Implementing surcharging in automotive dealerships can significantly reduce costs and enhance profitability. However, navigating the legal landscape is crucial to ensure compliance and avoid potential pitfalls. This blog will provide a comprehensive overview of the regulations surrounding surcharging and how dealerships can implement this practice within legal boundaries.

Understanding Surcharging Regulations

Surcharging is governed by various state and federal regulations, as well as card brand rules. These regulations are designed to protect consumers and ensure that surcharges are applied fairly and transparently. For dealerships, understanding and complying with these regulations is essential to avoid legal risks and maintain customer trust.

Dealerships must be able to apply surcharges on credit cards consistently via all payment methods. This includes physical card terminals and anywhere else where a payment may be taken in the dealership. The dealership must also confirm that they are not surcharging debit cards nor charging customers more than their cost of processing.

Key Legal Considerations

1. Consistent Application of Surcharges: Dealerships must apply credit card surcharges consistently across all payment methods, including in-person and online transactions. This ensures that all customers are treated equally, regardless of how they choose to pay.
   
   
2. Limits on Surcharge Amounts: The surcharge applied must not exceed the cost of processing the payment. This means that dealerships need to accurately calculate their processing costs and ensure that the surcharge does not go beyond this amount.
   
   
3. Required Signage: Compliant signage must be posted at payment terminals, online payments pages, and building entrances to inform customers about the surcharge. This transparency helps build trust and ensures that customers are aware of the additional fee before completing their transaction.
   
   
4. State-Specific Regulations: Surcharging regulations can vary significantly from state to state. For example, as of July 1, 2024, California implemented new surcharging laws that dealerships must comply with. It is essential for dealerships to stay updated on these regulations and ensure compliance in all the states where they operate.

How myKaarma Ensures Compliance

Navigating the complex regulatory environment can be challenging for dealerships. This is where myKaarma comes in. myKaarma offers a surcharging solution that automates compliance with all relevant regulations, ensuring that dealerships can implement surcharging without the risk of legal issues.

myKaarma automatically handles surcharge implementation through all required product sets to deliver a compliant surcharge solution regardless of card brand or state requirements​​. This comprehensive approach allows dealerships to focus on their core business while myKaarma takes care of the regulatory details.

Staying Updated on Legal Changes

The regulatory landscape for surcharging is constantly evolving, with new laws and regulations being introduced regularly. To stay compliant, dealerships must keep themselves informed about these changes and adjust their surcharging practices accordingly.

myKaarma plays a crucial role in this regard by monitoring major industry changes and updating their surcharging solutions to comply with new regulations. This proactive approach ensures that dealerships can adapt to legal changes quickly and efficiently, minimizing the risk of non-compliance.

Best Practices for Legal Compliance

To ensure a smooth and compliant implementation of surcharging, dealerships should follow these best practices:

1. Partner with a Reliable Surcharging Provider: Choose a surcharging partner like myKaarma that has a proven track record of compliance and can handle the complexities of surcharging regulations.
   
   
2. Provide Training for Staff: Ensure that dealership staff are well-trained on surcharging regulations and the proper application of surcharges. myKaarma offers comprehensive training sessions to help dealerships stay compliant.
   
   
3. Communicate Transparently with Customers: Clearly inform customers about surcharges through signage, receipts, and online payment portals. Transparency is key to maintaining customer trust and satisfaction.
   
   
4. Regularly Review Surcharging Practices: Periodically review your surcharging practices to ensure ongoing compliance with all relevant regulations. This includes staying updated on any changes to state or federal laws.

Conclusion

Implementing surcharging in automotive dealerships can lead to significant cost savings, but it requires careful navigation of the legal landscape. By understanding and complying with state and federal regulations, dealerships can avoid legal risks and maintain customer trust. With the support of a reliable partner like myKaarma, dealerships can implement surcharging confidently and effectively, ensuring both compliance and profitability.