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AG Kilmartin Urges Passage of Credit Card Surcharge Prohibition Legislation

Citing the legislation as an important consumer protection, Attorney General Peter F. Kilmartin today announced his support for 2013 H5213 "An Act Relating to Commercial Law – General Regulatory Provisions – Surcharges on Credit Card Transactions," sponsored by Representative John J. Lombardi. If passed, the legislation would prohibit retailers from imposing a surcharge on any consumer who uses a credit card in a transaction in lieu of cash or check. The legislation would not prohibit retailers from providing a discount for those who use cash or checks in transactions (i.e. gas stations).

As a result of a settlement in In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation (No. 05-MDL 1720), which occurred in United States District Court of the Eastern District of New York in November 2012, restrictions were removed that prevented retailers from passing on processing fees to consumers. As a result, on January 27, 2013, retailers may now impose a four percent surcharge on transactions that are paid by a credit card. Nine states have statutes that prohibit such practice and these statutes were in effect before the settlement occurred.

"While some retailers may choose not to impose such a surcharge, it is imperative that we take steps to protect our consumers from that possibility," said Attorney General Kilmartin in his letter of support to the House Committee on Corporations, which is scheduled to hear the bill this afternoon. "This is even more pressing as our neighbor states of Connecticut and Massachusetts already have this protection for their consumers. With Rhode Island retailers already facing loss of business to our border states, this act could potentially help keep business in Rhode Island."

Attorney General Kilmartin proposed an amendment to the legislation that would make the penalty a civil violation, versus a criminal penalty, with increased fines for those who violate the Act.

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