A New York law banning merchants from surcharging customers to make up for credit card swipe fees was halted by a federal judge who ruled the statute is unconstitutional, Bloomberg News reported yesterday. U.S. District Judge Jed Rakoff yesterday ordered the state not to enforce the ban during a legal challenge filed by several small businesses. Businesses including a Vestal, N.Y., hair salon, a Brooklyn ice cream parlor and a Lower Manhattan martial arts academy alleged in a lawsuit filed in June that the law violated free speech rights by penalizing them for adding surcharges while at the same time allowing them to provide discounts to customers paying with cash or debit cards. Judge Rakoff said that the law violated the First Amendment because it prevented merchants from calling the difference between prices charged to cash customers and credit-card users a “surcharge.” The term “surcharge” communicates to customers that credit cards are costly for merchants, the businesses argued.
