PEP Episode 075 — Surcharging Fines Without Findings: Dual-Pricing Compliance Playbook: Signs Receipts & You

Join Christopher Dryden, Leo Arzumanyan, and Jeremy Stock as they discuss how merchants are getting hit with four- and five-figure “surcharging violations”—and no one will say what actually went wrong. In this episode, our hosts pull back the curtain on the rulebook, the enforcement machine, and the practical fixes that keep ISOs, PayFacs, processors, and merchants compliant without tanking conversion. We share real cases, explain the caps, and show exactly where signage and receipt language fail in the wild—and how to fix them fast.

Why this matters

When letters arrive without clear findings or remediation steps, fines escalate, fear shuts down communication, and portfolios absorb risk they can’t see. Underwriting can’t screen for prior fines, “debit is not credit” keeps tripping teams, and state laws collide with brand rules at the POS. We translate that chaos into a clear playbook you can apply this week.

What we cover (and how to use it)

Fines without findings
How assessments jump from a few thousand dollars to much more with little guidance, why letters lack specific violations, and the operational drag that follows.

The three pricing models—done right
Surcharging (credit-only; capped by brand), cash discounting (posted price is the card price; discount for cash), dual pricing (two posted prices: cash vs. credit). Where teams mix concepts and invite complaints.

Debit ≠ credit
The most common failure mode. Why “flat fee on everything” is a lawsuit magnet, how to configure debit handling so frontline staff can’t override compliance.

Signage, receipts, and “conspicuous disclosure”
The exact choke points: entry, shelf/menus, checkout, and receipts. What must be stated, where it must appear, and why register-only signs get merchants fined.

State law vs. brand rules
How state statutes (e.g., display/advertising) can create liability even when brand caps are honored, and why the stricter rule governs in conflicts.

Risk flow and blind spots
Liability waterfalls from sponsor bank → acquirer/ISO → merchant, yet there’s no fines database. The underwriting gap this creates—and how to close it with attestations and audits.

Due process and escalation
Why fear of reprisal keeps merchants quiet, what a transparent channel should look like, and how to preserve evidence to challenge bad assessments.

The practical playbook (copy/paste to your runbook)

Standardize onboarding
Require a signed pricing/surcharging attestation covering signage, debit handling, caps, and receipt language. Lock these into your CRM and renewal cycles.

Compliance-in-a-box
Provide pre-approved templates for entry placards, menu/shelf tags, POS receipt footers, and e-commerce disclosures. Include brand-cap reminders where staff see them.

Configure the POS, not just the people
Hard-cap surcharge percentages at the terminal; block debit surcharges by BIN range; enforce item-level dual pricing where required. Turn on receipt disclosures by default.

Audit on a cadence
Quarterly website and on-site checks (or merchant-submitted photo audits). Verify that posted prices match the program (cash discount vs. dual vs. surcharge). Document everything.

Respond like a regulator will
When a notice lands, open a ticket, collect photos/receipts, map each allegation to the rule text, remediate within SLA, and keep a paper trail for appeal. Train support to route these instantly.

Who should watch/listen

ISOs/PayFacs tightening pricing programs across mixed merchant portfolios

Acquirers/processors standardizing dispute-proof disclosures and POS defaults

Merchant ops/compliance teams chasing down signage and debit handling

Risk/legal leaders building defensible responses to brand assessments

Bottom line

Until there’s clarity—and a real fines registry—your controls are your credibility. Get the model right, post prices where customers actually see them, program the POS to block mistakes, and keep receipts clean. That’s how you reduce complaints, avoid assessments, and protect portfolio value—without sacrificing margin or customer experience.

*Matters discussed are all opinions and do not constitute legal advice.  All events or likeness to real people and events is a coincidence.*

Christopher Dryden (00:00):

So even in the underwriting process, there’s no way to determine whether a merchant applicant has been fined before.

Leo Arzumanyan (00:07):

Was this something you reached out to Visa as well? To get

Christopher Dryden (00:10):

In my email,

Leo Arzumanyan (00:11):

Visa email. And they still didn’t

Christopher Dryden (00:12):

Visa. Yeah, because I went to people that carry risk and I asked the question and they had very good responses of, well, wouldn’t you do this or wouldn’t you do that? But it was basically still like an I don’t know, and this is what they do for a living. So I would think that that would be important to know. I think that that would be important for Visa to know from a risk allegation to promote compliance. So that was one of the things that I had asked about

Jeremy Stock  (00:36):

Was,

Christopher Dryden (00:37):

Hey, is there a database that we can scrub against?

Jeremy Stock  (00:41):

Welcome to the Payments Experts podcast, a podcast of global legal law firm. We hope you enjoy this episode. We’re really excited. We’ve got an in-studio podcast today. We’ve got our founding a managing partner, Christopher Dryden joining us in studio as well as Leo Arzu, Manian transactional associate attorney. We guys, we talk a lot about surcharging, dual pricing, et cetera. It’s a very hot topic still, maybe to our chagrin. You guys know a lot about it. You talk to our clients about it all the time. I want to present a kind of scenario here to kind of kick off this conversation. There’s a merchant who reaches out to their processor and they tell ’em, Hey, I’ve been fined a thousand dollars by Visa. They send their receipts, they send the pictures of their signage, all the information they’ve got, and they basically ask the processor, what have I done wrong? The problem seems to be is nobody can give them a clear answer as to why. What’s going on with this

Christopher Dryden (01:45):

Right now? There’s fines being dispensed, and we see to me, some clarity in the rules, A whole bunch of murkiness in the enforcement. And the fine is accompanied by evidence of wrongdoing with really no explanation necessarily as to how I am in violation. Some of it’s self-explanatory, some a judgment call because at times there are actual, they’re doing what they’re supposed to be doing with signage partly. So there’s some misunderstanding as to how they’re supposed to be compliant. Then there’s

Jeremy Stock  (02:33):

What you mean by partly Chris, what part are they doing that?

Christopher Dryden (02:35):

So I’ll give you an example. A lot of times they think that they need to have compliant signage, and there are some models of compliant signage. We are probably going to get into that. But where you place the sign matters, it has to be basically before they even see the product or at the point of product. I mean, there has to be a notice that this is going on. And the question is, how prominently do I display it? I mean, I could be in violation, and it’s not as though merchants are not receiving some sort of evidence that they’re in wrongdoing. There’s no ability to get clarity. There’s no communication. If I get fined for anything by a municipality where I live or whatever, I have some sort of effort of due process to understand, here’s the rule, here’s the standard, here’s the offending behavior, and then I still get a chance to disagree. That doesn’t exist here. And so for some merchants, the fines are, you don’t think, oh, a thousand dollars second fine is $5,000. And that becomes more significant for small merchants.

Leo Arzumanyan (03:52):

And just to piggyback off of what Chris was saying, we keep seeing this and we’re seeing this more and more where clients are coming to us, Hey, our merchants got fined. Like Chris said, 1,005 thousand, I think it’s 25,000 after that. And if you look at the actual letter that they get from Visa or whoever it may be, MasterCard, it don’t really, like Chris said, lay out the exact nature of what you did wrong other than just you violated the surcharge rule. But how you don’t provide examples to the merchant of what they really did wrong. So you’re getting into this area where merchants are getting fined by this card brand regime, but then when they’re trying to really get a clear understanding of what they should do to rectify the supposed issues, they’re not getting an answer.

Christopher Dryden (04:40):

Yeah, I mean, the problem is there’s not a clear avenue of who to contact. There is no real ability to contact the card brands directly for a merchant, maybe counsel. So I had an incident earlier, but even then there’s an unwillingness to discuss even through counsel. The example that I recently had was we had a bunch of case studies that we came across and I was trying to be proactive related to compliance. And so we were like, well, let’s just start to put some of these together. And I’ve had interaction before with the chief compliance officer Visa really briefly. He’s a super nice guy. And I said, oh, he seems so proactive and that’s what he does. Maybe there’s a dialogue that could take place. I emailed him and I laid some stuff out. Unfortunately, I forgot that we are in a lawsuit with Visa on behalf of one of our clients over the same subject matter.

Christopher Dryden (05:46):

I don’t work on that case, but still, I can’t contact Visa about this subject matter with this lawsuit ongoing. So I fo pod that was on me, but the message coming back was just wanting to almost robotically the attorney just beat me up for this versus, Hey, so I have other clients, they are having issues that are real current. Who do I contact at Visa? And I asked three times in an email and never got a response. And she wanted to beat the hell out of the point that I had done something wrong potentially with no damage. And even after her whole thing was, tell me, you’re going to be compliant. Tell me you’re going to be compliant with my rules. But yet when I was trying to engage in a conversation of, Hey, do I submit all this stuff to you? Is there a general legal inquiry, even email that we can send these things to on behalf of our clients? Are we now precluded from asking about any of this stuff because we’re in a lawsuit

Leo Arzumanyan (06:52):

On behalf of our clients that want to comply with your rules?

Christopher Dryden (06:54):

That’s right. They

Leo Arzumanyan (06:55):

Don’t want to violate

Christopher Dryden (06:56):

Your rules. That’s the backwards part of it is, and I asked in my last email, I was like, look, I’m asking a very simple question, and it’s two game compliance for people, and these are very real situations that are happening. I said, there just seems to be this unwillingness. Should I just reach out to the sponsor bank? But if the sponsor bank is non-responsive, what’s next? I file a lawsuit. I have to file a lawsuit to get some sort of dialogue going. I don’t really understand the unwillingness of it all. And literally, the visa attorney was a robot. She just was programmed to say one thing and ignore everything else and was even the tenor of it was just ridiculous in my opinion. But that’s fine. That’s how they want to operate. We’re just going to tell the stories of all the things that we find out so that maybe because our goal is compliance, these fines are significant. They’re a real problem for some merchants.

Leo Arzumanyan (08:00):

And the first fine is a thousand dollars. You might not think that’s allowed, but a lot of these merchants are mom and pop stores. They’re just getting off the ground. A thousand dollars is a significant amount, let alone when you start getting into 5,000 and beyond. And this kind of what goes into what we, I guess labeled as the problem of fines without findings. They’re getting hit with these fines, but they’re not really getting told why and how to rectify that. And I think this lends into our next topic, which is a discussion on the three, I guess you could say various models, which is surcharging, dual pricing and cash discounting.

Christopher Dryden (08:36):

Well, I want to go back because the fine regime is where I’m kind of focused

Leo Arzumanyan (08:40):

And

Christopher Dryden (08:40):

We’ll get that. But we had an interesting thing happen, and I mentioned it on another podcast. We had some guys come to us that had a legitimate issue and we analyzed it and they wanted to know, Hey, is it worth us to go back to and tell them what happened? Right? Because it really wasn’t, I mean, technically it was a surcharge violation, but it was really not. I mean, it was a glitch in their POS system and the way that it glitched made it look like an unlawful surcharge or a noncompliant surcharge. It was probably more an unlawful surcharge than a noncompliant one. But we told him, look, you’re not going to get a receptive ear to this when you go back. So I don’t know if it’s worth it, but what interested in me was the fines were $5,000. And I asked them, well, is this the second fine?

Christopher Dryden (09:39):

And they were like, no, this is the first one with us. Well, it was the first one with them. So at the end of the day, the way all the contracts are structured, all of the liability flows down and ends up at the merchant. And if the merchant can’t pay, it ends up at the agent or the iso. So what happens when I’m actually soliciting a merchant to come aboard, and they’ve already had multiple violations somewhere, and the rules that have caused fines that have a graduate, an upward graduating type of the next finds more, the next finds more. And I went to some underwriting people that I know, and I’m like, well, where do you scrub for this? And what they told me interestingly enough was, well, isn’t this something that you’re supposed to notify match because it’s technically a rules violation? And I’m like, really? Does that mandate really exist? I don’t know. There’s not a reason code C on me. Okay. So I think that’s a very good point. And so how do we scrub for this? Because ultimately, you look at larger ISOs, they’ve got thousands of merchants. They’re taking on the liability. They need to know what kind of liability that they’re actually shouldering. So even in the underwriting process, there’s no way to determine whether a merchant applicant has been fined before.

Leo Arzumanyan (11:04):

Was this something you reached out to Visa as well to

Christopher Dryden (11:06):

Get? It was in my email

Leo Arzumanyan (11:08):

Visa. It was emailed email, visa email. And they still didn’t

Christopher Dryden (11:09):

Visa because I went to people that carry risk, and I asked the question, and they had very good responses of, well, wouldn’t you do this or wouldn’t you do that? But it was basically still like an I don’t know, and this is what they do for a living. So I would think that that would be important to know. I think that that would be important for Visa to know from a risk allegation to promote compliance. So that was one of the things that I had asked about

Jeremy Stock  (11:34):

Was,

Christopher Dryden (11:34):

Hey, is there a database that we can scrub against how that has anything to do with the lawsuit or is geared towards, but rather than argue about any of it, I just want to know where do we direct people?

Leo Arzumanyan (11:46):

So frustrating is that they’re all about compliance and the rule set that they put out, but they’re not it easy for anyone to comply. And that’s where you get to these problems that we keep seeing on a weekly basis.

Jeremy Stock  (11:58):

It makes me think it’s almost like, Chris, you’re being too reasonable. You know what I mean? You’re almost approaching it with too much reason.

Christopher Dryden (12:05):

But here’s the problem. So as we got shut down, I went back to the three or four clients and asked, can I share this with the member bank or with Visa’s council because at least I could go to this visa council. Whether or not she would do anything with it, I have no idea, but at least I can try. Did. Nobody wants to pop their head out. Nobody wants to be identified as having an issue with the visa rules for fear of some sort of

Leo Arzumanyan (12:32):

Reprisal

Jeremy Stock  (12:33):

Or

Christopher Dryden (12:33):

Just a spotlight being shown on, oh, well, let’s go look at their emergence.

Leo Arzumanyan (12:38):

And that puts you just in a horrible position where you don’t know how to fully comply. And if you try to reach out, you might be on their radar and might suffer retribution in some sort of punitive way.

Christopher Dryden (12:47):

I don’t know if that would actually happened. What I know is that is the perception of the people participating in this. It’s not my perception necessarily. It’s what I’m seeing people fear. Because I mean, if you think about it like a match placement, MasterCard doesn’t place you on match MasterCard orders the member bank to place a merchant on match. That’s who does it. If it’s being used for non-compliance and excessive chargeback, true things that require a match placement, that’s generally how it’s happening. Because there’s one match caveat is that you cannot use it for leveraging a commercial debt with the person. And it looks really bad for the ISO taking a merchant loss matching a merchant when they’re supposed to maybe manage the risk or the member bank or whoever’s in the chain, right?

Jeremy Stock  (13:42):

Yeah,

Christopher Dryden (13:42):

It’s sure. Probably not the ISO if they’re like a non-risk holding iso, but there’s all these inherent disconnections in how the rules are maybe presented and then applied.

Leo Arzumanyan (14:01):

And besides that disconnections between how the rules are in the card, brown rule set versus state laws. And Chris, I actually wanted to ask you a question. Let’s say I’m one of these merchants who’s new to the game, doesn’t really understand the regime, doesn’t understand the various frameworks. How would, let’s say I’m a merchant, I come to you. How would you define to that merchant in the simplest way, what a proper surcharge is?

Christopher Dryden (14:25):

So the definition of, oh, how to compliantly

Leo Arzumanyan (14:29):

Surcharge, how to compliantly surcharge

Christopher Dryden (14:31):

Compliant surcharge is letting people know that you actually surcharge

Leo Arzumanyan (14:36):

And what the definition is as well.

Christopher Dryden (14:37):

And then it depends on what state we’re in because they got their own surcharge laws of whether or not you can even surcharge. Connecticut’s still a hold out. There’s still a couple of states that are holdouts, but it is a fee in addition to the regular price. So you have to do it in a systematic way to every customer for every card type visa’s, 3% cap, MasterCard’s, 4% cap, but it is adding a charge onto the receipt with proper signage of letting everybody know that you do it and assumedly registering, even though that’s a gray area too.

Leo Arzumanyan (15:22):

And just to bring my own little anecdote that I told Chris about recently, as he just mentioned, the cap is 3% for visa, four for MasterCard, beyond the cap. You have to do all sorts of disclosures. Essentially, you have to make it clear to the consumer when they enter your business, what they’re going to be paying for at checkout. I was out to dinner with some friends, I believe it was a week ago, go in. There’s no signage about surcharge or any of that, so I’m not assuming that I’m going to get surcharged at the end when I get the receipt. We dine, we get the check, there’s a 5% surcharge on top of the already expensive dinner that we had, so that not only violates Visa’s cap, but MasterCards as well. So when I

Christopher Dryden (16:06):

And California’s junk

Leo Arzumanyan (16:08):

Law, it violates totally, we could go on. It violates all sorts of rules. I reach out to the waiter. The waiter doesn’t know. He gets the manager, and the manager also didn’t know. I explained to him, Hey, look, I’m an attorney in this space. I told ’em about the podcast that we do on a weekly basis. And I explained to them, look, you’re violating the restaurant, not you as a manager is violating these rules. Can you please remove the surcharge from the bill? No problem. They removed it. But that I think just goes to show a lot of businesses out there are still operating in violation of numerous rules.

Christopher Dryden (16:46):

Yeah, I mean, I think for surcharge, I would agree with you. I think it’s easier to comply. It’s a problem with customers. It’s the way that you’re presenting it. Hey, if you use a card, you’re going to pay more. Versus, Hey, if you use cash, you’re going to pay less.

Leo Arzumanyan (17:02):

And let’s make a distinction if you use a credit card for card because you’re not allowed to surcharge.

Christopher Dryden (17:06):

So that’s another thing that I had a question about because I don’t really know the answer. And I have a feeling that somewhere this could come out of the word work would work at some point. So I had to pay, either it was the credit card price or it was the card price. So I said, well, I have a debit card. When I was at the cash register and they said, oh, well, we just run it as credit. But even when you run a debit card, it doesn’t run at the same rate as credit because the card’s present. So when you flip it, it’s not really a credit card. It has the Visa MasterCard logo on it, but it’s truly a debit card, taking money from your bank account, having nothing to do with credit that inherently it processes at a lower rate than the credit card rate when you’re looking at what people are setting as the credit card price. So when that happens, what about that spread? Is that an illegal surcharge? I don’t know. And I don’t know how they would, I don’t even know if anybody’s ever asked that question. Maybe somebody has, maybe somebody hasn’t. I don’t know. But the fact is, is that there are a lot of things that take place in reality, right? That haven maybe an unintended consequence or I don’t know.

Leo Arzumanyan (18:28):

Yeah. These things that are taking place are not being reflected.

Christopher Dryden (18:30):

Right.

Jeremy Stock  (18:31):

Hi, Jeremy Stock here, director of Operations at Global Legal Law Firm. I also produce the podcast, the Payments Experts podcast. As you can see from this episode today, we love talking about these things. We take these things very seriously, and these are very real world actual scenarios that people are facing every day in these payment schemes, and it’s a hard, tough world out there. We only see so much of it. If you yourself, if you’re an agent, an iso, maybe somewhere in the payments world where you are aware of stories, where people are being affected by these rules and the difficulty of application, let us know. Reach out. You can find us at PP, it’s pep@attorneygl.com. Also, of course, global legal law firm.com. Let us know your stories. We’d love to hear from you. We’d love to feature you on a podcast. If you’re interested in being a guest on the podcast, please reach out. Again, that’s PEP, which is short for Payments Experts podcast@attorneygl.com. That’s our email to reach us here at the podcast. We hope to see you on the next one. Bye-bye. Thank you for listening to this episode of the Payments Experts Podcast, a podcast of global legal law firm. Visit us online today at global legal law firm.com.

Jeremy Stock  (19:57):

I am not recording on either of my devices.

Leo Arzumanyan (19:59):

Oh my God, Jeremy, I was getting into my flow state.

Jeremy Stock  (20:03):

I know. Hey, we had a warm up run. You’re welcome, Leah. Let’s do again.

Christopher Dryden (20:10):

You can never be disappointed when I say I can’t do a podcast. Never. You can never be disappointed like you were yesterday. Never.