Texas authorities have ordered 14 merchants in the state to stop imposing surcharges on debit card purchases.
The merchants were violating a 10-month-old state law that prohibits the fees, the Texas Department of Banking said Wednesday in a news release.
"The department is attempting to eliminate these illegal surcharges before they become widespread," Banking Commissioner Charles Cooper said in the release.
The retailers were relying on erroneous information that was provided by their payment processor, Cooper said. No processor was named.
Consumers who shopped at the businesses were typically charged a 39-cent or 49-cent "service fee" or "customer service charge" if they paid with a debit card, according to the banking department.
Authorities instructed the 14 merchants, most of which appeared to be small businesses, to provide refunds to customers who present proof that they paid the fee.
The retailers that received the notice were: CiCi's Pizza in Bryan and College Station, Coco Loco in Bryan and College Station, Dairy Queen in Crosby, Jesse's Taqueria in Bryan, La Bodega in College Station, La Familia Tacqueria in College Station, Long John Silver's in Bryan, Mi Familia Coco Loco in College Station, Neuhause Café in Dallas, Ol' South Pancake House in Fort Worth, Shipley's Donuts in Bryan and Yogi's Bagel Café in Fort Worth.
The history behind the 2013 law is complex.
It was spearheaded by the Independent Bankers Association of Texas, which was worried about big-box retailers creating alliances with big banks that put community banks at a disadvantage.
The context for those concerns was the 2010 federal law that caps the fees large banks can charge to merchants, but leaves uncapped fees charged by banks with under $10 billion in assets. At least in theory, that price discrepancy gives merchants a financial incentive to encourage their customers to use debit cards issued by larger banks.
But merchants are also bound by rules imposed by the card networks. And shortly after the Texas law was signed by Gov. Rick Perry, spokespeople for Visa and MasterCard said that their rules prohibited surcharges on debit card purchases.
At the time the Texas law was signed, Maine was the only other state with a statutory ban on debit-card surcharges, according to the American Bankers Association.
State-level bans on credit-card surcharges are another matter. At least 11 states had such bans last year, though the bans in New York, California and Florida are being challenged in court.
The state-level bans on credit card surcharges, some of which have been in place for decades, became more relevant last year when Visa and MasterCard both agreed, as part of the settlement of an antitrust suit, to stop prohibiting those fees.