Sellers and Lessors Limited in Credit Card Surcharges to Consumers and Lessees

On July 1, 2022, Colorado’s Amendment to the Credit Card Surcharge Statute went into effect. C.R.S. § 5-2-212. Previously, Colorado banned the practice of sellers charging consumers the costs associated with businesses processing credit card transactions. Now, Colorado reversed that ban. This ban applies to both sellers and lessors. Prior to the Amendment going into effect, the Colorado Attorney General issued an opinion clarifying that this law applies to “all consumer sales and lease transactions,” and as such, a “lease transaction” includes residential leases. (Administrator’s Interpretive Opinion Letter: Amendment of Surcharge Statute (C.R.S. § 5-2-212), Effective July 1, 2022), dated June 29, 2022).

Although surcharges are now legal, there are limits on what can be charged to customers and lessees as well as required notices sellers and lessors must publish to consumers in advance of a covered transaction. If a seller or lessor is applying a credit card surcharge, the new law imposes one of the following limitations: either a 2% cap, or the actual merchant discount fee incurred by the seller or lessor in processing the transaction. C.R.S. § 5-2-212(1)(c)(I)-(II). A “merchant discount fee” is the actual fee that a seller or lessor pays its processor or service provider to process the transaction. C.R.S. § 5-2-212(1)(g)(II).

A seller or lessor charging a credit card surcharge must disclose the charge to the consumer or lessee by using visible signage or, for online transactions, by displaying the surcharge before the completion of the transaction in a manner visible to the online customer or lessee. The recommended statutory language is as follows:

To cover the cost of processing a credit or charge card transaction, and pursuant to 5-2-212, Colorado Revised Statutes, a seller or lessor may impose a processing surcharge in an amount not to exceed [2% of the total payment made for goods or services purchased or leased by use of a credit or charge card] or [the merchant discount fee that the seller or lessor incurs in processing the sales or lease transaction]. A seller or lessor shall not impose a processing surcharge on payments made by use of cash, check, debit card, or gift card.

C.R.S. § 5-2-212(1)(c)(I) – (II). Sellers or lessors in violation of this law are subject to liability as a creditor under the Uniform Consumer Credit Code. Violators are subject to actions brought by the Administrator. C.R.S. § 5-2-212(3).