Credit Card Surcharging in Colorado

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Credit Card Surcharging in Colorado | Consumer Protection

New Colorado Surcharging Law

Colorado used to be one of a few states that banned surcharging, but that all changed on July 9, 2021. On July 9th, Colorado’s governor, Jared Polis, signed a new law that makes surcharging permittable in Colorado. The revised statute will take place on July 1, 2022, and will allow Colorado merchants to add fees to transactions when a customer pays with a credit card or a charge card. The new Colorado surcharging rules include:

1. Every Charge Is A Surcharge

Usually, card brands dictate how surcharging programs are utilized. But, with this new Colorado surcharging law, there won’t be a difference between convenience fees, service fees, and surcharges. Instead, every charge will be a surcharge. With this new statute in place, a surcharge is defined as, ” any additional amount imposed at the time of the sale or lease transaction…for the privelege of using a credit or charge card.” So, what does this mean exactly? It means that every charge that’s added to your credit card or charge card in Colorado is subject to the new surcharging law.

2. Surcharges Are Limited

As a customer, the good news is that there’s a limit to surcharges in Colorado. With the new law, merchants can choose between two surcharging structures: 1. The surcharge is 2 percent of the transaction value, or 2. The surcharge is the amount the merchant has to pay to their payment processor. However, Visa and MasterCard have their own rules which limits surcharging to the lesser amount of either the merchant discount rate or 4 percent. This could create unique surcharging situations because the new Colorado surcharging law and card brand rules could differ.

credit card surcharging in Colorado VS Convenience Fees

3. Surcharging Cannot Be Applied To Debit Cards

If you complete a transaction with a debit card, gift card, cash, or check, then the merchant cannot add any fees. Even if a card brand rules allow surcharging on a debit card, the new Colorado law makes it illegal to add fees to debit card transactions.

4. There Are Specific Signage And Receipt Disclosures

Under Colorado’s new statute, merchants are required to disclose the surcharge using a specific language. The surcharge must also be broken down on the receipt with a separate line item, and only one surcharge may be applied per transaction.

5. Illegal Conduct Is Subject To Criminal Prosecution

The new surcharging statute in Colorado is a part of the Consumer Credit Code. This means that any merchant who violates the surcharging law is subject to liability as a creditor. One of the harshest penalties for violating the Consumer Credit Code is facing prosecution for a misdemeanor.

PayFrog Is Here To Help You Understand Credit Card Surcharging in ColoradoCredit Card Surcharging in Colorado | Get Educated

Even though this new law permits merchants to surcharge transactions completed with a credit card, it’s still extremely important to be cognisant of extra fees being applied to you. There are certain surcharging limitations and it’s important to make sure that merchants understand these laws and aren’t wrongfully surcharging your purchases. As a member of the Better Business Bureau, we highly value transparency and truthful education with our clients. You deserve to understand what fees are legally allowed to be passed to cardholders and how to spot an unlawful company performing unethical credit card surcharging in Colorado. Does your current processor educate you and treat you like we do? Please feel free to visit our blog page to learn more or post your story in the comments section below!

credit card surcharging in Colorado

7 thoughts on “Credit Card Surcharging in Colorado”

  1. Karen Kuenning

    Can a commercial landlord charge a service fee for using a credit card to pay my business lease payment. The business is in Colorado

    1. Karen,
      Thank you for your insightful question. A Colorado commercial landlord (assuming they are a business entity and not a government entity) are not exempt from the CO statutes. The CO revenue statute defines a surcharge as “any additional amount imposed at the time of the sales or lease transaction by the merchant, seller, or lessor that increases the charge to the buyer or lessee for the privilege of using a credit or charge card.”

      I will say that it is relatively uncommon for landlords to accepts credit cards for lease payments because usually the lease payments tend to be quite large and landlords do not want to incur the 2-3% cost associated with processing a credit card when ACH or check is less costly. However, I could envision that with the pandemic over the last year, a smart landlord may have obtained a merchant account in order to assist payment collections from their tenants via credit when cash had run dry.

      Regardless of the reasoning behind it, they should not have imposed the credit card surcharge in Colorado. If you have already been surcharged in CO, what then should you do about it? Here are several ideas:
      1) contact your landlord & share this article with them or reference https://www.stopfraudcolorado.gov/resource-guide69c5.html?topic=21
      2) share your landlord’s contact information with us ([email protected]), and our expert will call them for a free consult to explain proper payment processing protocol
      3) contact your card issuing bank and dispute the extra surcharged portion of the payment
      4) consult with an attorney
      5) report them to the CO Attorney General as a consumer complaint: https://www.stopfraudcolorado.gov/about-us/file-fraud-report.html

    2. Hello Dr. Kuenning,
      Thanks for your question! Technically speaking, Colorado states that everything is a surcharge (no matter if it is called a service fee or not), so the current CO laws prohibit this. However, last year Colorado finally made a change to this legislation to allow surcharging on credit cards as long as as the surcharge is less than the cost of acceptance for the merchant. However, this does not go into effect until July 1, 2022. So technically speaking, the landlord should hold off on this surcharge practice for about 4 more months until July 1 rolls around. More info about this update here: https://www.jdsupra.com/legalnews/colorado-opens-the-door-to-surcharging-6755797/

      If I can assist you or your landlord further with compliant credit card processing services or a savings quote, we offer free consultations that you can schedule here: payfrog.net/talk

  2. I was just in a local Thornton business getting a snack and they are already charging a surcharge and I got the impression that they are also charging that regardless if you use a credit or debit card. Who can I contact to report this business?

    1. Hello Steve,
      Colorado now allows credit card surcharging if merchants are following the credit card surcharging requirements.

      It is still prohibited to pass surcharge fees on debit cards, however, there are loopholes merchants use to get around this. This is because businesses have free speech just like individuals and they can use language to describe their pricing policies however they wish.

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