Yes, in most situations it is illegal to charge a credit card fee in California. Civil Code Section 1748.1 has banned retailers from adding a surcharge when a customer pays by credit card for decades, and a 2024 drip-pricing law reinforced the prohibition by requiring businesses to advertise the full price up front. A business can bake processing costs into the price everyone sees, and it can offer a discount for paying cash, but it cannot list one price and then tack on an extra charge at the register for using plastic.
What the Surcharge Ban Actually Says
Civil Code Section 1748.1 prohibits any retailer in a sales, service, or lease transaction from adding a surcharge when a customer chooses to pay by credit card instead of cash, check, or a similar method. The ban covers retailers of every size, online and in person.1California Legislative Information. California Civil Code 1748.1
SB 478, which took effect July 1, 2024, closed a related gap. It added Section 1770(a)(29) to the Civil Code, making it a violation of the Consumers Legal Remedies Act to advertise a price that leaves out any mandatory fee. The only permitted exclusions from the posted price are government-imposed taxes and reasonable shipping for physical goods.2California Department of Justice. SB 478 – Hidden Fees So even if a business tries to characterize a credit card charge as something other than a surcharge, adding it on top of the advertised price still violates California law.
Cash Discounts and Built-In Pricing Are Legal
The same statute that bans surcharges expressly permits discounts for paying by cash or check, provided the discount is offered to every customer. Framing decides the legality. A coffee shop that lists a latte at $5.00 and charges $5.50 to credit card customers has imposed an illegal surcharge. The same shop listing the latte at $5.50 with a 50-cent cash discount is doing something legal, even though the money changes hands the same way.
The California Attorney General’s office has put the rule plainly: a business can build processing costs into the prices it displays to everyone, but it cannot advertise one price and add a credit card fee at checkout.3California Department of Justice. SB 478 FAQ
Fees That Can Still Appear on Your Bill
Convenience Fees
A convenience fee compensates a business for accepting payment through a channel that costs more to process, such as taking a phone or online payment when its usual method is in person.4Consumer Financial Protection Bureau. What Is a Convenience Fee or Pay-to-Pay Fee? The fee has to apply the same way regardless of card brand and has to reflect an actual cost difference, not a penalty for choosing credit.
Minimum Purchase Requirements
Federal law lets businesses set a minimum for credit card transactions, capped at $10. The rule comes from the Dodd-Frank Act and applies across card brands; a business cannot set different minimums for different networks.5Office of the Law Revision Counsel. 15 USC 1693o-2 – Reasonable Fees and Rules for Payment Card Transactions A “$10 minimum for credit cards” sign is fine. Charging a fee on smaller purchases instead of declining them is not.
Utility Payments
Section 1748.1 has a narrow carve-out for electric, gas, and water companies whose card processing charges have been approved by the California Public Utilities Commission. Outside that approval, utilities are held to the same rule as every other business.
Debit Cards
Section 1748.1’s core prohibition uses the phrase “credit card,” so the statute itself does not clearly extend the surcharge ban to debit purchases. SB 478’s total-price rule is broader — it applies to any mandatory fee, regardless of the payment method — so a business that advertises one price and adds a debit surcharge at checkout still runs afoul of the drip-pricing law. Card network rules separately prohibit surcharges on most debit transactions.
What To Do if You Were Charged One
Start with a written demand. Send the business a certified letter asking for a refund of the surcharge. Under Section 1748.1(b), a business that willfully imposed the surcharge and fails to refund you within 30 days of receiving your demand is liable for three times your actual damages, plus reasonable attorney’s fees. Small claims court is an option if the amount fits within its limits.6California Legislative Information. California Civil Code 1748.1
You can also file a complaint with the California Attorney General’s Office or your local district attorney. Those offices investigate unfair business practices and can bring their own enforcement actions separately from any claim you pursue.
SB 478 violations carry their own remedies under the Consumers Legal Remedies Act, including actual damages or $1,000 per violation, whichever is greater, plus restitution and attorney’s fees. A CLRA damages suit requires 30 days’ written notice to the business before filing.