Have you ever had your credit or debit card stolen or lost? If so, you may be familiar with the headache of phone calls, emails, and online account changes that have to be made. While you may eventually get your money back, the short and long term effects can be mild to nightmarish. Think waiting a few days for a replacement card to major identity theft. But, the most likely scenario is someone gets your card and tries to use it right away. “In reality, criminals often don’t take the time to practice signatures. They use cards as quickly as possible after a theft and prior to the accounts being blocked” (Card Acceptance Guidelines for Visa Merchants, page 33). We are not talking about sophisticated criminals here. It’s all about the opportunity to get something for nothing. There is one way to prevent this form of credit card fraud – by checking an ID.
My wife recently had her debit card stolen. Within the next 12-14 hrs, someone managed to rack up close to $800 in fraudulent charges. Some were not preventable – under the card’s floor limit of $50 for authorization – but, others were. Those charges were done at Kohl’s, Target, Walmart, and one local convenience store. Since the time frame was so short, and the thief only had the card without PIN or ID, the card had to have been run as a credit. That being said, no one checked an ID.
That got me thinking – I thought merchants were required to ask for an ID when a signature was required expect for small purchases. I later discovered I was partially right, depending on what card I was using. Below I have excerpted from their merchant transaction guidelines the scenarios under which each of the four major credit card issuers (Visa, MasterCard, Discover, and American Express) do and don’t require and ID.
- Visa: When a signature has been obtained, match the signature on the back of the card to the signature on the receipt. The first initial and spelling of the surname must match. (Embossed name and signature do not need to be the same.) An unsigned card is considered invalid and should not be accepted. If a customer gives you an unsigned card, check the cardholder’s ID. Ask the cardholder for some form of official government identification, such as a driver’s license or passport. Then ask the customer to sign the card. The card should be signed within your full view. Check the signature against the customer’s signature on the ID. A refusal to sign means the card is still invalid and cannot be accepted. “See ID” or “Check ID” are not valid substitutes for a valid signature. (Card Acceptance Guidelines for Visa Merchants, pages 32-33)
- MasterCard: Check that the card is signed. For face-to-face unique transactions, request personal identification of the cardholder in the form of an unexpired, official government document (for example, a passport, identification document, or driver’s license) that bears the Cardholder’s signature, the Cardholder’s photograph, or both. Compare the signature, if present, on the personal identification with the signature on the card. Compare the photograph, if present, with the person presenting the card. If a MasterCard card is presented to a merchant and the card is not signed, the merchant must obtain an authorization from the issuer, ask the Cardholder to provide identification, and require the Cardholder to sign the card. The merchant must not complete the transaction if the Cardholder refuses to sign the card. (MasterCard Transaction Processing Rules, pages 3-2 through 3-3)
- Discover: You must verify there is a signature on the signature panel on the back of the card and verify that the name on the back of the card is reasonably similar to the name embossed on the front of the card. If a card presented is not signed, you must request two pieces of identification, one of which is a government-issued picture ID. When you have confirmed that the person presenting the card is the cardholder, you must require the cardholder to sign the back of the card. If you are unable to positively identify the presenter as the cardholder, contact Discover. (Discover Network Program Agreement, pages 5-6)
- American Express: Merchants must conduct In-Person Charges and follow Card acceptance procedures according to the type of In-Person Charge and Card presented. For example, Merchants must: verify that the Card is not visibly altered or mutilated, verify that the customer is the Cardmember (Cards are not transferable), capture Card Data, obtain an Authorization Approval, instruct the Cardmember to enter the PIN or obtain signature (when required) and verify that the signature is identical to the name on the Card, compare the signature on the Charge Record (when required) with the signature on the Card, match the Card Number and Expiration Date on the Card to the same information on the Charge Record, verify the Card’s Expiration Date, and validate the Card’s presence (key-entered Charges only). This list is not exhaustive and we may, at our sole discretion, modify Card acceptance procedures. (American Express Merchant Reference Guide – U.S., page 22)
Basically, MasterCard and Amex you should always check ID, Discover and Visa it depends. One exception to this is a purchase below the floor limit agreed upon by the issuer and the merchant. That means that no authorization is needed below the limit except to see if the card has been reported. This limit is no greater than $50. This is only true for 3 of the 4, AMEX has a floor limit of $0. These floor limits originated in the days of card imprints and were used as a way to save the time and hassle of getting a small purchase approved. Nowadays, when all you have to do is push a button, it seems a bit lazy not check someone’s ID.
So here is my simple solution – require merchants to check ID every time they are presented a credit card for an in-person transaction without a PIN. I know it sounds a bit wordy, but that’s what happens after you read too much of the fine print. Everybody needs their own card with their own name on it. Make the merchants behave more responsibly if they want our money. They don’t have to write anything down. They just have to click that they verified you are who you say you are. The bottom line is protecting your money.
If you think this idea is a good one, please visit my petition on Change.org at Require Merchants to Check IDs When Accepting Credit Cards for In-Person Transactions Without a PIN. If you did not like my ideas, thanks for reading, and I hope you never get separated from your card.