Surcharge Exception for Public Utilities
Compromises Consumers

Washington, D.C. (Aug. 29, 2005) – Californians are used to being trendsetters in the areas of food, fashion and certainly politics. But a little known bill that quietly passed through both houses of the state legislature could set a dangerous trend for Californians and consumers across the nation.

AB 746, set to go to the Governor’s desk for signature, grants the Public Utilities Commission authority to surcharge California consumers who pay their utility bills with credit cards and further authorizes the commission and the commission only, to determine the amount of the surcharge.

Presently, California law prohibits any retailer in sales, service or lease transaction with a consumer, from imposing a surcharge on a cardholder who elects to use a credit card in lieu of payment by cash, check or similar means. Several other states adhere to similar statute in that merchants are prohibited from imposing a "check out fee" - that is to charge consumers more at the point of sale who pay with plastic. Paying bills with a credit card has become more common for the same reasons that consumers choose to purchase goods with credit or debit - it’s a secure, efficient and convenient way for them to pay.

It appears that Southern Cal Edison, who successfully persuaded some state legislators to move this anti-consumer bill through the usually lively processes of legislative debate without much comment, effectively keeps merchants out of the issue entirely and makes the exception for surcharging exclusively for public utilities. It is difficult to point to a more egregious attempt to penalize consumers with blatant special interest legislation that no one seems to be aware of - least of all, consumers.

There is a cost incurred with check transactions and any other acceptable transaction whereby bills are paid. For most businesses, electronic transactions cost less to process, reduce fraud and the payment is recognized quicker than when paid with a check. A 2001 study by the American Association of Motor Vehicle Administrators says in-person check transactions cost $10.72 in personnel and check processing costs, while their e-government transactions, which are primarily paid with credit cards, cost $3.83 and that includes a transaction fee. It is simply illogical to target consumers who pay their utility bill with a credit card when there are costs associated with all types of payment.

Touting this bill as "leveling the playing field" for consumers is not an accurate characterization. What it does is limit consumer options and penalize a segment of consumers for their preference in payment method. It is a slippery slope to go down that could represent the first in a series of attempts to carve out exceptions to sound California policy that prohibits surcharging consumers.

Consumers should be aware of this legislation and take action to see that the Golden State protects and preserves consumer rights. Their state legislature has given surcharging the green light on a single but significant transaction in which millions of Californians engage. Should this surcharge bill become law, consumers must ask themselves, "What’s next?"

Susan Molinari, National Chairperson
Americans for Consumer Education & Competition