The US Supreme Court [official website] ruled [opinion, PDF] Wednesday in Expressions Hair Design v. Schneiderman [SCOTUSblog materials] that a New York state law that prohibited sellers from applying a surcharge to customers who paid with a credit card regulated the speech of the sellers. The law, New York General Business Law §518 [text], would punish violators with a fine up to $500 and/or up to one year in prison. The US Court of Appeals for the Second Circuit had ruled that law only regulated conduct and not speech. However, the Supreme Court ruled that because the law does not restrict how much a seller can collect from a cash or credit card user, but instead restricts how a seller communicates their prices, it is a regulation of speech instead of conduct. Under the law, a seller is not allowed to list two separate prices for an item, one for cash payers and a higher price for credit card users. A seller is also not allowed to post a single price with a statement that credit card users will pay a certain percentage or a specific dollar amount higher. The Supreme Court ruling remanded the case back to the Second Circuit. The appeals court will again determine if the law violates the First Amendment, but this time it will be considering the law to regulate speech instead of conduct.

Many sellers seek to apply a surcharge to credit card users due to the fee that credit card companies typically charge sellers for every purchase. Earlier this week the US Supreme Court refused to revive [JURIST report] a $7.25 billion anti-trust settlement that was thrown out by the Second Circuit Court of Appeals against Visa and MasterCard. The settlement was for alleged overcharging of fees and for not allowing retailers to direct customers to other forms of payment. In 2012 the European General Court upheld a ruling [JURIST report] that MasterCard’s cross-border credit card fees violated EU antitrust rules. In 2010 the Department of Justice filed a lawsuit [JURIST report] against Visa, MasterCard, and American Express over the credit card companies’ policies of not allowing merchants to give discounts or awards for using credit cards with lower merchant fees.