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Wednesday, May 21, 2008

How to Handle Being Carded at Checkout with your Credit Cards?

Have you ever been at the grocery store or at the mall when a retailer asks you for your identification? I know this has happened to me hundredes of times in my life. Practically any time I go into a retailer store I am asked.

Did you know that Mastercard, Visa, and Discover forbid retailers from requiring an additional form of identification with a signed credit card? And that American Express strongly discourages the practice? Well, neither did I until I read a recent snippet on privacy in my June issue of Money Magazine.

I did not quite trust the article, so I checked out the Mastercard and Visa merchant manuals to verify (text below) and no doubt -- it is right there in plain English. To be clear, merchants can ask to see your identification, but with your refusal to provide it, they cannot prevent you from completing the purchase as long as you have a signed valid card. It is within your rights refuse to provide your drivers license or other identification. Of course, unless this information is required to complete your purchase -- say you are shipping an item.

Why is this important? Credit card fraud is the biggest reason. If a merchant is able to obtain your credit card number, expiration date, security code (CID), and the address and zip code information -- that is more than enough to commit several types of identify theft and / or credit card fraud. By not providing your information on the drivers license, you prevent those critical pieces of information required to commit fraud from getting into the hands of the criminals.

You may think, wait a second -- how quickly can they remember all of that information, and in many cases -- you are right. It is somewhat difficult while you are standing there to capture all of your details. However, all the questionable individual needs to do is remember that 5-digit zip code from your ID. With your credit card swipe -- they have everything else they need as most vendors verify the Credit Card number, the expiration date, the CID, and the billing zip code with purchases.

So, the moral of the story is to be careful of who you give your drivers license to and think twice the next time a merchant asks for identification! While there are two schools of thought here, to me it is clear that the overall damage that someone can do with with the complete information is much higher and time consuming that dealing with the loss or charges on one credit card.

How serious of a problem is this? Serious enough to the credit card companies that they have setup phone hotlines and in some cases even online forms! For Mastercard you can either call 800-MC-ASSIST or go online here. For Visa, call 800-VISA-911. And finally, for Discover Cards call 800-Discover. In many cases they will either convince the merchants to accept your card without identification or write up the vendor for an agreement violation.

From the Mastercard merchant manual on page 48:

9.11.2 Cardholder Identification A merchant must not refuse to complete a
MasterCard card transaction solely because a cardholder who has complied with the conditions for presentment of a card at the POI refuses to provide additional identification information, except as specifically permitted or required by the Standards. A merchant may require additional identification from the cardholder if the information is required to complete the transaction, such as for shipping purposes. A merchant in a country or region that supports use of the MasterCard Address Verification Service (AVS) may require the cardholder’s ZIP or postal code to complete a cardholder-activated terminal (CAT) transaction, or the cardholder’s address and ZIP or postal code to complete a mail order, phone order, or e-commerce transaction.

And from the Rules for Visa Merchants, Page 29.

Requesting Cardholder ID:
When should you ask a cardholder for an official government ID? Although Visa rules do not preclude merchants from asking for cardholder ID, merchants cannot make an ID a condition of acceptance. Therefore, merchants cannot refuse to complete a purchase transaction because a cardholder refuses to provide ID. Visa believes merchants should not ask for ID as part of their regular card acceptance procedures. Laws in several states also make it illegal for merchants to write a cardholder’s personal information, such as an address or phone number, on a sales receipt.


Anonymous said...

As a consumer and a victim of identity theft, I am very happy that my indentification is checked when I use my credit card. Our businesses also take a great loss when fraud is accomplised, because the credit card companies simply do not pay them. That cost will eventually be passed on to the consumer.

Ken Hanscom said...

I am not sure I entirely agree, it seems your position is in a little bit of conflict. By providing identification and specifically your driver's license -- you are in fact opening yourself to a high chance of identity theft.

So, you verify your current transaction at the risk of having your identity stolen.