Do Junk Fee Laws Ban Credit Card Surcharges?

A growing number of states now require the price a business advertises to include every mandatory fee. Merchants who add a credit card surcharge reasonably ask whether these "junk fee" laws ban it, or force it into the advertised price. In California and Minnesota, whose regulators have answered the question in writing, the short answer is no, as long as the customer can avoid the surcharge by paying another way. The catch is that many online and phone-order businesses take nothing but cards, and for them the surcharge stops being optional.

This guide covers what the main state laws and the FTC's federal rule require as of October 2026, the test that decides whether a surcharge has to be built into your prices, why a card-only business is treated differently, and the states where the answer runs the other way. The card network material is from the Visa Core Rules and Visa Product and Service Rules dated 18 April 2026. None of this is legal advice; check the law in each state where you sell before changing your checkout.

What the junk fee laws require

The laws share one idea: when you show a customer a price, it must be the full price they have to pay, not a lower number that grows at checkout. They differ in scope and dates.

• California: SB 478 added section 1770(a)(29) to the Civil Code, effective July 1, 2024. It makes advertising, displaying or offering a price that leaves out mandatory fees or charges a deceptive practice. The only charges that may sit outside the price are taxes or fees a government imposes on the transaction and shipping costs reasonably and actually incurred. The Attorney General's guidance says it applies equally to online and brick-and-mortar businesses, and not to purchases for commercial use.
• Minnesota: amendments to the Deceptive Trade Practices Act, Minnesota Statutes section 325D.44, took effect January 1, 2025. The Attorney General can seek civil penalties of up to $25,000 per violation.
• Colorado: HB25-1090, signed April 21, 2025 and effective January 1, 2026, added section 6-1-737 to the Colorado Consumer Protection Act. The total price must be shown as a single number and more prominently than any other pricing information.
• Massachusetts: the Attorney General's regulations at 940 CMR 38.00 became enforceable on September 2, 2025. Besides the total price, they require a business to say whether any charge is optional or waivable and how to avoid it, and they add disclosure and cancellation rules for trial offers and subscriptions.
• Federal: the FTC's Rule on Unfair or Deceptive Fees, 16 CFR Part 464, took effect May 12, 2025. It covers only live-event tickets and short-term lodging. The FTC has said that businesses in other industries are still prohibited from deceiving consumers about fees under existing law.

California, Minnesota, Colorado and the FTC rule all let government charges and shipping sit outside the total. California's and Minnesota's regulators both stress that their laws do not limit what a business may charge. They govern how the price is presented.

The test that decides it: can the customer avoid the fee?

A mandatory fee is one the customer has to pay to buy the product. Minnesota's statute, as the Attorney General's FAQ summarizes it, treats a fee as mandatory if it must be paid to make the purchase, is not reasonably avoidable, and is one a reasonable person would expect to be included in the price. Colorado's definition of total price covers amounts that must be paid to purchase or use the product, or that are not reasonably avoidable.

A credit card surcharge is, by its nature, a fee the customer pays only if they choose a credit card. Two regulators have applied the avoidability test to it directly:

• California's Attorney General, in its SB 478 FAQ, says a credit card processing fee generally does not have to be included in the advertised price, because it is not a mandatory fee if the customer can avoid it by paying a different way, giving cash as the example.
• Minnesota's Attorney General, in its Price Transparency Law FAQ, lists credit card surcharges among the fees that may be left out of the advertised price so long as they are reasonably avoidable, and says a surcharge the customer could avoid by paying with cash is not a mandatory fee. The same FAQ reminds businesses that other consumer protection laws still govern how the surcharge is communicated.

Colorado's statute does not mention card surcharges, and as of October 2026 we found no guidance from the Colorado Attorney General applying the new law to them. Its "not reasonably avoidable" language is the same test California and Minnesota used, but until the state says so, treat that as a reading of the text rather than a settled answer.

When a surcharge becomes a mandatory fee

California's FAQ states the exception plainly. If a business accepts only credit cards, the credit card fee is mandatory and has to be included in the advertised price.

This is where card-not-present merchants should slow down. A store that sells online or by phone and takes nothing but cards has no cash register for the customer to walk up to. If every customer who checks out pays the surcharge, the logic of both regulators' answers says it belongs in the price you advertise, and showing a lower price that grows by 3% at checkout is exactly the practice these laws target.

Whether an online merchant's other payment options make the surcharge avoidable is a question the regulators have not answered directly. Their examples use cash. Visa's rules allow a surcharge only on credit cards, so an online store that also accepts debit cards, ACH or eCheck without a surcharge does give the customer a way around the fee. Whether a California or Minnesota regulator would treat that as reasonably avoidable has not been tested in their published guidance. The safer position is an alternative that is real and visible: offered on the same checkout page, not hidden behind a support email, and with the surcharge-free total shown before the customer commits.

Minnesota's FAQ also says a surcharge on debit cards would not be a mandatory fee if paying by debit is optional. That answers only the state's price-display question. Visa's rules still permit surcharges on credit cards only.

New York runs the other way

New York reaches the opposite result for surcharges that are entirely avoidable. Since February 11, 2024, General Business Law section 518, as the Department of State explains it, requires a business that surcharges credit card users to post the highest total price, including the surcharge, before the purchase, and limits the surcharge to what the card company charges the business. The Department's guidance lists as illegal adding a convenience fee, service fee, processing fee or similar line item to credit card receipts without clearly posting the total price first. Showing both a card price and a cash price, or a single price for both, complies.

So a checkout that passes in California, with the surcharge disclosed but left out of the advertised price, can still break New York law if you sell to New York customers. Violations carry a civil penalty of up to $500 each.

Colorado has two laws to follow

Colorado merchants who surcharge already had a separate statute before HB25-1090. Colorado Revised Statutes section 5-2-212 lets a seller impose a surcharge on credit and charge cards of either up to 2% of the transaction or up to the merchant discount fee it actually pays to process the transaction. The seller must post the statute's prescribed notice, which for an online sale has to be displayed before the customer completes the purchase. The surcharge must appear as a separate line item on the receipt, only one surcharge is allowed per transaction, and none may be charged on cash, checks, debit cards, or payments processed as debit, or on gift card redemptions.

The 2% option is lower than Visa's 3% US maximum. A Colorado merchant using the 2% option cannot surcharge up to the network ceiling.

Massachusetts: there is no surcharge to disclose

Massachusetts General Laws chapter 140D, section 28A, says no seller may impose a surcharge on a cardholder who elects to use a credit card instead of cash, check or similar means. The junk fee regulations sit on top of that ban rather than creating room for a disclosed surcharge. What the statute does allow is a discount for paying by cash, check or other non-card means, offered to every buyer and disclosed clearly.

Fees every customer pays are not surcharges

The bigger risk for many online merchants is not the credit card surcharge at all. It is a flat "processing fee", "service fee" or "platform fee" added to every order. A fee every customer pays regardless of payment method is the textbook mandatory fee. In California, Minnesota, Colorado and Massachusetts it has to be in the advertised price, and showing it only at checkout is drip pricing.

Calling a fee something else does not move it into a different category. A fee that only card payers pay is a surcharge and has to meet the surcharge rules. A fee everyone pays is part of the price. Our guide to convenience fees covers how Visa's rules treat each, and why an online-only business cannot use the convenience fee model at all.

Leaving a fee out of the price is not the same as hiding it

Even where an avoidable surcharge may be left out of the advertised price, the card networks still require it to be disclosed. Visa requires a merchant to give its acquirer written notice at least 30 calendar days before announcing or first charging a credit card surcharge. In the US the surcharge may not exceed 3%, and a brand-level surcharge may not exceed the merchant's Visa Surcharge Cap. For an ecommerce sale it must be disclosed on the first page that references the card brands accepted and again on the checkout page. The checkout disclosure must state the exact amount or percentage, that the merchant is charging it and that it applies only to credit transactions, and that it is no greater than the merchant's discount rate for Visa credit cards. The surcharge must also be included in the transaction amount.

A checklist before you add or keep a surcharge

1. List every fee your checkout adds. Anything every customer pays belongs in the advertised price in California, Minnesota, Colorado and Massachusetts.
2. For a credit card surcharge, confirm that customers have a genuine way to pay without it, shown on the same checkout. If you accept only credit cards, build the cost into your prices instead.
3. Check the states you sell into, not just your home state. Massachusetts bans card surcharges, New York requires the card total to be posted, and Colorado caps surcharges at 2% or the merchant discount fee and prescribes the notice wording.
4. Meet the card network rules: credit only, 30 days' notice to your acquirer, the 3% US maximum and your Visa Surcharge Cap, and disclosure on the first page that names the card brands and on the checkout page.
5. Never surcharge debit cards, even where a state's price-display law would allow it.
6. If you sell subscriptions to Massachusetts customers, review the trial and recurring-charge disclosures in 940 CMR 38.00 as well. They apply whether or not you surcharge.
7. Tell your processor before you launch. A surcharge setup that breaks network rules is something your acquirer will ask you to change.

Surcharging can make sense for a high-risk merchant whose card costs run above average, but only when it is set up as a genuine choice for the customer. A fee the customer did not expect is also a reason to dispute the charge, and disputes cost a high-risk account far more than the surcharge recovers. PayKings works with card-not-present merchants that mainstream processors decline. If you are weighing a surcharge, we can tell you what your acquirer will require and what the setup needs to look like before you switch it on.