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Fee fever: Watch for ‘COVID surcharges’ 

Prominently disclose all extra costs to customers, AG advises businesses 

Consumers may discover unexpected charges popping up on their credit card statements and other bills as a side effect of the pandemic. 

Businesses are charging more fees, in some cases calling them “COVID surcharges.” These could include retailers charging consumers more to use credit cards. Medical offices, salons, long-term care facilities, restaurants and other companies are charging fees to offset costs of personal protective equipment, increased cleaning or other costs related to the pandemic.  

“We understand that small businesses may face increased costs in dealing with COVID, and we realize that consumers may feel nickel and dimed,” Attorney General Tom Miller said. “We urge merchants to be fair when passing along expenses, and to let consumers know what the total cost will be before they make a purchase.”  

Merchants should clearly and prominently disclose all surcharges and ensure customers can see such disclosures before committing to a purchase.  If businesses attempt to deceive consumers or conceal fees, they could be in violation of the Iowa Consumer Fraud Act.  

Here are some things for consumers and businesses to keep in mind: 

Credit cards 

Industry reports indicate that credit card surcharges may be becoming a mainstream practice during the pandemic. 

Retailers are allowed to charge customers to cover the expenses of merchant fees when customers use credit cards. Merchants can pass along a charge equal to what they pay to accept the card, which can be up to 4%. 

Merchants may set a $10 minimum for credit card purchases under the Dodd-Frank Wall Street Reform and Consumer Protection Act. There is no law regarding minimum purchases for debit cards, so fee limits would be determined by the contractual agreement between the card network and the merchant. 

 The Attorney General’s Office encourages merchants to clearly display the full price that the customer will pay (excluding tax) using each method of payment that the merchant accepts. Customers must be able to see such disclosures before committing to a purchase. Simply notifying customers that there is a surcharge, without disclosing detailed costs, is not adequate. Any surcharge should be limited to the actual cost to the merchant of accepting a card.   

COVID surcharges 

Miller urges caution to businesses considering passing along expenses for PPE, cleaning, testing or other expenses related to the pandemic. In any case, companies should disclose surcharges to customers. Some examples:

  • Businesses such as barbers, spas, and beauty and nail salons should clearly display and disclose surcharges before any service or purchase.  

  • Landlords and property managers, including long-term care facilities, should disclose any COVID surcharges and comply with all contractual provisions, including notice requirements.  

  • Doctors, dentists and other health professionals should confer with health insurers and state regulators to determine whether it is legal to charge patients surcharges on top of co-payments or other charges.     

How to file a complaint with us 

If you believe a business’s fee is unfair or hidden, contact the Iowa Attorney General’s Consumer Protection Division. To file a complaint, go here or call 515-281-5926 (in Des Moines area) or 888-777-4590 (outside the metro area).  

For more tips, follow the Iowa Attorney General on Facebook and Twitter at @AGIowa. 

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