are however also pursuing yours.  The current rules allow for credit card companies to run excessive fees (forcing prices higher) and split off the profit to you, in fact they protect the credit card companies' "right" to do so, by banning the sharing of information between you and the vendor that might allow you to reach a better deal.  How can that not be a violation of your rights?
« Last Edit: January 11, 2017, 02:22:01 PM by Seriati »

D.W.

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #35 on: January 11, 2017, 02:23:36 PM »
I don't believe all offenses, or things I find offensive, are a violation of my rights.  ;)

TheDrake

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #36 on: January 11, 2017, 02:36:00 PM »
"Their product is so valuable to me that I can't do without it. They are charging me too much."

*headslap*

Gaoics79

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #37 on: January 11, 2017, 02:36:28 PM »
Has anyone actually studied the data and performed an actual cost / benefit analysis? To me it is a simple question of whether the benefit of ubiquitous credit in greater consumer sales outweighs the aggregate cost of fees paid by the merchants. If it does, then as I see it, merchants bite the hand that feed them when try to undermine that system.

Seriati

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #38 on: January 11, 2017, 02:43:45 PM »
jasonr, I think people misunderstand the impact of borrowing.  Borrowing to invest is a net good, it allocates capital to effective uses more quickly than savings and lets opportunities be seized instead of lost.  If well done the resulting economic activity is a great boon.

Borrowing to consume is a losing game.  There is no long term way that a short term boost in consumerism that is paid for by a long term suppression of consumerism leaves you net ahead.  It might be okay to smooth out an otherwise undesirable dip but it's not a recipe for long term gain.

TheDrake

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #39 on: January 11, 2017, 02:44:34 PM »
To the merchant, the calculation should be easy. For every lost CC sale for doing cash only (or demanding a surcharge), you lose your entire margin - lets randomly call it 15%. But, you gain back ~3% for every sale converted to cash. It is a heck of a gamble anyway. Seems to me that if you lose even 20% of your CC sales over your obsession to free speech and hatred of the CC companies, you're going to lose money for it.

The thinner your margins, the more you are concerned. If you are eking it out in a failing business, that's where you care the most.

Let's toss in another grenade - what's to say that a merchant can't charge MORE than the CC company to CC users and imply that the CC company is responsible for the full amount? Given the complexity of the actual fee calculations, I find this plausible.

Pete at Home

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #40 on: January 11, 2017, 02:50:52 PM »
A side effect of the transaction is oligarchic reverse welfare.  Money is systematically transferred from the poor, who are most likely to pay cash, to the wealthy, who are most likely to have the most lucrative rewards program.  So that's another reason why the government should refuse to collaborate in any contractual scheme to keep the costs from consumers' eyes.

Pete at Home

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #41 on: January 11, 2017, 02:52:33 PM »
To the merchant, the calculation should be easy. For every lost CC sale for doing cash only (or demanding a surcharge), you lose your entire margin - lets randomly call it 15%. But, you gain back ~3% for every sale converted to cash. It is a heck of a gamble anyway. Seems to me that if you lose even 20% of your CC sales over your obsession to free speech and hatred of the CC companies, you're going to lose money for it.

The thinner your margins, the more you are concerned. If you are eking it out in a failing business, that's where you care the most.

Let's toss in another grenade - what's to say that a merchant can't charge MORE than the CC company to CC users and imply that the CC company is responsible for the full amount? Given the complexity of the actual fee calculations, I find this plausible.

Then the court rules for the credit card company, of course, because freedom of speech is not freedom to deceive.

Pete at Home

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #42 on: January 11, 2017, 02:55:01 PM »
Has anyone actually studied the data and performed an actual cost / benefit analysis? To me it is a simple question of whether the benefit of ubiquitous credit in greater consumer sales outweighs the aggregate cost of fees paid by the merchants. If it does, then as I see it, merchants bite the hand that feed them when try to undermine that system.

it's a speech issue, and we can bark at the hand the feeds us.

Gaoics79

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #43 on: January 11, 2017, 06:16:00 PM »
Really Pete? Speech? As in first amendment?

I don't get that. To me it seems like a straightforward contractual issue. You use the Visa brand and system, you play by their rules, no? If a store doesn't want to play ball they can go cash only.


Pete at Home

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #44 on: January 11, 2017, 06:53:05 PM »
Really Pete? Speech? As in first amendment?

I don't get that. To me it seems like a straightforward contractual issue. You use the Visa brand and system, you play by their rules, no? If a store doesn't want to play ball they can go cash only.

In the OP, the issue before SCOTUS is speech.  "You use the Visa brand and system, you play by their rules, no?"

If it's that simple, then why are the credit card companies relying on the supporting legislation?

TheDeamon

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #45 on: January 11, 2017, 10:54:48 PM »
Thing is, my understanding is this isn't over contract law, this is over a law passed by the State of New York making them unable to call it a surcharge.

TheDrake

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #46 on: January 12, 2017, 01:45:12 PM »
My understanding of this issue was a little dated, it turns out. Visa and MC, at least. They settled a lawsuit in 2013 that claimed that they were conspiring to fix interchange fees. As part of the settlement, they agreed to allow surcharges. Then that settlement was thrown out in 2016. The surcharging was actually the CC's idea to avoid lowering rates.

Also interesting to see Wal-Mart having to sue someone for being unfair to them in negotiations. I'm surprised the giant retailers

This source is from one of the plaintiffs in that suit. Also interesting is that the EU capped swipe fees at 0.3%

https://nrf.com/advocacy/policy-agenda/swipe-fees

Pete at Home

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #47 on: January 12, 2017, 02:46:00 PM »
In the context of the EU law, I think that having consumers know what's being charged here makes the communication (so long as it's accurate as to the amount charged) a first amendment issue.  Not just freedom of speech, but right of the people to petition the government for redress. They can't do petition without knowing how they are being screwed.
« Last Edit: January 12, 2017, 02:48:23 PM by Pete at Home »

TheDrake

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #48 on: January 12, 2017, 03:48:14 PM »
The merchants are the only ones getting "screwed" in the scenario, and they are quite well aware of how much they are paying.

I don't get to know how much I'm getting "screwed" by freight charges in a brick and mortar either. Or any other cost component of the thing I buy. Nor the total margin. All the consumer needs to know is whether that good or service is worth X dollars to them. Cost components are irrelevant to the buying decision. You do need to know how much something costs if it is a direct fee, like at ATMs. People complain about those rates too, but its not worth getting emotional over - just decide if finding an ATM without fees is worth $3 to you. Or change banks to one that will reimburse all ATM fees. Or just pay with your credit/debit card. :)


Pete at Home

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Re: Supreme Court to Decide If It's OK to Call It a Surcharge
« Reply #49 on: January 12, 2017, 03:58:48 PM »
The merchants are the only ones getting "screwed" in the scenario, and they are quite well aware of how much they are paying.

I don't get to know how much I'm getting "screwed" by freight charges in a brick and mortar either.

If the seller wants to tell you, you have a right to know.  If you don't want to exercise that right, that's your call.  But you seem essentially to be saying people don't have freedom of speech if they disagree with you, because that would make them wrong.