Vermont Enacts Law Restricting Certain Practices of Credit Card Companies

On May 21, the Vermont legislature enacted S. 138, a bill limiting certain practices of “electronic payment systems” (a defined term that includes most credit card companies). Under the new law, electronic payment systems would be prohibited from (i) imposing penalties on merchants that offer discounts for use of certain cards (or alternate forms of payment), (ii) restricting the freedom of merchants to set minimum card transaction amounts up to $10, and (iii) limiting the right of merchants to accept electronic payments at some, but not all, of their locations. Electronic payment systems that violate S.138 would also violate Vermont’s Consumer Fraud Act and could face civil penalties of up to $10,000, as well as private civil actions. Notably, the final bill does not contain a restriction on interchange fees that was present in the original version of the bill. The bill becomes effective January 1, 2011.