Client Alert

January, 2017      
Service Charge?  For what?
Have you ever visited a commercial establishment only to find a "service charge" you can't account for when you receive the bill? Has a restaurant included mandatory tipping fees to your bill without prior consent even though tips are supposed to be voluntary and subject to the quality of the services received? Been there, right? Well, due to the recent proliferation of commercial establishments adding a "service charge" to your bill without a prior explanation of the charge, the Puerto Rico Legislature took action.

Effective December 30, 2016, the "Act for Transparency in Payment Receipts," Act No. 209 of 2016, establishes that commercial establishments or on-line vendors that offer goods or services for sale, lease, exchange or transfer cannot bill customers for service charges that don't actually exist or are not previously disclosed. Moreover, service charges cannot cover non-operational services that are necessary or indispensable to the primary product or service being purchased -- such as the use of plates or cutlery in a restaurant.

Every additional charge levied on customers must be entered on the receipt in sufficient detail to identify what the customer is being charged for. The receipt must contain the time and date of the transaction, the nature of the products or services, the person or entity that receives the payment, the amount paid, and the method of payment used. In addition, the commercial establishment must place a visible and legible notice of any service charges at the entrance of the establishment.

The Department of Consumer Affairs ("DACO", for its Spanish acronym) is expected to set forth additional interpretations of the Act's requirements in regulations that are due to be issued within 30 days of the Act's effective date. Note, however, that the Act will also be enforced by the Telecommunications Board and by the Office of Financial Institutions, in addition to DACO. Any business that violates the provisions of the Act will be punished with a fine that does not exceed $5,000 for each violation.

We at Goldman remain committed in assisting you and your business to adjust to these changes in the Law.  For further information you may contact any of the attorneys in the Corporate Department.

Attorneys - Corporate & Banking Law Department
Francisco J. Dox-Millán
Myrna I. Lozada-Guzmán
Marlena Riccio-Paniagua
Thelma Rivera-Laboy
Arnaldo Villamil
Although the information included in this document may concern legal issues, it is not a legal opinion or professional advice and clients shall not use it as such. We assume no responsibility or liability of any kind for any information contained herein, and we expressly disclaim all liability for any claim for damages arising from the use, reference to, or reliance on, such information. If legal or other expert assistance is required, the services of a competent professional should be sought.