Michigan Credit Card Surcharge Laws

Quick Summary:

• Credit card surcharging is legal in Michigan with proper disclosure requirements
• Brick-and-mortar businesses must post surcharge notices at store entrances and points of sale
• Online sellers must disclose surcharges where credit cards are first mentioned on websites
• Gas stations have special signage requirements with equal illumination and specific lettering size
• Surcharges cannot exceed the actual processing cost, capped at 4% federally (3% for Visa)

Michigan allows businesses to legally add surcharges to credit card transactions, but the state has specific transparency requirements that merchants must follow to remain compliant. These rules ensure customers know about additional fees before completing their purchases, protecting consumers from surprise charges while allowing businesses to recover credit card processing costs.

The ability to surcharge credit cards in Michigan stems from a 2013 class action lawsuit settlement that eliminated previous restrictions imposed by Visa and MasterCard. However, businesses must still follow both federal regulations and Michigan's specific notification requirements to avoid violations.

Legal Disclaimer: This information is for reference only and does not constitute legal advice. Consult with an attorney before implementing surcharge programs, as rules can change and enforcement varies.

Is Credit Card Surcharging Legal in Michigan?

Yes, credit card surcharging is legal in Michigan. The state does not have any laws prohibiting merchants from adding surcharges to credit card transactions, meaning businesses can implement these fees as long as they follow federal guidelines and card network rules.

According to the Michigan Attorney General's Consumer Protection guidance, Michigan merchants can legally surcharge credit card transactions but must meet strict disclosure requirements to protect consumers from hidden fees.

What's Allowed

Michigan businesses can implement credit card surcharges under these conditions:

• Add surcharges up to processing costs - fees cannot exceed what the business actually pays to process the transaction
• Follow federal caps - maximum 4% surcharge limit (though Visa restricts to 3%)
• Provide clear disclosure - customers must be informed before completing transactions
• Apply to credit cards only - surcharges are prohibited on debit and prepaid cards
• Use compliant signage - specific posting requirements for different business types

What's Not Allowed

Michigan law and federal regulations prohibit these surcharge practices:

• Surcharging debit cards - federal law prohibits fees on debit transactions
• Hidden or surprise fees - all surcharges must be disclosed before purchase
• Exceeding processing costs - cannot profit from surcharge fees
• Inadequate disclosure - failing to meet Michigan's specific signage requirements
• Discriminatory pricing - different surcharge rates for different card brands (with some exceptions)

Special Requirements for Different Business Types

Brick-and-Mortar Businesses: Must post surcharge notices at both the store entrance and at each point of sale terminal, clearly explaining which credit cards incur fees and the surcharge amount.

Online Businesses: Must disclose surcharge information on the website page where credit cards are first mentioned as a payment option, not just during checkout.

Gas Stations: Face additional requirements under Michigan law effective July 2017. When fuel prices differ based on payment method, stations must post both cash and credit prices on road signs with equal illumination, using lettering of the same style and at least half the size of the main price display.

Penalty For Non-Compliance

While Michigan doesn't specify particular penalties for surcharge violations, businesses can face consequences through multiple enforcement mechanisms:

Consumer Protection Violations: The Michigan Attorney General's Consumer Protection Team can investigate businesses for deceptive practices under the Michigan Consumer Protection Act if surcharge policies are misleading or inadequately disclosed.

Card Network Penalties: Visa, MasterCard, and other networks can impose fines, increase processing rates, or terminate merchant accounts for violations of their surcharge rules.

Customer Complaints: Consumers can report violations directly to card networks (Visa and MasterCard have online complaint systems) or file complaints with the Michigan Attorney General's office.

To report surcharge violations or file consumer complaints in Michigan, contact:

• Michigan Attorney General Consumer Protection Team
• Phone: 517-335-7599 or toll-free 877-765-8388
• Online: Consumer complaint form
• Mail: P.O. Box 30213, Lansing, MI 48909

Is Debit Card Surcharging Legal in Michigan?

No, debit card surcharging is illegal in Michigan and all 50 states. Federal law prohibits businesses from adding surcharges to debit card transactions, regardless of whether the debit card is run as debit or credit.

According to Michigan's consumer protection guidance, "the terms of that class action settlement, as well as the terms of MasterCard and Visa Merchant agreements, do not allow surcharges on debit or pre-paid card transactions."

This restriction applies to all debit cards, including:

• Traditional bank debit cards
• Prepaid debit cards
• FSA/HSA debit cards
• Gift cards with debit functionality

Businesses can still offer cash discounts that effectively lower prices for customers who choose debit over credit cards.

How Surcharging Laws in Michigan Have Changed Over Time

Pre-2013 Era: Credit card surcharging was effectively prohibited in Michigan due to contractual restrictions imposed by Visa and MasterCard in their merchant agreements.

2013 Settlement: A class action lawsuit against major card networks eliminated the blanket prohibition on surcharging, allowing merchants in Michigan and other states to begin adding fees to credit card transactions.

2017 Gas Station Requirements: Michigan enacted specific legislation requiring gas stations to clearly display price differences between cash and credit payments on their road signs, responding to consumer complaints about surprise fees at the pump.

Current Landscape: Michigan maintains a business-friendly approach to surcharging while emphasizing consumer transparency through disclosure requirements.

Unlike some states that have passed specific surcharge restrictions in recent years, Michigan has maintained its permissive stance while relying on existing consumer protection laws to prevent deceptive practices.

Michigan Credit Card Surcharge FAQs

Can Michigan restaurants add service charges to credit card payments?

Yes, Michigan restaurants can add service charges to credit card payments as long as they comply with the state's disclosure requirements. The charge must be posted at the restaurant entrance and point of sale, and cannot exceed the actual processing cost.

Do Michigan online businesses need special surcharge disclosures?

Yes, according to the Michigan Attorney General, online sellers must disclose surcharge information "on the website page where credit cards are first mentioned" rather than waiting until checkout. This prevents customers from discovering fees only after selecting items.

Are there different rules for small businesses versus large corporations in Michigan?

No, Michigan's surcharge disclosure requirements apply equally to all businesses regardless of size. Both small retailers and large corporations must post entrance signage, point-of-sale notices, and itemize surcharges on receipts.

Can Michigan gas stations charge different credit card fees for different fuel grades?

Gas stations can implement different surcharge structures for different fuel grades, but they must clearly display all pricing on their road signs with equal illumination and proper lettering size as required by Michigan law.

What should Michigan consumers do if they encounter hidden credit card fees?

Consumers can file complaints with the Michigan Attorney General's Consumer Protection Team at 877-765-8388 or report violations directly to card networks like Visa and MasterCard through their online complaint systems.

Do Michigan businesses need to notify credit card companies before starting surcharge programs?

Yes, federal regulations and card network rules require businesses to provide 30 days written notice to Visa, MasterCard, and other card issuers before implementing surcharge programs.