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Plastic Police: How Merchants Gouge Credit Card Users


Keep an eye out for these tricks.

It might not always feel like it, but paying for a purchase with a credit card can be more of a blessing than a curse.

Yes, credit card companies sometimes increase their interest rates to exorbitant heights with little notice. Yes, they hike fees and impose penalties, along with other sneaky tricks. Yes, credit card debt can decimate a person's finances. Still, when used wisely, credit cards protect consumers from fraud and provide a valuable link to extra cash when they need it.

Studies show that customers spend more money when they're allowed to pay with a credit card, so in theory, merchants should like credit cards, too, even though they have to pay a fee in order to accept them. That's why it's frustrating to go into a store and be made to feel like using your card is an inconvenience to the establishment.

Merchants employ lots of sneaky ploys to subtly discourage the use of credit cards, but some of these common behaviors are actually against the rules set forth in the merchants' contracts with Visa (V), MasterCard (MA), American Express (AXP), and the like.

The next time you pull out the plastic, be on the lookout for these tactics. They're not just shady moves -- they actually constitute a breach of contract.

Minimum Purchase Requirements

No establishment is allowed to require its customers to spend a certain amount of money simply for the privilege of using a credit card; if it does, it's breaking its contract with the credit card company.

MasterCard's contract states: "A merchant must not require, or indicate that it requires, a minimum or maximum transaction amount to accept a properly presented card."

When merchants try to impose a minimum purchase for credit cards, they're probably trying to either encourage cash sales or force customers to spend more money (or both). Sometimes businesses try to discourage customers from using credit cards just because of the amount of time that goes into processing a credit transaction.

If you're in a store that tries to enforce a minimum purchase for credit cards, calmly remind the cashier that it's a breach of the store's merchant agreement. If the merchant still won't budge, threaten to take your business elsewhere. Most places will give in and allow you to buy only what you need, because they'd rather have a credit card purchase than no purchase at all.

Credit Card Surcharge

I tended bar after college, and one place where I worked tacked on an extra fee whenever a customer paid with a credit card.

The owner wanted to recoup his merchant fees, which are, on average, 2% to 3% of each purchase. We told customers that we had to charge "sales tax" on credit cards, when in reality, those few extra bucks were simply to reimburse the owner for the money he paid to his bank and the card companies.

Most people saw our charge for what it was: an unauthorized fee that can get a business into very hot water with its bank.

According to American Express, "merchants must not impose any restrictions, conditions, disadvantages, or fees when the card is accepted that are not imposed equally on all other payment products."
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