Jim Flynn

Jim Flynn, Money & the Law

As the Colorado General Assembly sprints (stumbles?) to its mandatory June 12 adjournment, there are two personal finance bills I thought you should know about.

First, House Bill 21-1048, which was signed into law May 10 by Gov. Jared Polis and becomes effective Sept. 11, requires retail establishments in Colorado to accept payments made in cash. There are, as with most things legal, a few exceptions. In particular, a merchant can require that a security deposit, damage deposit or expense contingency be backed with a credit card or charge card.

So, for example, when you stay at a hotel and the hotel wants to be sure it will get paid if your children run up a bill watching pay-per-view movies or playing video games, or you order drinks in the bar and pay with your room number, the hotel can require a credit card or charge card at check in. The card will be used to cover these expenses if you skip out without paying them at the end of your stay.

A merchant violating this law can be prosecuted for a class 2 petty offense and, if convicted, fined up to $250 per transaction.

Senate Bill 21-091 takes on the controversial subject of credit card/charge card surcharges. As of this writing, the bill is still under debate and amendment but, assuming it makes it to the finish line, it will allow merchants to assess such a charge. Under current law, merchants cannot add a surcharge when a customer elects to pay with a credit card or charge card.

Under current law, as an exception to the no surcharge rule, state and local government agencies can — and do — add a “convenience charge” to payments made with a credit card or charge card.

SBl 21-091 would allow merchants to assess a surcharge not to exceed 2% of the cash price or, if greater, a surcharge equal to the “swipe fee” they must pay their bank when they deposit a credit card or charge card payment. Merchants will be required to give disclosures for both in store and online purchases stating that Colorado law allows a merchant to impose a “processing surcharge” on a credit card or charge card purchase. Merchants can then advertise, and post, prices for goods or services using their cash price without engaging in a deceptive, bait and switch, trade practice (even though, arguably, that’s what it is since most people these days pay with a credit card or charge card).

No surcharge will be allowed for payments made with a debit or gift card. Customer receipts will need to separately show any surcharge. Merchants who fail to play by these rules can be sued by an aggrieved customer under a provision of the Uniform Consumer Credit Code allowing for a penalty up to 10 times the amount of an improperly made charge. If SB 21-091 becomes law, its effective date will again be Sept. 11.

Jim Flynn is with the Colorado Springs firm of Flynn & Wright; moneylaw@jtflynn.com.

Jim Flynn is with the Colorado Springs firm of Flynn & Wright; moneylaw@jtflynn.com.

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