As a recent victim of credit card fraud, I am now even more well-versed in what is and what is not allowed by your credit card company when you make a purchase with a local merchant and, believe me, the credit card companies are much more on your side than you know.  In fact, it’s the local businesses who are out to needlessly and carelessly throttle you.

The first thing I didn’t know is that local merchants are not allowed to check your ID when you make a credit card purchase.  The credit card companies are against asking for ID when you make a purchase and American Express explicitly orders their merchant vendors to NEVER check your ID when making a purchase using their card.

What the credit card companies know — and clearly local merchants do not — is that ID checking does absolutely nothing to prevent credit card fraud and all it does is needlessly hassle you, the consumer.

If your credit card is stolen and purchase are charged to your account, the merchant doesn’t take the loss.  The credit card company eats the fraudulent purchase.  All the merchant is required to do is make certain the signature on the back of the credit card matches the signature of the purchaser.  That’s it.  Asking for ID does nothing more than bother the consumer because, if the signatures match, and there’s still fraud involved, the card company writes off the loss, not the merchant.

In the case of my credit card being stolen, it happened because of an online security breach at Valve and the thieves created a whole new credit card using my account number but not my name.  Because the name on the card was not mine, and if the thief had to show ID, he’d show ID connected to the name they put on the card.  The thief signed the receipt with the same signature on the card they made, so my card company ate the loss.

If merchants are guaranteed from taking on any loss in credit card fraud if they match signatures, why do merchants insist on making you show ID?  I believe they do it because they’re either ill-informed that they will take the loss, or they think they’re making you feel safer by hassling you to prove you are who you say you are…

Let’s say someone stole your actual credit card with your name and signature on the card and then tried to make a purchase in person with your card.  There’s no way the run-of-the-mill card thief would be able to replicate your signature on the back of your card before you called to cancel the card.  The signatures wouldn’t match and the merchant would not have to take the loss.  Just make sure you always sign the back of your credit card — that’s why your bank urges you to sign your cards the moment you receive them.

Knowing this rule of “only confirming signatures” has already proven to be a great value to me in the marketplace.  Now, if a merchant asks me for ID, I refuse to show ID and, if the cashier is not a manager, I ask to speak the manager.  When I explain to the manager that I know how and why their merchant agreement is structured, they have backed off 100% from “requiring” me to show any form of ID.  The managers know they are only required to match signatures.  Yes, it probably takes me longer to argue with a manager over showing my ID than it would be to show my photo ID to a cashier — but if you’re truly concerned about identity fraud — you should think about just who you are showing your most intimate ID information to… some anonymous person behind a cash register!

The real problem with my new “no ID, or I don’t buy” philosophy, I sense, will come when I make my next purchase at an Apple store.  If you read online discussion forums about Apple demanding not just ID, but GOVERNMENT ISSUED identification if you want to use a credit card, you will read streams and streams of content that Apple will refuse to sell to you unless you “prove” who you are with proper ID.  When Apple store managers are called over by Apple consumers, Apple managers refuse to sell anything paid for with a credit card without a GOVERNMENT ISSUED photo ID — they do not care that their position is in conflict with their merchant agreement with the card companies.  Apple’s policy is arrogant and unfortunate — but they get away with it because consumers want their products more than they want Apple to not needlessly harass them.

Did you also know merchants are not allowed to have a “minimum purchase” amount for any credit card they accept?  It’s true.  Making you buy $10 worth of something when you want to make a 50 cent purchase with your credit card is a violation of their merchant agreement.  You can buy something worth pennies using your credit card if you like.  Merchants don’t like small purchases, and they’ll try to bully you out of them every time, because they get charged transaction fees, but to that argument I say, “Too bad!  That’s the price of doing business!”  If any store requires me to buy something I do not need just so I can use my credit card, I first refuse to pay more and if they continue to hassle me, I refuse to buy from them at all.

Another thing that bothers me is when you pay via debit card, enter your PIN, and the merchant ALSO wants your signature.  Refuse to sign.  Your PIN is your signature and if they have a problem with that, tell them to take it up with your bank.  Don’t let the merchant threaten you.  If you’ve given your PIN and the transaction went through, the vendor has been paid.  Don’t sign that receipt.  There’s no need.  You signing your name doesn’t protect you and it certainly doesn’t protect the merchant.

Did you also know that for credit card purchases less than $25.00USD, you do not have to sign the receipt?  The card companies don’t want you hassled for small purchases, they want you in and out of the store as fast as possible in order to make you happy so you’ll keep using their card and they are actually not happy when these small-time merchants bother you to sign a credit card receipt for purchases less than $25.00.  Refuse to sign.  The merchant has been paid.  Don’t waste your time signing and if they hassle you, tell them they are in violation of their merchant agreement and walk out.

You should also visit all the major credit card companies online and make a complaint against a vendor if you are involved in any of these described hassles.  Consumer complaints against vendors are taken seriously because they are authentic field reports that are impossible to reproduce without direct consumer input — and so it is your moral duty to duly report each and every infraction if you want to make a difference in the business world.  Keep your receipt.  You’ll need it for the details, date, and transaction numbers for your report.

Know your credit card consumer rights!  Your credit card company stands behind you!  Stand up for yourself in the marketplace, because the only person getting hurt is you, and not the merchant, and certainly not your credit card company.

8 Comments

  1. I almost always tell merchants that tell me that there is a minimum that they are in violation of their agreement but go through with it anyway because that is how much I want the thing they are selling, sadly. I just read on The Consumerist that credit card companies are giving the OK for minimums:

    http://consumerist.com/2010/09/amex-visa-mastercard-all-give-thumbs-up-to-10-credit-card-minimums.html

    Funnily, I always thought the merchants who didn’t require me to sign for under 25 were just doing something cool and new!

    1. That’s a good point, Gordon. It’s a confusing issue, though, because those minimums don’t apply to debit card purchases and they can’t be over $10.00 for credit cards. Our local deli has a $5.00 minimum — and each cashier station has a bunch of bananas on the counter so people can easily “add” to their coffee purchase by adding a banana or two or three to meet the $5 minimum. It’s obscene! I won’t be a part of that scam.

      The NYBBB better update their website:

      http://newyork.bbb.org/SitePage.aspx?site=24&id=c603d39c-a770-4aa3-9198-17b99b3e5d56

  2. All major credit card companies have in their almoat 100 page merchant agreements, available online, terms that state merchant may not ask for an id. Additionally all merchants are responsible and take the hit for fraudulent transactions when the card is not swiped and the signature does not match. It is called a chargeback and Amex is the only one who will chargeback a merchant if a customer is not completly satisfied the other do chargeback for fraud.

  3. It’s good to see a ‘consumer’ checking up on FACTS regarding credit card. As a merchant in the paint business for many years, I was made aware of ‘most’ of what is made known here. When I found out about the lack of necessity for a photo ID and the credit card companies REQUIRED it (of me, the merchant), I was mildly surprised.
    On the flip side, it took a lot of responsibility off of me for proving identity. It made life easier.

  4. Great information, but…. the tone is so anti-merchant it’s not even funny. Most merchants are ill-informed and trying to do the right thing (when checking ID’s) Threatening them seems a little harsh of a reaction under the circumstances.

    Also, the part about signature replication is pretty invalid. People sign quickly, and rarely is the signature a perfect match. Store clerks are not necessarily experts in matching signatures (nor should they be). The matching signature is very little protection against credit card fraud and because of this merchants may ask for ID. The credit card company can’t see how you’ve signed your card, therefore, can’t prove that the merchant didn’t match your signature, meaning the signature accomplishes next to nothing.

    Also, making it out that the CC companies are “on your side” is misleading. They don’t really “eat” the cost of fraud. They pass those charges onto merchants when they set up their merchant fees. Merchants in turn pass those costs on to the consumer. For your convenience, you pay more for every product you buy from anyone who accepts credit cards. Of course, those increased costs are also paid by those who use cash, so they are the real losers in all of this. If card companies were truly on your side, trying to avoid fraud to hold down costs, they could require PINs or at least your zip code.

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