(Part One in a two-part series on credit cards)
Recently, I got into a conversation with a friend about Open’s credit card policy. He handles the front desk on occasion, while I work on various projects, and on this particular day, he relayed a story about a customer who hadn’t signed his card and didn’t have ID. As such, my stringently ethical friend didn’t accept the card. Luckily the customer had enough cash for a few of his books, but he left another behind, ostensibly to come back for it later.
As I looked at the lonely left-behind book on the counter, disappointed that it hadn’t made the rather crucial transformation from inventory into liquid capital, a bit of a philosophical discussion ensued.
Now, we’re no Best Buy and my general attitude has been two-fold: One, if folks are running around with stolen credit cards, there are a lot better places to take them than a used bookstore, and two, outside of the movies, are there really that many thieves out there looking to brush up on their literature? I’ll ask to see someone’s ID if the back of their card requests it, but as long as someone isn’t trying to buy a $200 first edition, I figure it’s legit with or without it.
But as we discussed it further, I realized I didn’t actually know what was required, or by whom. I adopted my current credit card acceptance policy from the place where I garnered much of my industry experience: Barnes and Noble. Their policy was to accept all credit cards, signed or unsigned, and to never ask for identification.
Of course, that was in 2001, before identity theft became all the rage, and, upon reflection, I probably ought to have researched this when Open opened four years ago. But, hey, no time like the present. I just have to figure out whose policy I should be following!
I knew it wasn’t the feds or the state: As far as the government is concerned, commerce is private (score one for the libertarians!). As long as everyone is paying their sales tax and no one is buying illegal things, it’s of no concern to Uncle Sam (or Uncle Arnold). The only way the government gets involved is with the privacy laws that vary from state to state, which indicate what ID you can and can’t ask for. (I have yet to figure out which government entity would make—let alone enforce!—that law.)
Since merging with MBNA in January, Bank of America has become the largest credit card issuer in the U.S., so I thought perhaps they would know. But no: BofA has no policy on what ID should be shown at the point of transaction. Their only concern is that their customers use their cards as many places as possible, as easily as possible.
BofA recommends that customers sign the back of their card, but according to their costumer service agent (who uses the “See ID” method on her cards), signed or unsigned, the decision to accept the card falls squarely on the merchant.
Well, since it’s my policy that I’m trying to determine, perhaps my card processor would know?
I was surprised to find out that my credit card processor (UMS banking) sends its merchants a credit card acceptance guidelines and best practices booklet (or, more accurately, “tome”), in which they specify that merchants cannot make providing identification a condition of the sale (score one for Barnes and Noble!). According to internet credit card processor Advanced Merchant Services, though, that policy is not set by the individual processors, but by the big guns themselves: Visa and MasterCard.
So what do the two dominant credit issuers of all of humanity have to say about it?
The same exact thing: A signed card is valid and must be accepted without any further identification. An unsigned card is invalid and the merchant should refuse to accept it, unless the cardholder then signs it in their presence. ID never actually comes into the equation at all.
And what of the mythical “See ID” for all of you hard-core identity protectors and customer service agents out there? The official word: Unless it’s written next to the signature, a “See ID” card is officially invalid, whether or not you have ID to see. Apparently Visa and MasterCard don’t trust driver’s licenses. Or passports. Why aren’t these guys in charge of Homeland Security?
This is why: All these PINs and CVV2s and PCI Security Standards and still the most crucial security step involves a smeary, half-rubbed off signature on a quarter-inch strip of something that doesn’t actually hold ink.
Nice!
In the end, like most things these days, it comes down to liability. And in this case, merchants are 100% liable for any transactions made with a credit card.
If you say you didn’t buy something that is charged to your card, you are no longer liable and both Visa and MasterCard (and Larry H. Parker) will fight for you, demanding your money back from the merchant who took it.
If a transaction is called into question, the merchant must somehow prove that they did their due diligence by matching the aforementioned signatures. American Express takes it to a higher level with a no-questions-asked refund policy, even refunding customers—at the expense of the merchant—for simply being dissatisfied with the transaction (which I’m now adding to the list of Reasons We Don’t Accept AmEx).
So I guess the question isn’t really “ID or not ID.” It’s a lot closer to “Do you feel lucky, merchant?” Or maybe “Do you happen to have cash?”
(Incidentally, the customer never did come back for his book. Hmm. Perhaps next we should cover impulse purchases next.)