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Landlords, real estate owners and retail owners have experienced cuts into their bottom line as a result of having to absorb the costs of consumers using credit cards. Such landlords and business owners typically have to pay a percentage of each transaction to the credit card companies as a fee. Due to the high transaction fees charged by credit card companies, those fees can have a large impact on these businesses and can significantly increase the cost of doing business. A recent Eleventh Circuit case may have opened the door for business owners in Florida to more easily pass on these fees to the consumers.

For example, rent is traditionally paid to a landlord by check. These days, however, most tenants want the convenience of paying their rent online, and some may not even have physical checks or checkbooks. If a landlord begins accepting payment of rent by online credit card payments to accommodate tenant demands, then the transaction fees incurred monthly by the landlord can quickly add up and cut into the landlord’s profit. Similarly, smaller mom and pop stores who may not have the high volume of sales to support these fees can be overly burdened by credit card fees. That is why many small businesses try to pass that fee along to their consumers when they pay with credit cards via a credit card "surcharge fee."

In Florida, however, these landlords and retail owners have to use caution when attempting to charge different prices for cash and credit card transactions. Florida Statute Section 501.0117 prohibits Florida sellers or lessors from imposing "a surcharge on the buyer or lessee for electing to use a credit card in lieu of payment by cash, check or similar means." The statute, however, "does not apply to the offering of a discount for the purpose of inducing payment by cash, check or other means not involving the use of a credit card." This language appears to simply prohibit businesses from using the term "credit card surcharge" as they can essentially do the same thing and call it a "cash discount." By violating this statute, a person is guilty of a second degree misdemeanor, punishable by 60 days in jail or a fine of $500. See Fla. Stat. § 775.082 and Fla. Stat. § 775.083.

In November 2015, the Eleventh Circuit struck down Section 501.0117 as unconstitutional. The issue arose when Florida’s Attorney General gave four businesses cease and desist letters for imposing a "surcharge" on credit card transactions. The businesses challenged that the surcharge itself is legal in Florida, but the law unconstitutionally prohibited to use of the word "surcharge." The district court found in favor of the Attorney General and held that the statute was constitutional. On appeal, the Eleventh Circuit reversed and held that the statute was unconstitutional as it violated the businesses' First Amendment right to freedom of speech.

The crux of the case was whether the law regulated speech or conduct. If it regulated speech, then it invoked First Amendment scrutiny. If it regulated conduct, then then the level of scrutiny was significantly lower. The Court found that the law in fact, regulated speech. The Court reasoned that "[t]autologically speaking, surcharges and discounts are nothing more than two sides of the same coin; a surcharge is simply a 'negative' discount, and a discount is a 'negative' surcharge."

The Attorney General argued that the statute regulated conduct as it was meant to prohibit any "bait-and-switch" tactics, where consumers were not notified in advance that they would be charged an additional fee for using a credit card. The court disagreed with this interpretation and used the fact that "bait-and-switch" tactics are already regulated by Florida’' Deceptive and Unfair Trade Practices Act in support of its finding.

The statute was unable to pass the high level of scrutiny required by the First Amendment to regulate speech and the court accordingly struck it down. The Attorney General still has time to file a petition to the Supreme Court for a writ of certiorari to challenge the ruling. If the Attorney General elects not to challenge it, however, then business owners in Florida will soon have more leeway in passing along credit card "surcharges" to the consumer. While this may be burdensome to the consumers, it may help landlords and smaller businesses that are struggling with absorbing the credit card transaction fees as a part of their expenses.


1Dana’s Railroad Supply, et al. v. Bondi, No. 14-14426 (11th Cir. 2015).