Quick Summary:

• Surcharging credit cards is legal in New Jersey with strict cost-of-acceptance restrictions
• Surcharge cannot exceed merchant's actual processing costs (no profit allowed)
• Comprehensive disclosure requirements for all transaction types
• Law signed by Governor Murphy in August 2023 (A4284/S3508)
• Violations subject to Consumer Fraud Act penalties

New Jersey enacted comprehensive credit card surcharge legislation in 2023, joining Nevada, New York, and South Dakota as states that specifically limit surcharges to the merchant's actual cost of acceptance. Governor Phil Murphy signed the law to protect consumers from unfair practices and ensure transparency, particularly for low- and moderate-income families. New Jersey's approach emphasizes consumer protection while allowing businesses to recover legitimate processing costs without profiting from surcharge fees.

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 vary by business type.

New Jersey Credit Card Surcharge Laws

Quick Summary:

• Surcharging credit cards is legal in New Jersey with strict cost-of-acceptance restrictions
• Surcharge cannot exceed merchant's actual processing costs (no profit allowed)
• Comprehensive disclosure requirements for all transaction types
• Law signed by Governor Murphy in August 2023 (A4284/S3508)
• Violations subject to Consumer Fraud Act penalties

New Jersey enacted comprehensive credit card surcharge legislation in 2023, joining Nevada, New York, and South Dakota as states that specifically limit surcharges to the merchant's actual cost of acceptance. Governor Phil Murphy signed the law to protect consumers from unfair practices and ensure transparency, particularly for low- and moderate-income families. New Jersey's approach emphasizes consumer protection while allowing businesses to recover legitimate processing costs without profiting from surcharge fees.

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 vary by business type.

Is Credit Card Surcharging Legal in New Jersey?

Yes, credit card surcharging is legal in New Jersey, but with strict cost-of-acceptance limitations. Under A4284/S3508, signed by Governor Phil Murphy on August 18, 2023, merchants can impose surcharges on credit card transactions, but the surcharge cannot exceed the actual amount the merchant pays to process the payment.

New Jersey's law specifically prohibits businesses from using surcharges as a profit center. According to Acting Director of Consumer Affairs Cari Fais, the law "allows the Division to take action against merchants that use credit card surcharges to make a profit." This makes New Jersey one of four states (along with Nevada, New York, and South Dakota) with cost-of-acceptance restrictions.

The law applies to all sales, leases, or rentals of goods (except motor fuel) and services of any kind, with comprehensive disclosure requirements across all transaction channels.

What's Allowed

New Jersey businesses implementing credit card surcharges can:

• Charge up to actual processing costs - typically 1.5-3% for most merchants
• Apply to credit cards only - Visa, Mastercard, American Express, and Discover
• Use across all transaction types - in-person, online, phone, and mobile app transactions
• Recover legitimate fees - interchange fees, processing costs, and gateway charges
• Implement percentage-based fees - calculated as percentage of transaction total

What's Not Allowed

New Jersey businesses cannot:

• Exceed actual processing costs - no profit allowed on surcharge fees
• Surcharge debit cards - prohibited under federal Durbin Amendment
• Apply to motor fuel sales - gasoline and diesel transactions are exempt
• Hide surcharge information - comprehensive disclosure required before charges
• Use flat fee structures - surcharges must be percentage-based

Penalty For Non-Compliance

New Jersey enforces surcharge violations through the Consumer Fraud Act:

• Civil penalties up to $10,000 for first violations, $20,000 for subsequent violations
• Individual and class action lawsuits - consumers can seek damages in court
• Attorney General enforcement - Division of Consumer Affairs investigates violations
• Restitution requirements - businesses may be required to refund improper charges

New Jersey consumers can file complaints about improper surcharging with the Division of Consumer Affairs at (800) 242-5846 or (973) 504-6200.

How Surcharging Laws in New Jersey Have Changed Over Time

New Jersey's surcharge law represents a relatively recent consumer protection initiative. Before August 2023, the state had no specific legislation governing credit card surcharges, allowing merchants to follow federal guidelines and card network rules without additional state restrictions.

The 2023 legislation emerged from growing concerns about businesses using surcharges to generate profit rather than simply recover costs. Governor Murphy cited "affordability challenges experienced by our low- and moderate-income families" as a key driver for the law.

The immediate effective date meant businesses had to quickly adjust their practices, with some choosing to eliminate surcharges entirely rather than navigate the new compliance requirements. The law's integration with the Consumer Fraud Act penalties created significant enforcement mechanisms that didn't exist previously.

Types of Businesses That Must Follow New Jersey's Surcharge Laws

New Jersey's surcharge law has broad application across most business sectors. The legislation defines covered transactions as "any sale, lease or rental occurring in New Jersey of goods of any kind (except motor fuel) or services of any kind."

Covered businesses include:

• Restaurants and food service establishments
• Retail stores and e-commerce businesses
• Professional service providers (legal, medical, consulting)
• Contractors and home improvement services
• Entertainment venues and event providers
• Online platforms and mobile app businesses

Notable exemptions:

• Motor fuel sales - gas stations are exempt from the surcharge restrictions
• Government entities - public agencies operate under different rules
• Financial institutions - banks and credit unions have separate regulatory frameworks

The law intentionally uses broad language to ensure comprehensive coverage across New Jersey's diverse business landscape.

New Jersey Credit Card Surcharge FAQs

How do New Jersey's disclosure requirements differ from other states?

New Jersey requires disclosure "prior to incurring any charges," which is more stringent than many states. For service businesses, this means customers must be informed before services are rendered, not just at the point of payment. Online businesses must show surcharges on checkout pages, and phone transactions require verbal disclosure before processing.

What happens if a New Jersey business charges more than their actual processing costs?

This violates the Consumer Fraud Act and can result in penalties up to $10,000 for first violations. The Division of Consumer Affairs can investigate, require restitution, and consumers can file individual or class action lawsuits. Businesses must be able to document their actual processing costs if challenged.

Can New Jersey restaurants add both automatic gratuity and credit card surcharges?

Yes, restaurants can add automatic gratuity for large parties and credit card surcharges, but the surcharge can only apply to the portion paid by credit card and cannot exceed actual processing costs. Both fees must be clearly disclosed before customers incur charges.

How does the motor fuel exemption work in New Jersey?

Gas stations are completely exempt from New Jersey's surcharge restrictions and can charge different prices for cash versus credit without following the cost-of-acceptance rules. However, they must still comply with federal regulations and card network requirements.

What documentation should New Jersey businesses keep to prove their processing costs?

Businesses should maintain detailed records of their merchant account statements, showing interchange fees, processing rates, monthly fees, and any other charges. This documentation is crucial if the Division of Consumer Affairs investigates a complaint or if consumers challenge surcharge amounts in court.

For more information about consumer protection in New Jersey, contact:

• New Jersey Division of Consumer Affairs: https://www.njconsumeraffairs.gov
• Consumer Complaints Hotline: (800) 242-5846
• New Jersey Attorney General's Office: https://www.njoag.gov

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