CA Senate Bill 478- "Junk fees" bill

[storewanderer]

Previously the credit card networks prohibited surcharges and minimum purchase amounts.

Credit card fees became legal due to the Durbin legislation. This politician also fought some years ago to get it so merchants could have a "minimum charge amount" if $10. Durbin is a Democrat politician from Illinois who has been "fighting the big banks" for years. The ability for merchants to legally surcharge was a huge win for him. However prices have not come down at any business I've watched implement a credit card surcharge. So this is a complete joke and has not helped the consumer. Similar to various other "Progressive" political ideas and policies this one has not played out as promised or expected. In the end everyone keeps paying more and the bigger irony is as prices go up the credit card processors who fee as a % of transaction make even more money. So these compelte fools who support "Progressive" politician policies that are sold to the public as "helping the vulnerable (that poor middle class consumer trying to buy something and paying more due to the big bad bank 2% card processing fee) and hurting the big corporations" actually do the exact opposite. It lines the pocket of the business owner and throws more money to the bank on the higher processing fee. Great job again guys.

My theory is this politician is friends with some small business owners who hate credit cards and want minimum purchase amounts and surcharges and didn't like that the card networks prohibited those practices and will terminate merchant accounts over such violations of their acceptance terms.

Plus it has always been legal to offer a "cash discount" presenting both prices clearly. There have been lawsuits about that too. The merchants always won as long as both prices were clearly presented side by side.

Credit card processing fees are also a junk fee as far as I'm concerned. The cost of handling cash, robbery risk, theft risk, counterfeit bill risk, far outweigh the cost of processing credit cards. I'd also like to see IRS look very closely at some of these businesses that seem so anti-credit card and are pushing for cash and try to figure out if all of the cash revenue they take in actually gets reported on their tax returns.

[storewanderer]

“To-go” requires packaging, which costs more nowadays, especially because foam containers are verboten in many areas of the country. Dine in requires none of that packaging.
As to “checked luggage”, certain items “disappear” from checked luggage frequently as it is checked-like electronic devices. Also the problem of access to medications if you need them and they are in your suitcase.

The cost of labor for dine in, dishwashing, drink refills (labor+materials), customer more likely to use restroom-consume soap/paper towels, far exceeds the cost of the to-go packaging assuming the restaurant uses the lowest cost available packaging. Especially in states like CA/NV etc. where the wage for restaurant servers is the same as standard minimum wage. Even when foam is banned there are pretty low cost options available. Some restaurants want to make a statement to their customers and use super expensive corn based packaging and other weird stuff and yes that costs a lot more... but they don't have to use that stuff.

In the states where the servers still get paid $2-$3/hr+tips I can see where a restaurant may see to-go as costing more than dine in because the dine in customer basically "pays the server's labor" by way of the tip. Whereas the to-go customer is not doing that. The restaurant should be staffing to-go with an employee who is untipped and paid regular minimum wage.

I also agree the airlines should charge for carry on luggage but not charge for 1 piece of checked luggage (charge anything beyond 1 piece). This would speed up security, deplaning, and boarding. But the airlines would also incur additional costs from the baggage handling, counter help (mostly kiosk now), and then claims (from lost/damaged luggage) side. Somewhere along the way they seem to have decided they'd rather collect the fee for checked luggage and allow the delays in security, deplaning, and boarding caused by all of the carry ons.

As far as expensive electronics, medicine, etc. go that can go in your "small carry on item that can fit under your seat" - purse, backpack, etc.

Personally I'd probably just pay extra to carry on when I leave, but then check the bag on the way back; there is a significant value in not having to go to the check in counter or baggage claim but to me it is more valuable at the beginning of the trip than at the end. Luckily in Reno Southwest is the dominant airline so this is not a decision that causes any price impact to me; I can do whatever I want or whatever time permits me to do and not have to worry about junk fees thanks to Southwest. Wish they were as reliable as they once were, but it is what it is.

[HCal]

“To-go” requires packaging, which costs more nowadays, especially because foam containers are verboten in many areas of the country. Dine in requires none of that packaging.
As to “checked luggage”, certain items “disappear” from checked luggage frequently as it is checked-like electronic devices. Also the problem of access to medications if you need them and they are in your suitcase.

To-go saves the cost of paying a server, busser and dishwasher, and also the real estate costs of the dining room. Those are going to be much higher than the cost of some takeout containers.

In some places such as Italy, it is standard to pay a cover charge when eating at a restaurant for this reason. You can avoid it by doing takeout.

[HCal]

Previously the credit card networks prohibited surcharges and minimum purchase amounts.

Credit card fees became legal due to the Durbin legislation. This politician also fought some years ago to get it so merchants could have a "minimum charge amount" if $10. Durbin is a Democrat politician from Illinois who has been "fighting the big banks" for years. The ability for merchants to legally surcharge was a huge win for him.

I think you are confusing credit cards with debit cards. The Durbin legislation only covered debit cards. Durbin has introduced another bill for credit cards, but it hasn't passed yet and is unlikely to do so.

Credit card fees became legal due to a lawsuit filed by a coalition of merchants against Visa, Mastercard and the banks. It was resolved through a settlement which required the networks to allow surcharging with certain conditions.

[storewanderer]

Previously the credit card networks prohibited surcharges and minimum purchase amounts.

Credit card fees became legal due to the Durbin legislation. This politician also fought some years ago to get it so merchants could have a "minimum charge amount" if $10. Durbin is a Democrat politician from Illinois who has been "fighting the big banks" for years. The ability for merchants to legally surcharge was a huge win for him.

I think you are confusing credit cards with debit cards. The Durbin legislation only covered debit cards. Durbin has introduced another bill for credit cards, but it hasn't passed yet and is unlikely to do so.

Credit card fees became legal due to a lawsuit filed by a coalition of merchants against Visa, Mastercard and the banks. It was resolved through a settlement which required the networks to allow surcharging with certain conditions.

That is incorrect. This is direct text from the Durbin legislation back in 2010:

“(3) NO RESTRICTIONS ON SETTING TRANSACTION MINIMUMS OR MAXIMUMS.–A payment card network shall not, directly or through any agent, processor, or licensed member of the network, by contract, requirement, condition, penalty, or otherwise, inhibit the ability of any person to set a minimum or maximum dollar value for the acceptance by that person of any form of payment.”

https://www.govinfo.gov/content/pkg/USC ... 693o-2.htm

Operationally the way this works is the Federal Reserve gets to set the minimum, which is at $10.

Where this has gotten more interesting is when it comes to Debit cards. The merchants are still NOT allowed to impose any surcharges or minimums on debit cards... yet I see it all the time. There is a small group of primarily California merchants who are "grandfathered in" and allowed to surcharge debit cards as they have done since the 1980's- Arco is one of those merchants, maybe the last one still taking advantage of that.

[HCal]

Previously the credit card networks prohibited surcharges and minimum purchase amounts.

Credit card fees became legal due to the Durbin legislation. This politician also fought some years ago to get it so merchants could have a "minimum charge amount" if $10. Durbin is a Democrat politician from Illinois who has been "fighting the big banks" for years. The ability for merchants to legally surcharge was a huge win for him.

I think you are confusing credit cards with debit cards. The Durbin legislation only covered debit cards. Durbin has introduced another bill for credit cards, but it hasn't passed yet and is unlikely to do so.

Credit card fees became legal due to a lawsuit filed by a coalition of merchants against Visa, Mastercard and the banks. It was resolved through a settlement which required the networks to allow surcharging with certain conditions.

That is incorrect. This is direct text from the Durbin legislation back in 2010:

“(3) NO RESTRICTIONS ON SETTING TRANSACTION MINIMUMS OR MAXIMUMS.–A payment card network shall not, directly or through any agent, processor, or licensed member of the network, by contract, requirement, condition, penalty, or otherwise, inhibit the ability of any person to set a minimum or maximum dollar value for the acceptance by that person of any form of payment.”

https://www.govinfo.gov/content/pkg/USC ... 693o-2.htm

Operationally the way this works is the Federal Reserve gets to set the minimum, which is at $10.

Where this has gotten more interesting is when it comes to Debit cards. The merchants are still NOT allowed to impose any surcharges or minimums on debit cards... yet I see it all the time. There is a small group of primarily California merchants who are "grandfathered in" and allowed to surcharge debit cards as they have done since the 1980's- Arco is one of those merchants, maybe the last one still taking advantage of that.

I thought you were referring to credit card fees (surcharges). The clause you cited applies to setting a minimum purchase amount of up to $10. While you're technically correct, I haven't seen a minimum charge to use a credit card in years. This really isn't necessary now that surcharging is possible.

Going back to card fees, the Durbin amendment only reduced interchange fees for debit cards.

[ClownLoach]

I think you are confusing credit cards with debit cards. The Durbin legislation only covered debit cards. Durbin has introduced another bill for credit cards, but it hasn't passed yet and is unlikely to do so.

Credit card fees became legal due to a lawsuit filed by a coalition of merchants against Visa, Mastercard and the banks. It was resolved through a settlement which required the networks to allow surcharging with certain conditions.

That is incorrect. This is direct text from the Durbin legislation back in 2010:

“(3) NO RESTRICTIONS ON SETTING TRANSACTION MINIMUMS OR MAXIMUMS.–A payment card network shall not, directly or through any agent, processor, or licensed member of the network, by contract, requirement, condition, penalty, or otherwise, inhibit the ability of any person to set a minimum or maximum dollar value for the acceptance by that person of any form of payment.”

https://www.govinfo.gov/content/pkg/USC ... 693o-2.htm

Operationally the way this works is the Federal Reserve gets to set the minimum, which is at $10.

Where this has gotten more interesting is when it comes to Debit cards. The merchants are still NOT allowed to impose any surcharges or minimums on debit cards... yet I see it all the time. There is a small group of primarily California merchants who are "grandfathered in" and allowed to surcharge debit cards as they have done since the 1980's- Arco is one of those merchants, maybe the last one still taking advantage of that.

I thought you were referring to credit card fees (surcharges). The clause you cited applies to setting a minimum purchase amount of up to $10. While you're technically correct, I haven't seen a minimum charge to use a credit card in years. This really isn't necessary now that surcharging is possible.

Going back to card fees, the Durbin amendment only reduced interchange fees for debit cards.

At this point all these fees are poorly sorted out, I don't think there are any penalties these days for retailers who break the rules (whatever they are), and the customers are getting screwed. All these fees are a result of trying to manipulate the consumers ability to search online for the lowest price, only for the price to actually be higher at unscrupulous businesses. The restaurant fees are obnoxious, especially when you see them on day one opening day of a new restaurant (so it isn't like they applied a percentage instead of raising prices to prevent losing customers, they under priced the menu to intentionally mislead from day one).

I think there are serious problems as I mentioned with ticket prices where they have not figured out the right model so the "best fans" are getting the brunt of price increases. I am also concerned about the delivery piece if there is some recourse that forces the price to be the same if ordered for pickup or delivery.

But it should be very helpful to resolve the biggest issue of simple menu prices in the restaurant, and also make comparison easier. Many people look online at menus, judge and decide, only to get to the restaurant and find a surprise surcharge that might have misled them to go there versus another restaurant that might actually be cheaper without the bogus fees.

[storewanderer]

I thought you were referring to credit card fees (surcharges). The clause you cited applies to setting a minimum purchase amount of up to $10. While you're technically correct, I haven't seen a minimum charge to use a credit card in years. This really isn't necessary now that surcharging is possible.

Going back to card fees, the Durbin amendment only reduced interchange fees for debit cards.

The ongoing thing with Durbin gave the merchant groups the ammo to fight for the right to surcharge in their lawsuit. I give full credit for all of the hassles using cards being "allowed" - minimums, surcharges- to Durbin. If we lose credit card rewards thanks to what Durbin is currently trying to get passed, I again give all credit to Durbin for that. If prices went down as a result of these things Durbin pushes, I wouldn't have as much of an issue with it but the vast majority of these merchants do NOT lower prices, they just pass any additional card related fees they are allowed to pass onto the customer.

I see minimums all the time at bars and smaller restaurants especially Asian ones. Independent coffee shops are loving the surcharge thing but they have long given up on minimums. Also still seeing it at gas stations inside run by dealers- or something like a $3 minimum or 50 cent fee under $3 (this is a complete violation- they can't surcharge more than 3% of purchase amount).

As far as merchants being disciplined for breaking the network rules, they are absolutely disciplined, I have reported many for surcharging Debit Cards or surcharging greater than 3% on credit or requiring ID, and seen corrections made. I have also seen merchant accounts terminated when a merchant continually refuses to comply. If you ever wondered why one of the small Italian grocery stores in Santa Monica with great sandwiches is "cash or debit only..." in recent years... I have in some cases provided a copy of my receipt (showing for instance a 50 cent surcharge on a $2 purchase) and/or a copy of signage indicating a policy violation to help support the complaints. Visa and MasterCard accept these complaints directly and will deal with the violation merchant's card processor. Fines are assessed for repeated non-compliance. Card issuers (CapOne, etc.) are also set up to take these complaints but getting someone who knows how to do it with the issuers I deal with (it is called a "customer complaint form" with Visa and a "merchant violation" with Mastercard) can be a little trying- easier to go straight to Visa or MasterCard with web forms. MasterCard may have pulled their web form down, I can't seem to find it now so it appears complaints have to go to their customer service email. Visa still has their web form.

[HCal]

The ongoing thing with Durbin gave the merchant groups the ammo to fight for the right to surcharge in their lawsuit.

The merchant lawsuit was filed in 2005... yes, it took over a decade to settle! That's how slow the legal system is. The lawsuit was well underway before the Durbin amendment was passed in 2010, so I don't think the Durbin amendment had anything to do with it. If anything, reducing the fees for debit cards might have made it easier for merchants to absorb the fees for credit cards, making it less worthwhile to continue fighting.

I am not opposed to surcharges as long as they are clearly disclosed, but I'm seeing an increasing number of places that don't have any disclosure, or have it hidden away somewhere that you probably won't notice. When I pay at an independent business, I make it a point to look for a surcharge sign. If they ask "cash or card?" I inquire about whether the price is the same. Sometimes they say "no" but the employee has no idea how much the surcharge actually is. In these cases, I fill out Visa's web form. So far, there has been no evidence of any follow-up.

[veteran+]

The ongoing thing with Durbin gave the merchant groups the ammo to fight for the right to surcharge in their lawsuit.

The merchant lawsuit was filed in 2005... yes, it took over a decade to settle! That's how slow the legal system is. The lawsuit was well underway before the Durbin amendment was passed in 2010, so I don't think the Durbin amendment had anything to do with it. If anything, reducing the fees for debit cards might have made it easier for merchants to absorb the fees for credit cards, making it less worthwhile to continue fighting.

I am not opposed to surcharges as long as they are clearly disclosed, but I'm seeing an increasing number of places that don't have any disclosure, or have it hidden away somewhere that you probably won't notice. When I pay at an independent business, I make it a point to look for a surcharge sign. If they ask "cash or card?" I inquire about whether the price is the same. Sometimes they say "no" but the employee has no idea how much the surcharge actually is. In these cases, I fill out Visa's web form. So far, there has been no evidence of any follow-up.

Yup, that is exactly what I do. I am so anti-fee for anything.