CARD SWIPE SCORE

Stores win fee ruling

A New York law barring stores from promoting a credit card surcharge violates their freedom of speech, the Supreme Court ruled on Wednesday.

The 8-0 high court ruling breathes new life into retailers’ long-running battle against the 2 perce1nt to 3 percent swipe fees levied against them by credit card companies.

Five companies sued New York in June 2013 over the law that bizarrely allows them to offset the swipe fee by charging more for credit card purchases — but only if promoted as a cash discount.

Credit card surcharges were against the law.

Manhattan federal Judge Jed Rakoff later that year ruled in favor of the stores, saying the law violated their First Amendment rights, in addition to being unconstitutionally vague.

An appeals court on Sept. 29, 2015 overturned Rakoff ’s judgment — setting the stage for the retailers’ appeal to the Supreme Court.

Chief Justice John Roberts, writing for the court, said the three-judge appeals panel erred in finding no free speech issue in New York’s 1984 law.

“Sellers are free to charge $10 for cash and $9.70, $10, $10.30 or any other amount for credit,” Roberts wrote in the 11-page opinion. “What the law does regulate is how sellers may communicate their prices.”

“The merchants want to pass the fees along only to their customers who choose to use credit cards,” Roberts wrote. “They also want to make clear that they are not the bad guys — that the credit card companies, not the merchants, are responsible for the higher prices.”

The Supreme Court sent the case back to the appeals court.

The strange discount vs. surcharge psychology that found its way into the New York law was addressed in a 1991 report that said shoppers were less likely to buy something that had a surcharge and more likely to buy something that had a discount, even though the two prices were the same.

One of the stores that sued New York — and won with Wednesday’s ruling — is Brooklyn Farmacy & Soda Fountain, a retro-themed ice cream parlor in the Carroll Gardens neighborhood of Brooklyn.

While it had been on the books for years and unchallenged with virtually no enforcements actions, Rakoff ruled in 2013 that the law comes up short.

“This virtually incomprehensible distinction between what a vendor can and cannot tell its customers offends the First Amendment and renders section 518 [the New York law] unconstitutional,” Rakoff wrote in 2013.