Are credit card 'swipe fees' legal?

Julia Fello | WTMJ-TV Milwaukee

MILWAUKEE -- Using a credit card can be convenient, but it could also be costing you more than you think.

Some businesses charge what are known as "swipe fees," and one viewer wanted to know if the fees are legal.

Julia Fello looked into Wisconsin's rules to find out what is and is not allowed.

Surcharge, convenience fee, swipe fee -- whatever you call it, many businesses are passing the cost onto customers. There are some ways you can avoid the additional charge.

"They have no interest in listening to your side of the story, and they just say 'Sorry we run everything as credit' and 'The fee is the fee.,'" said Doug Jenks.

Flappers owner Mark Silber had no problem showing us the credit card fee policy in question.

"...Got it right here," said Silber, pointing to his sign that reads '$2.50 credit card fee.'

There is no law on the books that can stop a business from passing those fees onto you. However, they must tell you up front.

Doug Jenks, who came in for drinks last month, is frustrated by it.

"I felt that they weren't interested in helping a patron that's supporting their business," said Jenks.

"What are you doing with the $2.50 that you make from it? Where does that go?" asked TODAY'S TMJ4 reporter Julia Fello.

"That gets wrapped up in paying the bank fees," explained Silber.

Every time a card is swiped for a purchase, the business is charged a fee by your credit card company, which in the U.S. is typically between 1.5 to 3 percent of the total purchase. For Silber:

"It's about $500 a month here. It's two, three percent," said Mark Silber.

For example, a $100 drink tab would cost Silber up to three dollars for this credit card swipe. Those swipes add up fast, which is why he charges this fee.

"We're trying to stay in business, you know?" said Silber.

Other businesses like Outpost encourage customers to use debit, because credit card fees alone cost the company about $150,000 a year.

  Milwaukee Attorney Gordon Leech has worked on consumer protection cases for more than two decades. He believes with fees like these, consumers lose in the end, no matter what.

  "The bottom line is that the consumer really is going to pay for these surcharges, whether it's disclosed by a merchant or its simply built into the purchase price," said Gordon Leech, Consumer Protection Attorney.

  To protect yourself from ever being unknowingly charged an added fee, Leech suggests you double check your receipts, or simply pay by cash. That's what Doug Jenks did.

  "We ended up just borrowing a $20 bill from my sister-in-law, so we could just pay and leave," said Jenks.

We checked in with the Better Business Bureau to see if anyone has brought this to their attention. A spokeswoman told us no business in southeast Wisconsin has been flagged by a consumer over this practice, including Flappers.