Legal Question in Credit and Debt Law in Pennsylvania
Discount for cash sale vs. credit card sale
Is it legal for an auction house to charge a 12% buyers premium for items
purchased and then give a 2% discount if you pay by cash or check? They are
in essence charging more for using a credit card in order to cover their
charges from the credit card company. If this practice is illegal do you know
what law or statute states this, show I can show it to them? Thanks!
1 Answer from Attorneys
Re: Discount for cash sale vs. credit card sale
It's not illegal in PA. Insome state it is.
But that's wrong. Actually, tthis makes a whole lot of sense. When you charge something to a credit or debit card card the vendor is charged a percentage fee to facilitate the transaction. The cardholder has use of the money for aprox. 30 days but normally at the same rate as the rest of the balance on the card. Effectively this turns out to a very high rate of interest that the card processor gets in addition to the 3% that it gets in front.
Car processors fought hard to put in place many laws that made the transaction look as you describe it. As though transaction fees are simply a part of doing business, but all costs of business must be passed along or a business cannot survive.
Hope this helps. If you have any legal questions or matters that I can assist with please arrange an appointment.
Roger Traversa
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