U.S. Supreme Court Rules in Favor of Merchants, Decides “No-Surcharge” Law Regulates Protected Speech
In a unanimous decision, the U.S. Supreme Court today overturned a lower court’s ruling against the merchants challenging New York’s “no-surcharge” law.
The Supreme Court held in “Expressions Hair Design v. Schneiderman” that the New York law restricts constitutionally protected speech, instructing the Second Circuit to decide whether the law, as a speech regulation, can survive the First Amendment’s commercial speech protections.
CardX President Jonathan Razi explained, “By remanding, the Supreme Court is telling the Second Circuit to review the New York law under a far more favorable standard for the merchants, and a far worse standard for the statute—as a regulation of protected speech.”
Mr. Razi, a graduate of Harvard Law School, noted that, while the First Amendment’s protections for commercial speech are not absolute, they are strong.
“This law may be struck down as an outright violation of those protections. It’s also possible that the Second Circuit may reframe the law as a consumer disclosure requirement. In the latter scenario, the law may survive, but ‘no surcharge’ would actually mean ‘no surprise’—and merchants would be allowed to pass on the credit card fee, so long as they make the required disclosure.”
CardX earlier contributed an amicus curiae (“friend of the court”) brief and appeared at the U.S. Supreme Court to attend oral arguments in “Expressions.” Today’s decision will also be influential in pending challenges to other state laws.
Mr. Razi added, “With this result, we’re confident predicting that more opportunity is on the horizon, and the CardX team looks forward to serving additional markets. Moreover, today’s decision recognizes the key policy interests we highlighted in our brief: passing on the credit card fee is the best tool a merchant has for informing the customer of the transaction cost and giving the customer the incentive to reduce the cost.”