(Adds comments from challengers' lawyer)
By Lawrence Hurley
WASHINGTON, Sept 29 The U.S. Supreme Court on
Thursday agreed to hear a challenge to a New York state law
barring retailers from imposing surcharges on customers who buy
with a credit card rather than cash, a measure merchants contend
violates their right to free speech.
The court will hear an appeal by a group of merchants to a
September 2015 ruling by the New York-based 2nd U.S. Circuit
Court of Appeals upholding the law. Nine other states have
similar laws. The justices took no action on two cases involving
similar challenges to Florida and Texas laws.
Merchants contend the laws violate retailers' rights to free
speech and due process under the U.S. Constitution's First
"These state laws attempt to keep consumers in the dark
about the high cost of credit cards. But the First Amendment
guarantees the right of merchants to keep consumers informed
and, just as importantly, the reciprocal right of consumers to
receive information. There's no good justification for these
laws," said Deepak Gupta, the merchants' lawyer.
The states have said their laws protect consumers, letting
customers rely on a retailer's posted prices rather than be
surprised at checkout, when they may resist changing their minds
New York Attorney General Eric Schneiderman, who is
defending the law, declined to comment.
Retailers have long complained about the cost of accepting
credit cards including "swipe fees," a percentage of a credit
card transaction the merchants pay to networks such as
MasterCard Inc and Visa Inc every time a credit
card is swiped to pay for a purchase. "Swipe fees" average about
2 percent of a purchase, according to the National Retail
Federation, which favors lowering these fees.
New York's law subjects merchants to a potential one-year
prison sentence and $500 fine for imposing credit card
Five merchants, including a Brooklyn ice cream parlor and a
hair salon near Binghamton, challenged it. In 2013, U.S.
District Judge Jed Rakoff sided with the merchants and blocked
enforcement of the law, saying it "perpetuates consumer
The New York-based 2nd U.S. Circuit Court of Appeals then
upheld the law in September 2015.
Several merchants, including CVS Health Corp and
Safeway Inc, filed a brief urging the high court to take up the
issue. Lawyers for the companies called New York's law a free
speech violation that "suppresses business, harms the economy
and disproportionately burdens low-income consumers."
The court will hear arguments and issue a ruling in its
coming term, which begins on Monday and ends next June.
(Reporting by Lawrence Hurley; Editing by Will Dunham)