Why the Supreme Court Is Talking About Credit Card Fees
As Congress prepares to vote on Supreme Court nominee Neil Gorsuch, the eight members who currently sit on the highest court in the land spent yesterday discussing a topic that resonates with plenty of TPG readers: credit cards.
No, they weren't trying to figure out how to maximize sign-up bonus offers or earn free nights at major hotel chains. Instead, the legal debate centered on a business you've probably never heard of (Expressions Hair Design) and transaction fees that you probably never discuss (interchange fees). These are the fees that retailers pay each time you swipe your credit card, and naturally, they don't like them. "Some merchants balk at paying the fees and want to discourage the use of credit cards, or at least pass on the fees to customers who use them," Chief Justice John Roberts wrote in his opinion on the case.
You've probably seen interchange-fee avoidance in action before. For example, one of my favorite bars in Chicago has a sign posted that says customers who pay in cash will save 3%. In many taxis, swiping a credit card to pay for a ride will generate a message that alerts customers of an additional 50-cent charge for paying with plastic. In New York and nine other states, though, Expressions Hair Design and other merchants aren't allowed to post this type of messaging that educates customers on the benefits of paying in cash.
And that's exactly what the case is about: communication. Expressions Hair Design and four other businesses in the lawsuit claim that restricting their ability to post signs about pricing restricts their First Amendment rights. The Supreme Court seems to agree. "In regulating the communication of prices rather than prices themselves, [the law in New York] regulates speech," Roberts continued in a mile-long opinion letter that gave me a new appreciation for the art of speaking legalese.
So what's next? More debates. The Supreme Court voted unanimously to return the case to a lower court for further examination. While merchants won't be able to escape interchange fees, cardholders can avoid paying extra for the ability to pay with plastic. Check out "7 Best No-Annual-Fee Credit Cards for 2017" and "The Top 9 Low-Free Credit Cards for 2017" to find a card that doesn't come with a hefty price tag. In the meantime, you can find me getting a trim at Expressions Hair Design.