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January 1999 Vol. 14, No. 1   RSS Feed for Undercurrent Issues
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Beating the Credit Card Surcharge

don’t get stiffed by the unscrupulous

from the January, 1999 issue of Undercurrent   Subscribe Now

Have you ever been on a dive trip, pulled out a credit card, and been told that you must pay a surcharge if you aren’t paying cash? It’s not an uncommon practice. Credit card companies charge merchants a fee that may run as high as 4 percent of the bill when the customer uses the card, and some merchants try to recoup it by passing it on to you.

If they do, however, they are breaking their agreement with the companies, and you don’t have to stand for it.

Reader James L. Waller (Sioux Falls SD), on a trip to the Philippines, wrote that “my high opinion of Atlantis Resort soured when they cheated me out of $27 on my bill when I checked out. Atlantis (and many other Philippine hotels) charges 5-10 percent for using a credit card, a detail they neglect to tell you when you check in.”

When Undercurrent publisher Ben Davison was in the Turks and Caicos Islands last May, the proprietor of the Mt. Pleasant Guest House told him he would have to pass on the 5 percent bank charge if he used his credit card.

Reader Doug Burch, who frequently takes groups from his Pennsylvania dive shop to New Providence Island in the Bahamas, complained to us that he had to pay a surcharge and asked us to look at the legality of the practice.

To understand the credit card companies’ policy, we talked to officials at both Visa and MasterCard, who told Undercurrent that charging extra to use a credit card is a clear violation of their agreements with merchants — worldwide. Their agreement allows a merchant to give a discount from the advertised prices for cash, but they may not raise the advertised price or the bill if one decides to use a credit card.

Reader Burch told us that for many years he used Dive Dive Dive in Nassau. He says he no longer does because they insist on tacking a 5 percent surcharge on his Visa bill, in his view a clear violation of Visa’s participating merchant agreements. Burch didn’t take the hit to his wallet sitting down — and neither should you.

The first year, Burch says he was unaware of the surcharge until he noticed it on his credit card statement. He called Visa International and filled out forms to have the charge reversed. Visa assured him that they’d direct Dive Dive Dive to stop the practice. But the same thing happened on subsequent trips, as well.

So Burch demanded each time that the surcharge be dropped before he signed his charge slip, until finally Dive Dive Dive’s manager directed the desk clerk to just stop surcharging his bill. For the next couple of years all went smoothly, and Burch became less diligent about checking his bill. Then, in 1997, he found a $43 surcharge on his credit card statement and again called Visa International for an adjustment. This time, the folks at Visa requested a copy of the charge slip, and then told Doug that since he had signed it, they could not refund the extra 5%.

But in our conversations with the credit card companies, they both insisted that cardholders may still dispute charges even after signing a credit card slip. Both advise that the cardholder should first contact the bank that issued his or her card (by calling the toll-free number shown on the credit card statement) to open a formal dispute process. From there, procedures may vary from bank to bank, but the credit card policies remain consistent.

Of course, you should first try to get the charges dropped at the point of purchase. Tell the person who hands you the bill that the charge is against the policy of the credit card company and you won’t pay it. If they ignore you and say you must sign — or if you fail to notice the surcharges until your statement arrives — file a dispute, and don’t take no for an answer.

Oh, and while you’re at it, demand that the credit card company’s enforcement division bring the merchant into compliance with its stated policies.

In our conversation with Dive Dive Dive, an owner told us that their prices are quoted with discounts for cash or traveler’s checks. “It has been our policy for twenty years, and people are told that. If they don’t want to pay the 5 percent extra, they can pay cash.” Burch sticks to his story that not only was it a surcharge, but he wasn’t informed in advance.

While Dive Dive Dive claimed that Visa policies against surcharges were not in effect in the Bahamas, Visa told us this policy is a uniform, worldwide policy applying to all types of merchants.

Anyhow, Burch is out $43. And Dive Dive Dive has lost valuable repeat business.

P.S.: When I called Mt. Pleasant Guest House to ask proprietor Brian Sheedy about his policy, he insisted that it was not his policy to add a surcharge to credit card charges. “There’s no way anybody got charged that 5 percent on a credit card.” Ben didn’t; rather than pay the surcharge, he paid cash.

— D.L.

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