Credit-Card Surcharges at Car Dealerships (2026): CA, the Italian Colors Ruling & Beyond
Auto dealers face a uniquely litigated surcharge question. California’s Civil Code § 1748.1 nominally bans surcharges, but a federal court enjoined enforcement — what dealers can and cannot do.
Last verified: 2026-08 · Educational reference, not legal advice
The safe, universal option for dealers is a cash-discount / dual-price program. If you want to surcharge, the analysis splits by product line and by state.
The California picture
California Civil Code § 1748.1 prohibits a "surcharge" for credit-card use. In Italian Colors Restaurant v. Becerra (9th Cir. 2018), the Ninth Circuit upheld an injunction blocking the state from enforcing that ban, treating it as a speech restriction. So in practice California dealers have operated cash-discount programs freely, and surcharging has proceeded under the cloud of the unenforced statute. This is contested, not settled — verify the current AG position.
By product line
| Sale type | Practical stance |
|---|---|
| Parts & service | Cash discount is clean; surcharging often operated where permitted |
| Vehicle sale / lease | More cautious — RISC contract line items and lender rules matter |
| Aftermarket / F&I | Confirm lender and state constraints before any fee |
If a dealership surcharges a vehicle sale, the fee must reconcile with the Retail Installment Sales Contract (RISC) line items and any lender restrictions. Misalignment creates compliance and financing risk. A written opinion from a local attorney is strongly advised before surcharging vehicle sales.
Recommended path
- Default to a cash-discount program — legal in every state, no litigation exposure.
- If surcharging parts/service, confirm your state’s status and follow network caps + debit exclusion.
- For vehicle sales/leases, get a written local attorney opinion and check lender rules.
- Keep written records that the program is structured as a discount, not a hidden fee.
Check your state’s general rule.Open the decision tool →
Related guides
Frequently asked questions
California Civil Code § 1748.1 bans surcharges, but Italian Colors v. Becerra (9th Cir. 2018) enjoined enforcement. In practice dealers run cash-discount programs freely; surcharging proceeds in legal limbo. Verify the current AG position and consider a local attorney’s opinion.
Yes. A dual-price / cash-discount program is legal in all 50 states and Puerto Rico and avoids the contested-state litigation entirely.
Practically yes. Parts and service are commonly handled like any retailer; vehicle sales/leases add RISC contract and lender constraints that make surcharging riskier.
Educational content, not legal advice. Cashbizly is an independent educational resource. Nothing here is personalized legal advice and it does not replace a licensed attorney or your state’s Attorney General.
Our state-by-state status reflects the consensus of published 2025–2026 compliance guides (card-network rules, LawPay, Stax, NCSL) as of the “last verified” date on each page. Surcharge law changes frequently and is actively litigated — always confirm current figures with your state Attorney General or a professional. Read our full disclaimer.