Get Ready, Get Set: Same-Day ACH Service Mandatory in 2016
Why it matters
Continuing its efforts to modernize the U.S. payments infrastructure, the Federal Reserve Board of Governors announced that effective September 23, 2016, receiving depository financial institutions (RDFIs) who participate in the FedACH network will be required to accept same-day automated clearing house (ACH) transactions. In addition, originating depository financial institutions (“ODFIs”) will be required to pay RDFIs an initial fee of 5.2 cents per same-day ACH transaction. “Same-day ACH capability will facilitate the use of the ACH network for certain time-critical payments, accelerate final settlement, and improve funds availability to payment recipients,” the Federal Reserve said in a statement. “The board believes that these capabilities will in turn provide a more efficient electronic payment option for person-to-person payments, expedited bill payments, same-day payroll payments, and other types of transactions.” Some credit unions and smaller banks opposed the change, expressing concern that they would be left with an unfair cost burden as they only process a small number of requests on a given day, but the Board said the rule had to be applied consistently to all entities in order to achieve the ubiquity necessary for success of same-day ACH service.
Emphasizing the importance of modernizing the payment system, the Federal Reserve Board of Governors announced final approval to a rule mandating acceptance of same-day ACH service by RDFIs who participate in FedACH.
Currently, same-day service is optional under a program that was introduced in 2010. But over the last five years, just 78 financial institutions (i.e., less than 1% of participants) have adopted the service. To encourage the adoption of same-day service, NACHA announced changes to its operating rules that would allow same-day clearing and settlement. The Federal Reserve followed with a proposed mandatory rule in May and requested comment from industry.
The new rule provides for an interbank fee, not to exceed 5.2 cents, to be paid by originating depository financial institutions (ODFIs) for each same-day transaction they send to RDFIs. The fee is meant to help RDFIs offset operating costs for accepting, posting, and making funds available for same-day transactions. If same-day ACH volume exceeds projections by more than 25 percent during one of the regularly scheduled review periods, the fee will be reduced. Ten years after implementation is effective—and every ten years thereafter—NACHA will reevaluate the interbank fee.
The majority of the comments on the proposal were positive, the Board said, with 27 of the 39 commenters on the issue of a mandatory rule agreeing they were required for the success of same-day ACH service. Others expressed concern about the cost of the mandatory rule. Some credit unions and smaller banks told the Federal Reserve that the technical and operational changes necessary to receive same-day ACH transactions would be overly burdensome and they would be unable to offset the associated costs of receiving the transactions because of their lower same-day volume.
Two of the credit unions proposed exempting smaller depository institutions from the mandatory receipt requirements, but the Fed disagreed, stating that “the benefits of same-day ACH service outweigh the costs institutions would incur to implement such a service.” Ubiquity was also necessary to achieve the benefits of the service, as the limited adoption of the optional program “demonstrates an optional service cannot achieve the ubiquity necessary to establish a successful same-day ACH service,” the Federal Reserve explained. “The Board agrees with the majority of commenters that mandating receipt of same-day ACH transactions is the only practice method to achieve that necessary ubiquity and the corresponding benefits.”
The interbank fee also drew comment from the industry, with 32 of the 34 commenters in support of a charge and 21 of those agreeing that 5.2 cents per transaction was a reasonable fee. Some of the commenters (credit unions and one bank holding company) backed an interbank fee but argued the 5.2 cent amount was too low for smaller institutions to recover their costs in a reasonable amount of time. Two comments suggested a tiered fee structure instead of a flat fee.
Again, the Board stuck with the proposed rule as a needed business justification for mandatory adoption, noting that the current optional program does not include an interbank fee and has resulted in a low adoption rate by FedACH participants. As for the amount of the fee, the Federal Reserve said it reviewed the methodology used by a NACHA consultant to calculate the amount and found the data and analysis provided a reasonable basis for the fee.
“The Board believes that the lower interbank fee of 5.2 cents, combined with regularly scheduled reviews to determine any necessary reduction in the fee in pre-calculated intervals, allow cost recovery … over time while maintaining the attractiveness of the same-day service,” the Fed said.
The same-day ACH service will roll out in three phases, beginning Sept. 23, 2016. Phase I will provide for same-day processing of ACH credit transactions to include hourly payroll, person-to-person payments, and same-day bill payments. The second phase will add ACH debits to same-day processing as well as consumer bill payments and Phase III will require RDFIs to provide faster ACH credit funds availability.
Some industry members hailed the final rule, including NACHA and the Independent Community Bankers of America, which called same-day capability “a significant improvement for the nation’s payment system.”
“With the Federal Reserve’s support of the NACHA rule, the industry’s commitment to modernizing the payments system and enabling a ubiquitous faster payment option can be fully realized,” NACHA President Janet O. Estep said in a statement. “Same Day ACH is a game changer as it will enable new options for consumers, businesses and government entities that want to move money faster, and will serve as a building block for enabling payments innovation in the development of new products and services.”
Others expressed concern about the potential costs. “While NAFCU and our members believe that ubiquitous Same-Day ACH capability represents an improvement for the nation’s payment system, we continue to have significant concerns regarding the board’s inadequate interbank fee and for credit unions to affordably receive, process and settle those payments in near-real time,” said Carrie Hunt, senior vice president of Government Affairs and general counsel for the National Association of Federal Credit Unions.
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Regulators Demand “Good Faith Efforts” for TRID Implementation
Why it matters
Federal regulators said they don’t expect perfection from banks trying to comply with the new mortgage disclosure requirements but will not turn a blind eye with regard to enforcement. In letters to industry groups and official guidance to supervised institutions, the Consumer Financial Protection Bureau (CFPB), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) explained they are looking for “good faith efforts” to comply with the updated integrated Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) mortgage disclosures in recognition of “the scope and scale” of the technological shift that lenders must undertake. The changes—which took effect October 3—require lenders to switch to new “Know Before You Owe” forms after more than 30 years of using the old disclosure forms. The regulators’ substantially identical communications attempted to assuage concerns about implementation of the integrated disclosures but did not create a formal safe harbor or promise a grace period before launching enforcement actions, as hoped for by the industry. Examiners will consider “the institution’s implementation plan, including actions taken to update policies, procedures, and processes; its training of appropriate staff; and its handling of early technical problems or other implementation challenges,” the letters said.
In 2013, the Consumer Financial Protection Bureau (CFPB) released a final rule establishing new mortgage disclosure requirements for lenders. Mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the new disclosures replaced existing forms that were used to comply with the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA) for more than 30 years.
The TILA-RESPA Integrated Disclosures (TRID) feature two new “Know Before You Owe” forms. Pursuant to the final rule, lenders must provide borrowers with two forms: a three-page Loan Estimate and a five-page Closing Disclosure. Originally slated to take effect August 1, 2015, the CFPB agreed to an extension following an “administrative error” in its promulgation of the rule.
But with the effective date around the corner and many lenders struggling to manage their TRID implementation, industry representatives continued to push for some form of a grace period. Federal regulators, however, declined to adopt a formal delay or grace period.
The agencies said, however, that they did not expect perfection. The mortgage industry “needed to make significant systems and operational changes to adjust to the requirements of the rule,” the regulators acknowledged, requiring extensive coordination with third-party vendors. The industry has dedicated “substantial resources” to understand the requirements, adapt systems, and train affected personnel.
Recognizing the “scope and scale of changes necessary for each supervised institution to achieve effective compliance,” the regulators indicated that initial examinations for compliance will evaluate the compliance management system and “overall efforts” to achieve compliance. “Examiners will expect supervised entities to make good faith efforts to comply with the [TRID rule’s] requirements in a timely manner,” according to the regulators’ communications. “Specifically, examiners will consider: the institution’s implementation plan, including actions taken to update policies, procedures, and processes; its training of appropriate staff; and, its handling of early technical problems or other implementation challenges.”
This approach is similar to how the agencies handled initial examination for compliance with the mortgage rules that became effective in January 2014, some of them said. “The Bureau’s experience at that time was that institutions did make good faith efforts to comply and were typically successful doing so,” the CFPB wrote. The CFPB took its first enforcement action under those rules in October 2014.
In separate communications to their sellers and servicers, Fannie Mae and Freddie Mac (the GSEs) issued guidance to the same effect, saying they were doing so at the direction of their regulator, the Federal Housing Finance Agency. The GSE guidance went on to say that the GSEs do not intend to exercise contractual remedies, including demanding repurchase of mortgage loans, for noncompliance with the new TRID rule except in the following two limited circumstances:
(1) if the required form is not used at all; or
(2) if a particular practice would impair enforcement of the note or mortgage or would result in assignee liability, and a court of law, regulator or other authoritative body has determined that the practice violates TRID.
To read the CFPB’s letter to the American Bankers Association, click here. To read the OCC’s letter to the American Bankers Association, click here. To read Fannie Mae’s Lender Letter, click here. To read Freddie Mac’s Industry Letter, click here.
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CFPB Brings Another Auto Lender Action, This Time for $48M
Why it matters
Continuing its focus on the auto lending industry, the Consumer Financial Protection Bureau (CFPB) ordered Westlake Services LLC and subsidiary Wilshire Consumer Credit LLC to pay roughly $48 million for what the agency said were deceptive debt collection practices used to coerce borrowers to make payments on car loans. Employees of the California-based indirect auto lender sometimes posed as pizza delivery workers or family members using fake caller ID information to contact borrowers, the CFPB said. The defendants also threatened to have borrowers arrested or criminally prosecuted. The Bureau alleged that the defendants misled borrowers about monthly interest rates with false statements in advertisements as well as neglected to tell borrowers about the effect of changing payment dates or extending loan terms, resulting in more interest over the life of the loan. To settle the charges, the defendants agreed to pay a $4.25 million civil penalty and provided $44.1 million in restitution and reductions in loan balance to borrowers.
The automotive industry has faced heavy scrutiny from regulators over the last few months, with enforcement actions by the Federal Trade Commission and the New York Attorney General’s Office. In addition, the Consumer Financial Protection Bureau (CFPB) released its final rule providing oversight of larger participants in the nonbank auto-financing ecosystem.
Most recently, the Bureau announced an enforcement action against an indirect auto finance company and its auto title lending subsidiary. California-based Westlake Services LLC and Wilshire Consumer Credit LLC ran afoul of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Truth in Lending Act (TILA), and the Fair Debt Collection Practices Act (FDCPA) by relying upon illegal debt collection tactics, the Bureau said.
Westlake specialized in purchasing and servicing auto loans, particularly subprime and near-subprime loans, which it purchased nationwide, while Wilshire also offered auto title loans directly to the consumers via the Internet and serviced loans as well and serviced other loans.
According to the CFPB, the companies used false pretenses to gain access to borrowers, sometimes posing as a repossession company, making explicit or implicit threats to repossess the borrowers’ vehicle. On other occasions they presented themselves as an unrelated business, such as a pizza delivery service or flower shop. These deceptions were made possible by the use of a Web-based service that allowed the companies to choose the phone number and caller ID text displayed for the recipient, the CFPB said.
Borrowers were threatened with criminal prosecution, tricking them into believing they needed to make an urgent payment to avoid an investigation and criminal charges. Where a vehicle had already been repossessed, the companies implied that a payment would get the car released even if that was not the case. Information about debts was disclosed to employers, friends, and family without the permission of the borrower, according to the CFPB.
In addition to the deceptive debt collection practices, Westlake and Wilshire violated federal law with their advertising, customer relations, and account servicing practices, the Bureau alleged. Some collectors changed the due dates on accounts or extended the term of a loan without consulting the borrower or telling them that the change would have a positive effect.
The actual result, the Bureau said: borrowers ended up owing additional interest over the life of the loan.
The companies’ disclosures were also found lacking. Borrowers were not informed of the annual percentage rate (APR) as required by federal law. Instead, Wilshire buried the annual rates in small text and representatives speaking with prospective borrowers would quote a monthly rate or other rate, not the APR.
The CFPB ordered the companies to “overhaul” their debt collection practices and pay a total of more than $48 million: a $4.25 million civil penalty and $44.1 million in redress to borrowers, broken down as $25.8 million in cash and the rest in loan balance reductions.
Going forward, Westlake and Wilshire must comply with the relevant sections of Dodd-Frank, as well as the FDCPA and TILA. The companies can no longer disclose borrowers’ information to third parties, must end unlawful advertisements, and provide borrowers with truthful information about their loans, pursuant to the consent order.
To read the consent order in In the Matter of Westlake Services, click here.
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Mixed Ruling in Suit Challenging Operation Choke Point
Why it matters
A D.C. federal court judge issued a mixed ruling in a suit brought on behalf of payday lenders against the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board of Governors, and the Office of the Comptroller of the Currency (OCC) in a challenge to Operation Choke Point. While the court granted the regulators’ motion to dismiss claims alleging they violated the Administrative Procedure Act (APA), it refused to dismiss several claims accusing the agencies of violating the plaintiffs’ Fifth Amendment procedural due process rights. The lawsuit alleged the regulators undertook a two-part campaign: first promulgating regulatory risk guidance and then relying on “a campaign of backroom regulatory pressure” to end relationships between payday lenders and banks. Finding that the guidance at issue did not constitute “final agency action” for purposes of the APA, the court dismissed those counts. Considering the due process claims, however, the judge found the plaintiffs had sufficiently alleged that “their liberty interests are implicated by Defendants’ alleged actions and that the alleged stigma has deprived them of their rights to bank accounts and their chosen line of business,” allowing the suit to move forward.
A national trade organization that represents payday lenders, Community Financial Services Association of America, and a payday lender filed suit in 2014 against the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board of Governors, and the Office of the Comptroller of the Currency (OCC) in a challenge to Operation Choke Point.
The plaintiffs alleged that the regulators participated—and continue to take part—in the Department of Justice’s (DOJ) operation, forcing banks to terminate their business relationships with payday lenders.
According to the plaintiffs, the defendants engaged in a two-part campaign: first promulgating regulatory guidance regarding reputation risk and later relying on that guidance “as the fulcrum for a campaign of backroom regulatory pressure seeking to coerce banks to terminate longstanding, mutually beneficial relationships with all payday lenders.”
The plaintiffs sought declaratory and injunctive relief to set aside certain informal guidance documents and other actions by the FDIC, the Board, and the OCC on the grounds they violated the Administrative Procedure Act (APA) and deprived the plaintiffs of liberty interests without due process of law.
In their motion to dismiss, the regulators argued the plaintiffs lacked standing to sue and failed to state a claim.
U.S. District Court Judge Gladys Kessler first settled the threshold issue of standing. First, the defendants did not dispute that the plaintiffs suffered an injury in fact. The court held that the plaintiffs’ allegations that they suffered an injury by losing beneficial banking relationships, requiring them to expend resources to locate new banking partners, were sufficient to allege an injury in fact. However, defendants contended that Plaintiffs lack causation because their injuries were the independent decisions of the respective banks to terminate their relationships with the plaintiffs’ members. The court held that the plaintiffs had sufficiently alleged that the defendants’ actions were “a substantial factor” motivating the decisions of the banks, and therefore, plaintiffs sufficiently alleged the causation element.
The plaintiffs referenced several documents issued by the FDIC, OCC, and the DOJ, such as a letter from a FDIC regional director to an unidentified bank stating that “we have generally found that activities related to payday lending are unacceptable for an insured depository institution.” They bolstered their allegations by noting that the Board, the OCC, and the FDIC are the prudential regulators for a total of three, seven, and four banks, respectively, that have already terminated relationships with the plaintiffs.
Defendants also contended that plaintiffs lack standing because their injuries are not redressable by the court. Specifically, defendants argued that even if the court invalidated the documents that allegedly redefined “reputation risk,” banks might not reestablish their relationships with the plaintiffs while the Federal Deposit Insurance Act limited the ability of the court to grant some of the injunctive relief requested by the plaintiffs. Judge Kessler disagreed. Invalidation of the documents “may certainly affect Defendants’ ability to pressure banks in the future,” she noted, and the Act did not preclude her ability to grant any injunctive relief.
The court then addressed the defendants’ motion to dismiss for failure to state a claim. The payday lenders claimed the regulators violated the APA in a number of ways, from exceeding their authority to set standards for safety and soundness to acting arbitrarily and capriciously.
But Judge Kessler never made it to the merits of the APA claim, ruling that the actions at issue were not final agency actions under the statute and therefore not judicially reviewable. Courts apply a two-party test to determine whether an agency action is reviewable as final: first, the action under review must mark the consummation of the decision-making process; and second, legal consequences must flow from an action. Looking at the agency documents cited by the plaintiffs, the court held they did not contain obligatory language and that they were not obligatory and meant only to serve as guidance.
“Read in context, it is clear that the language does not create new legal obligations,” the court held. “Instead, the language is used with regard to banks’ overall responsibility to manage risks and third-party risks—obligations that existed prior to the [documents]. In addition, the documents consistently use nonmandatory language such as ‘should,’ rather than ‘shall’ or ‘must.’”
Although the documents “provide guidance on the FDIC and OCC’s views regarding risk management, they do not impose any obligations or prohibitions on banks,” Judge Kessler wrote. “Guidance that ‘does not tell regulated parties what they must do or may not do in order to avoid liability’ is merely a general statement of policy.”
The court dismissed nine of the 12 counts in the plaintiffs’ complaint.
But keeping the suit alive, Judge Kessler then ruled the plaintiffs had sufficiently alleged a violation of their procedural due process rights under the Fifth Amendment by claiming the Board, FDIC, and OCC “stigmatized them, deprived them of their bank accounts, and threatened their ability to engage in their chosen line of business, all without notice and opportunity to be heard.”
The court rejected the defendants’ argument that due process protections were not applicable to the legislative activities of an administrative agency that were generalized in nature and affected a large number of parties. The allegations of the plaintiffs were different, the court held, more akin to an informal adjudication, which requires more individualized process.
Looking at the merits of the due process claim, the court had no problem finding that the plaintiffs sufficiently alleged two of their protected interests were affected by the defendants’ actions. “Plaintiffs have alleged that the stigma promulgated by Defendants has resulted in lost banking relationships, and that the continued loss of banking relationships may preclude them from pursuing their chosen line of business,” Judge Kessler wrote. “This is sufficient to constitute a ‘tangible change in status’ and implicate a protected liberty interest.”
The court denied the motion to dismiss on the plaintiffs’ due process claims.
To read the opinion in Community Financial Services Association of America v. FDIC, click here.
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Second Circuit Upholds New York Ban on Credit Card Surcharges
Why it matters
New York’s ban on credit card sales transactions surcharges was upheld by the Second Circuit Court of Appeals, reversing a federal court judge’s 2013 ruling striking down the law and joining the majority of other courts to find similar bans constitutional. Enacted in 1984 as the federal ban on surcharges expired, the New York law prohibits sellers from imposing a surcharge on consumers who elect to use a credit card in lieu of other forms of payment, while still allowing merchants to offer a cash discount. A handful of businesses in the state challenged the constitutionality of the law on the grounds it violated their First Amendment free speech and Fourteenth Amendment due process rights. A federal court judge sided with the plaintiffs, striking down the law in 2013. But a unanimous three-judge appellate panel reversed, holding the law regulated conduct and not speech. The court rejected the retailers’ argument that the difference between a cash discount and a surcharge triggered free speech considerations because the terms were “labels” resulting in distinct consumer reactions. As for due process concerns, the panel found the law was not unconstitutionally vague and that retailers would be able to comply without a problem. Eleven states have enacted similar surcharge bans but courts have reached differing conclusions about their constitutionality. Like the Second Circuit, federal courts in Florida and Texas held that the law only regulated economic activity and did not involve First Amendment rights; in March, a California judge reached the opposite conclusion—citing the New York district court decision for support—ruling that the state’s surcharge ban violated sellers’ First Amendment rights. Those decisions are currently on review to the Fifth, Eleventh, and Ninth Circuit Court of Appeals, respectively.
In 1984, the New York state legislature enacted Section 518 of the General Business Law, which states: “No seller in any sales transaction may impose a surcharge on a holder who elects to use a credit card in lieu of payment by cash, check or similar means. Any seller who violates the provisions of this section shall be guilty of a misdemeanor punishable by a fine not to exceed five hundred dollars or a term of imprisonment up to one year, or both.” Merchants are still permitted to offer cash discounts.
Section 518 was passed in reaction to the expiration of provisions of the Truth in Lending Act (TILA) that prohibited credit card surcharges. The provisions were based on a psychological phenomenon known as “loss aversion” meaning that losses loom larger for consumers than improvements or gains of an equivalent amount. In the context of surcharges, that means credit card surcharges are more effective than cash discounts at discouraging credit card use.
To encourage credit card use, Congress added the surcharge ban to TILA. Lawmakers also expressed concern that allowing sellers to add surcharges would result in rates higher than the amount necessary to recoup its swipe fees, with sellers able to extract windfall profits from credit card users.
When the federal law expired in 1984, eleven states enacted their own laws prohibiting credit card surcharges: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, Minnesota, New York, Oklahoma, and Texas. Enforcement of the New York law was limited over the years, in part due to the standard provisions in credit card issuers’ contracts that prohibited the use of surcharges.
Over the last decade, as sellers began challenging these provisions, issuers like Visa have dropped their contractual prohibitions on credit card surcharges. In response, five New York businesses and their owners and managers filed suit challenging Section 518 in 2013. The plaintiffs claimed the law violated both their First Amendment free speech rights as well as their due process rights under the Fourteenth Amendment, requesting the law be declared unconstitutional.
The plaintiffs told the court they would like to impose a credit card surcharge instead of offering a cash discount and display prominent signage to explain the dual pricing scheme without fear of state action. A federal court judge sided with the plaintiffs and struck down Section 518 as unconstitutional.
A panel of the Second Circuit Court of Appeals reversed.
Section 518 does not regulate speech, the court explained—it regulates conduct. Prices, although necessarily communicated through language, do not rank as “speech” within the meaning of the First Amendment.
Price control laws (such as those banning sale prices for cigarettes) have never been thought to implicate free speech rights, and if “prohibiting certain prices does not implicate the First Amendment, it follows that prohibiting certain relationships between prices also does not implicate the First Amendment,” the court said.
“By its terms, Section 518 does not prohibit sellers from referring to credit-cash price differentials as credit-card surcharges, or from engaging in advocacy related to credit-card surcharges; it simply prohibits imposing credit-card surcharges,” the panel wrote. “Whether a seller is imposing a credit-card surcharge—in other words, whether it is doing what the statute, by its plain terms, prohibits—can be determined wholly without reference to the words that the seller uses to describe its pricing scheme.”
The words and labels used by the sellers are merely prices, which are not speech within the meaning of the First Amendment, “nor are they transformed into ‘speech’ when considered in relation to one another,” the court added. “Because all that Section 518 prohibits is a specific relationship between two prices, it does not regulate speech.”
Consumers’ different reactions to the labels “discount” and “surcharge” did not change the court’s conclusion. “[C]onsumers react negatively to credit-card surcharges not because surcharges ‘communicate’ any particular ‘message,’ but because consumers dislike being charged extra,” the panel wrote. “Nothing about the consumer’s reaction in either situation turns on any words uttered by the seller. And although the difference in the consumer’s reaction to the two pricing schemes may be puzzling purely as an economic matter, we are aware of no authority suggesting that the First Amendment prevents states from protecting consumers against irrational psychological annoyances.”
The court rejected the plaintiffs’ argument that the law illegally prevented a “dual price” display, where the retailer listed one price for customers paying with cash, check, or debit card and a higher price for customers paying with a credit card. Noting that “it is far from clear that Section 518 prohibits the relevant conduct in the first place,” the court said the plaintiffs were attempting to expand application of the law beyond its reach, a position the court would not adopt.
If a state statute is susceptible to multiple interpretations, one which would render it overbroad and one which would not, and the state courts have not weighed in on the issue, the panel said it needed to adopt the narrower, less problematic interpretation in favor of the law’s constitutionality. “[W]e cannot hold a duly enacted state law unconstitutional based entirely on speculation that the New York courts might give it an expansive and arguably problematic reading that its text does not require,” the court said, further declining to certify the question to the state’s highest court for consideration.
Turning to the sellers’ due process claims, the court said this count failed “for essentially the same reasons as Plaintiffs’ First Amendment challenges.”
Section 518 had a core meaning that could reasonably be understood, the Second Circuit said: “sellers who post single sticker prices for their goods and services may not charge credit-card customers an additional amount above the sticker price that is not also charged to cash customers.”
“We have complete confidence that sellers ‘of ordinary intelligence’ will—if they post single sticker prices—readily understand how to avoid imposing a credit-card surcharge, and that New York authorities will have sufficient guidance in determining whether such sellers have violated the law,” the court said.
The panel remanded the case for dismissal of the plaintiffs’ claims.
To read the decision in Expressions Hair Design v. Schneiderman, click here.
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