Visa Isn’t Liable for Underenforcing Its No-Surcharge Rule–Williams v. Visa

Visa has a rule that merchants can’t impose surcharges on consumers for using their debit cards. However, merchants widely disregard this rule. The plaintiff:

alleges that “Visa does not enforce the No Surcharge Rule in a systematic or effective manner,” and as a result, “merchants routinely impose such surcharges on consumers making purchases via debit card. This practice is widespread and indiscriminate. Visa knowingly permits it.” Because the amount Visa collects as its debit assessment fee is a percentage of the gross transaction amount, Visa profits from merchant surcharges on debit card transactions, even though such surcharges violate Visa’s own rules. “Plaintiff Williams has been repeatedly charged unlawful debit surcharges when using his Visa-branded debit card” to make purchases from various merchants in South Carolina.

In other words, Visa is being sued for underenforcing its policy instructing third-party merchants not to impose surcharges. This is analogous to the many lawsuits against user-generated content companies alleging that they underenforce their content moderation rules. The lawsuit against Visa fails, just like most or all of the Internet Law analogs should fail as well.

Unjust Enrichment

The allegations of Visa’s “unjust” enrichment fail because “Williams has still failed to identify any duty that Visa owed to Williams to prevent merchants from imposing debit surcharges.” Instead, Visa’s materials threaten to fine the merchants who impose surcharges, not refund the money to consumers.

The court also questions Visa’s scienter:

Williams’s amended complaint does not meaningfully allege that Visa knew merchants were imposing or would impose debit surcharges. Although Williams alleges that Visa “deliberately chose to permit” surcharge fees and “turn[ed] a blind eye to” them, these conclusory allegations are unsupported by any facts making them plausible. Although the complaint references consumer complaints and random audits, Williams does not allege that Visa learned through these mechanisms about any merchants that applied debit surcharges. And regardless of whether Visa was generally aware of the surcharge practice—and it must have been, since it enacted a rule to forbid it—Williams does not allege, plausibly or otherwise, that Visa was aware of any particular instance of such surcharges. This dooms Williams’s unjust enrichment claim.

Sound familiar? Just because a service has a published content moderation policy doesn’t guarantee that no third-party violations have or will occur. And generalized awareness that third-party violations are occurring isn’t sufficient to impose liability.

Unfair Competition Law

The court says the plaintiff adequately alleged an economic injury (the surcharge). However, citing Woods v. Google, the case fails the unfairness prong:

the amended complaint does not allege with any specificity that Visa knew merchants were violating the No Surcharge Rule or deliberately allowed them to continue to do so. Even if it had, it does not allege that Visa had an obligation to ensure perfect compliance with its Rules; in fact, Visa’s representations and Rules promise some compliance efforts but emphasize that intermediary banks of merchants who are caught face potential fines.

In Woods v. Google, the plaintiffs alleged that Google had advertising standards that were under-enforced, causing advertisers to overpay. The court says this is analogous to the allegations against Visa:

While Woods had a contract with Google, Williams does not allege that he had a contract with Visa. And Williams, like Woods, did not plead facts showing that Visa owes him an obligation to enforce its policies, even though Visa allegedly represents to the public that it will do so.

I have lost count of the number of times plaintiffs have claimed that a TOS’s negative behavioral restrictions on a third-party should be treated as affirmative promises to parties not in privity that such third-party behavior won’t occur. This evergreen argument is so common that it comes up in week 1 in my Internet Law course (the Noah v. AOL case). Despite the meme’s popularity with plaintiffs, it’s usually legally unsupportable.

Case Citation: Williams v. Visa, Inc., 2025 WL 3563716 (N.D. Cal. December 12, 2025)