Oklahoma’s Attorney General Says the State’s Credit Card Surcharge Ban Restricts Speech

Proponents of credit card surcharging have received a Christmas present in the form of an Oklahoma attorney general’s official opinion declaring the state’s no-surcharging law unconstitutionally restricts free speech. The development means surcharge bans remain in only four states.

State Sen. Michael Brooks, D-Oklahoma City, asked Attorney General Mike Hunter to assess the law’s legality. Hunter’s Dec. 17 decision will allow businesses to apply credit card surcharges as long as they make the required consumer disclosures, Brooks said.

Brooks in a Friday news release said he sought the official opinion “with the goal of allowing more flexible payment options in Oklahoma that offer benefits to both businesses and consumers. In light of significant developments in federal constitutional law that bear directly on the legality of Oklahoma’s ‘no-surcharge’ statute, Attorney General Hunter concluded that the Oklahoma state law that bars nationally common pricing practices unconstitutionally restricts free speech.”

The Oklahoma law allows discounts for cash or check payments, but not credit or debit card surcharging. (Card-network rules ban debit surcharging.) A key issue in some other states where surcharges have been removed in recent years has been how laws regulated commercial speech, and how merchants could communicate differential pricing to customers in light of their payment card acceptance costs. As the result of a merchant lawsuit challenging it on First Amendment grounds, New York’s surcharge ban was greatly circumscribed early this year to the point of its not being a ban as long as merchants clearly communicate the final price of a product.

Hunter’s decision says Oklahoma’s law “does not facially violate the First Amendment,” but would “if interpreted consistent within the plain meaning of surcharge.”

CardX LLC, a Chicago-based tech firm specializing in credit card surcharging programs for merchant acquirers that has been a high-profile proponent of removing state bans, said in the release that it worked with Brooks ”to identify the issue and call out how this dated statute was impeding the ability of merchants and consumers to adopt a mutually beneficial modern payments technology.” Brooks is a member of the state Senate’s Business, Commerce and Tourism Committee.

“This result in Oklahoma solidifies an inevitable payments-industry makeover,” Jonathan Razi, CardX founder and chief executive, said in a statement. “Until today, Oklahoma was one of five states where we couldn’t serve businesses, and this decision means that 94% of the United States by population is now open to credit card surcharging.”

The other states where surcharge bans continue are Kansas, Colorado, Connecticut, and Massachusetts, according to CardX.