A pivotal US law-suit, pitting the six major card issuers and two major card brands against the retailers’ organization over card surcharges, has sparked a legislative backlash.

According to the Credit Union National Association, 28 states have either passed or are currently considering bills blocking retailers from surcharging consumers for credit card purchases.

Surcharging was forbidden in the US before being dropped as part of a proposed settlement to ongoing litigation.

The card brands opposed the change to the surcharging rules, suggesting that the rule would have serious implications.

According to the Credit Union Times, an executive with Visa stated that the recent legislative activity was sound when considering that retailers might try surcharging and then more might take it up.

Retailers contend that surcharging for card use would be regulated and would therefore not constitute a threat to consumers.

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Indeed retailers must notify the card brand that they are surcharging and limit the surcharge to no more than the interchange rate and capped at 4% of the transaction. Retailers then must notify the consumer of the surcharge. They also must post surcharge notices at both the store’s entrance and point of sale.

Nonetheless, the possibility that retailers might take advantage of the change in legislation has led 18 states to propose banning card surcharging, according to the National Retail Federation.

Ten states — California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas — already ban surcharging.

Mallory Duncan, general counsel to the NRF, disregarded the idea that surcharging could ever become widespread in the US with the current rules in place.The notification requirements make the practice far too cumbersome to be practical, he argued.

"Even the few members we have had who have said they might be interested have come back to us after looking into it and reported they found it was just not worth it," the NRF attorney said.

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