The comedian Gallagher once joked that customers don’t like to hear they’re being charged more for using credit cards—they’d rather hear they’re getting a “discount for cash.” But in New York and some other states, it’s not just what customers want to hear. Telling customers there’s a surcharge to pay by credit card can actually land business owners in jail. Yet it’s perfectly legal to tell them something costs less if they pay cash.
That, at least, is how New York officials enforced the law, which—read literally—actually only prohibits shopkeepers from charging customers different prices depending on how they pay. Passed in the 1980s, the law is supposedly intended to protect consumers from hidden fees. But business owners must pay processing fees that don’t apply to cash transactions. Charging customers to pay that fee makes perfect sense. That’s why New York officials didn’t punish businesses that said they were giving cash customers a discount.
Yet that also means the state was violating the free speech rights of businesses who used the word “surcharge”—which, after all, is the truth. Business owners therefore sued on First Amendment grounds, and the U.S. Supreme Court heard the case last week. Timothy Sandefur explains why the Court needs to respect the First Amendment and rule against the state’s unconstitutional regulation.
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