NEW JERSEY — Restaurants and retailers are facing soaring food prices as inflation grips the country, with no near-term relief in sight.
As a result, according to Hudson Riehle, senior vice president of research at National Restaurant Associationa restaurant industry trade association, total restaurant food costs as a percentage of sales are higher than they were before the initial outbreak of COVID-19 in 2020.
According to the Bureau of Labor Statistics, average wholesale food prices rose 17.5% year over year from April 2021 to April 2022, the largest 12-month increase in nearly five decades.
More and more businesses, including restaurants, are passing credit card charges on to customers in an effort to combat rising inflation and ongoing supply chain issues. Although it is legal, a bill expected to be introduced by a lawmaker on Monday would require consumers to be aware of the fees before making a purchase.
When a business accepts credit and debit cards, it pays a percentage fee to the card processor. These processing fees include interchange and brand fees, with the total cost varying from 2-4% of each transaction.
The bill would require notification from all merchants, but it specifically mentions restaurants, requiring notification “in the customer entrance area or on a printed menu”.
The bill’s sponsor, Assembly Deputy Speaker Paul Moriarty, D-Gloucester, said, “As the costs of credit card interchange fees are unfairly passed on to all consumers, even those who don’t do not use credit cards as a method of payment through inflated prices of goods and services, it is entirely appropriate to establish restrictions that allow greater transparency in the pricing of consumer goods and services and promote competition with the credit card interchange fee market.”
A violation of the provisions of the proposed bill is an illegal practice under the Consumer Fraud Act and can result in a fine of up to $10,000 for a first violation and up to $20,000 for any subsequent violation.
In addition, a breach may result in the Attorney General issuing cease and desist orders, assessing punitive damages, and awarding treble damages and costs to the injured.
“have become increasingly expensive, especially for smaller businesses that may have tight budgets and may not generate as much revenue as their larger competitors,” Lisa McKnight, Certified Financial Planner at Peapack Private Wealth Management told New Providence. . “These fees can add up for a business, especially as the United States moves increasingly toward a cashless society.”
According to a report by NJ Money Helpa 2013 class action lawsuit against Visa and Mastercard resulted in a settlement that allows companies to pass certain fees on to customers in the form of a credit card surcharge.
“There is little competition in the pricing of credit card interchange fees because Visa and MasterCard, the two largest companies in the industry, set prices with their member banks and small merchants have no power to negotiation to change prices,” Moriarty said.
Consumers who believe a company is not following the law can file a complaint online with Consumer Affairs through its website or by calling (800) 242-5846.