Discover Card Abandons Cardholders in
Battle Against Check Out Fees
National Consumer Advocates Warn Discover Cardholders: Expect Merchant Imposed Check Out Fees Now that Card Company Lifted Restrictions that Protect Consumers
Washington, D.C. (February 14, 2006) – Discover Card gave the green light to the nation's retailers yesterday to charge check out fees to consumers who pay with the branded card when the card company announced it would drop its "No Surcharge Rule" - a restriction on merchants that protects consumers from a pass through cost at the point of purchase, Americans for Consumer Education & Competition (ACEC) said today.
"Discover Card waved the white flag to merchants and handed over their cardholders in the battle by retailers to impose check out fees on consumers who pay with plastic," said Susan Molinari, National Chairperson for ACEC. "The slippery slope just got more slippery for consumers. Discover Cardholders will now be penalized for doing what Discover encourages them to do – use their card as a preferred payment method."
Often unnoticed by consumers, merchant imposed check out fees are a method practiced by some retailers to recoup fees they pay for the advantage of offering credit and debit options to their customers. payment method.
"The fact is that merchants benefit from offering credit and debit options to consumers," Molinari continued. "Merchants attract a higher volume of customers and credit and debit transactions generally are higher amounts than purchases made with cash. Retailers and consumers enjoy a secure electronic system that quickly processes transactions and merchants seem to think consumers ought to pay for their own goods and the retailer’s decision to provide the credit option."
An overwhelming majority of consumers (89%) believe imposing check out fees on those who pay with plastic is an unfair practice and would not purchase goods from merchants who penalize debit and credit card users, according to a national survey sponsored by ACEC and conducted in January 2006. The survey of 1,000 American adults, indicated that 62% of American adults would abandon their purchase if charged a check out fee for using a debit or credit card. Eighty-two percent of those who reported being surcharged were charged check out fees in the past year. And, 62% percent of those who have been surcharged said getting hit with the fee gave them a negative impression of the retailer.
"Less than 20 states have laws that ban merchants from charging consumers check out fees when they pay with a credit or debit card," said Molinari. "Consumer awareness and enforcement of surcharge bans in those states that have laws is not at the level it must be."
States that ban surcharging or "check out fees" for consumers who pay with plastic are: California, Colorado, Texas, Oklahoma, Connecticut, Florida, Kansas, Maine, and New York. New Hampshire specifically bans surcharging by travel companies and Kentucky bans surcharging by restaurants for tips if they are included on a credit transaction. Wyoming, Washington, Maryland and Massachusetts allow merchants to offer a cash discount to the customer who pays with cash rather than credit, as do many other states. Only Minnesota allows surcharging up to five percent of the purchase price.
"Consumers need to alert their state legislators to this problem and urge them to pass laws that ban merchant imposed check out fees and to enforce those bans," said Molinari. "Doing this will ensure that consumer rights are protected and that the movement by merchants to surcharge comes to an abrupt halt."
For More Information, Contact:
Rebecca Reid
Executive Director
Americans for Consumer Education & Competition
Office: 410-267-1128. Cell: 410-212-3843