As of Sunday, a new state law in New York mandates that businesses must prominently display the total cost of their products when customers choose to pay with a credit card.
Due to the consumer protection law, stores are now prohibited from displaying signs on doors and registers that indicate surcharges for credit card purchases.
Alternatively, they can choose to display the higher credit card price alongside a lower cash price, or adjust the cost of items to reflect the credit card price for all customers.
“New Yorkers deserve transparency when it comes to credit card costs, and this law aims to provide that assurance. By signing this law, Gov. Kathy Hochul, a Democrat, emphasizes the importance of protecting consumers from unexpected surcharges,” stated the governor.
Transparent Pricing: Empowering Consumers With Clear Financial Choices
The new measure, excluding debit cards, will also restrict credit card surcharges to the exact amount businesses are charged by processing companies.
“It is crucial for individuals to have access to clear pricing information in order to make well-informed choices when it comes to their finances,” expressed state Sen. Jeremy Cooney in a formal statement. Revealing credit card surcharges to businesses allows consumers to gain a clearer understanding of the overall expenses involved.
Last month, the Consumer Financial Protection Bureau introduced new regulations that would greatly reduce the long-standing practice of banks charging clients $35 for insufficient funds on their accounts.
In 2019, according to the agency, overdraft charges amounted to $12.6 billion for individuals and companies, contributing to the $280 billion in fees that banks have accumulated since 2000.
As per the New York Times, the CFPB aims to reduce these charges to a range of $3 to $14 for banks with assets of $10 billion or more. This initiative is expected to result in annual savings of around $3.5 billion for individual and business customers.
In spite of strong opposition from the industry, several banks have already started adjusting their overdraft policies, seemingly in anticipation of the proposal’s approval.
As per CNBC, Capital One, Citigroup, and Ally have decided to eliminate the charge, while some other companies have either reduced the fees or restricted the situations in which they are applied.
According to the report, JPMorgan’s revenues from overdraft fees in 2023 decreased by approximately 12 percent compared to 2022. Similarly, Wells Fargo experienced a 27 percent drop, while Bank of America saw a significant decrease of 64 percent.
