States Step Up Scrutiny of Surcharges, Junk Fees and Interchange Fees

State lawmakers are intensifying their scrutiny of the fees consumers encounter at checkout, pursuing measures that range from restrictions on credit and debit card surcharges to broader “junk fee” disclosure mandates and limits on interchange fees.

An analysis by attorneys with the Global Advertising Lawyers Alliance (GALA) finds that the 2025-2026 legislative cycle produced a wide variety of proposals aimed at pricing transparency and payment practices. Although many bills failed to become law, the authors say they illustrate approaches likely to reappear in future legislative sessions and could leave businesses navigating increasingly divergent state requirements.

Surcharging has drawn particular attention. New Jersey lawmakers considered AB4807, which would prohibit surcharging altogether, while Georgia’s HB700 and Oklahoma’s SB2132 proposed tying permissible surcharge amounts to merchants’ actual payment-processing costs.

Illinois and Minnesota considered allowing surcharges only when consumers have access to alternative payment methods that do not carry the additional charge.

Louisiana went further on debit cards. Gov. Jeff Landry signed SB254, which prohibits retail businesses from imposing surcharges on consumers paying with debit cards. The law, effective Aug. 1, also creates a private right of action for consumers harmed by violations, adding potential litigation exposure to the compliance risks facing merchants.

States are simultaneously targeting “junk fees,” generally through requirements that businesses disclose the full mandatory cost of a transaction rather than advertising a lower initial price and adding required charges later.

Illinois considered a Junk Fee Prevention Act that would amend the state’s Consumer Fraud and Deceptive Business Practices Act to make it unlawful to advertise or offer a price that excludes mandatory fees or surcharges. Tennessee considered legislation requiring clear and conspicuous disclosure of total prices before payment, while New York lawmakers proposed a similar Junk Fee Prevention Act defining total price to include mandatory fees.

Other proposals would incorporate pricing transparency directly into state unfair or deceptive acts or practices, or UDAP, laws. Measures introduced in West Virginia and New York, for example, would treat failure to disclose a total price including mandatory fees as a deceptive pricing practice.

The most legally complex battles involve interchange fees and the interaction between state regulation, federal banking regulators and federal courts, according to the analysis.

Colorado lawmakers advanced SB134, which would have prohibited payment card networks from charging interchange fees on the sales-tax portion of transactions. Gov. Jared Polis vetoed the measure June 3, citing significant legal risks, including federal preemption concerns stemming from actions by the Office of the Comptroller of the Currency and National Credit Union Administration and litigation over a similar Illinois law.

That Illinois dispute demonstrates the obstacles states may encounter when attempting to regulate payment networks and federally regulated financial institutions.

Illinois enacted its Interchange Fee Prohibition Act in 2024 to restrict interchange fees on tax and gratuity portions of transactions. But the law has been substantially blocked by federal litigation. After the Seventh Circuit in May vacated an earlier district court judgment and ordered reconsideration in light of an OCC interim final rule and preemption order, U.S. District Judge Virginia Kendall issued a new ruling June 1.

Kendall permanently barred Illinois from enforcing the interchange restriction against national banks, certain out-of-state state-chartered banks covered by the Riegle-Neal Act, federal savings associations and payment card networks, concluding that the OCC’s actions had materially changed the federal preemption analysis.

The developments underscore a growing compliance challenge. States are experimenting with outright fee prohibitions, all-in pricing mandates, UDAP enforcement mechanisms and structural restrictions on payment fees, even as federal regulators and courts determine how far state authority can extend into federally regulated banking and payments.

For merchants, financial institutions and payment companies, the result could be a fragmented regulatory landscape in which fee practices permissible in one jurisdiction trigger disclosure obligations, private lawsuits or regulatory restrictions in another.