When I’m not writing about self-reliance or packing bug-out bags for my friends and family, I work part-time as a cashier. Recently, a customer paid with a credit card. When I went to swipe it, I saw “ASK FOR I.D.” written in Sharpie on the back. I had never seen a card like that! Surprised, I asked for his ID, noted that the name on his license matched his card, and processed the order.
The customer said the ID request on his card was meant to protect him from identity theft or fraud. I wondered if it actually helped. So I took to the internet and here is what I found out! Information from Experian.com:
Turns out, there is a hotly contested debate over the benefits of asking for ID on a credit card. Here are the two sides of the discussion and the pros and cons of each.
The recommendation to sign your credit cards is based on the idea that the clerk will compare your signature to the signature on the credit slip. In theory, if the handwriting does not match, the clerk will know something is wrong and will stop the transaction.
Proponents of the “check ID” approach argue that the clerk is compelled to check the person’s identification, which they wouldn’t necessarily do otherwise. The theory is that the person trying to use your card fraudulently would not have identification matching the name on the card. The clerk could then stop the transaction.
This sounds reasonable, too.
Unfortunately, both are based on several flawed assumptions.
The first is that the clerk – often a part-time, teenage, high school student – will even look at the back of your card. The second is that the clerk will ask for identification even if the card tells them to do so.
The third assumption is that the person who has your card will not have false identification matching the credit card. A savvy identity thief will likely have very good false identification, which is the strongest argument for signing your card. While the name on the fake ID will match that on the front of the card, the handwriting for the signature is less likely to be identical.
Still, the odds of an untrained clerk identifying a reasonable forgery are probably pretty slim. Despite that fact, I lean toward signing your card. I think that signing the card gives the clerk a slightly better chance of catching the identity thief simply because it provides something to match against.
When you sign “check ID,” a sophisticated identity thief can simply whip out his fake drivers license. The clerk will see that the name printed on it matches the name printed on the card and the transaction will go forward.
And that puts you back at the beginning. Is there a better chance of being protected by the clerk comparing your signature to your card or the clerk taking the extra step of asking for ID?
The debate continues, but I needed more information. I also worried, as a cashier, that I could be put in jeopardy of losing my job if my state or store had a policy against checking IDs. Here’s what I found regarding laws about ID information from CreditCards.com:
Networks hold the cards
While some states have laws barring a cashier from writing down your ID information, the card networks — Visa, MasterCard and the like — have the most say in whether merchants can even ask for identification. The agreements merchants sign when they decide to accept cards from those networks include rules that govern card verification procedures.
All the networks allow a merchant to ask for identification. MasterCard and Visa, however, explicitly prohibit retailers from requiring an ID to accept a properly signed card. “They can ask for that ID, but you can refuse to show the ID and they still must accept the card,” says Paul Stephens, director of policy and advocacy at the Privacy Rights Clearinghouse, a nonprofit that advocates for consumer privacy rights.
On the other hand, Visa and MasterCard rules prohibit the acceptance of unsigned cards. If you present one, the merchant must ask you to sign the card and supply an ID. Visa guidelines specify that it must be an official government ID.
Discover’s policies are more intrusive. They state that a store employee who has doubts about the validity of a card should “request and review additional identification” from the customer. And for an unsigned card, the company requires two pieces of identification, including one government-issued photo ID.
American Express is more vague. It requires merchants to “verify that the customer is the card member,” but its rules make no direct mention of requiring an ID.
“American Express doesn’t really have a policy on it,” says Linda Sherry, director of national priorities for Consumer Action. “If the merchant wants to ask for an ID, that’s fine.”
Shop clerks don’t always comply
Stephens says many store owners aren’t aware of card issuer restrictions on requiring an ID, and set store policies that violate the rules. In other cases, employees may unwittingly break their own store’s own policy by requesting an ID, out of fear of having an unauthorized transaction slip by.
Retailer location can make a difference, too. Stephens recalls a personal experience when a store’s ID policy seemed to be applied in a discriminatory way. “It was a supermarket chain in the San Diego area, and when I shopped in a more affluent area I was never asked for an ID,” Stephens says. “One time I went to one of the chain stores in an area that was socioeconomically lower than the neighborhood that I typically shopped in — it was a rather small purchase — and I was asked to show ID.”
Intentions are good
The whole idea behind checking a cardholder’s identification is to prevent the use of stolen credit cards. Some payment processing consultants advise their clients to check IDs with that thought in mind.
Donna Broder, vice president and agent at Card Solutions International in Royal Palm Beach, Fla., says it behooves retailers to take extra steps to protect themselves against the financial risk of a fraudulent purchase and subsequent charge-back.
“Once it goes into a charge-back … the merchant’s going to lose, because they accepted a stolen card and didn’t do their due diligence,” Broder says.
Broder gives the example of a client with a chain of mall T-shirt shops who was getting hit with numerous charge-backs because of stolen credit cards and card numbers. After the employees became more consistent about checking IDs, along with signatures and holograms on customer credit cards, the number of charge-backs declined, she says.
“Some people are offended by [being asked for an ID]. I’m not,” Broder says. “They’re protecting you, the cardholder, as much as they’re protecting themselves.”
Protecting personal information
While many shoppers don’t mind showing their IDs, they may have concerns that their privacy will be at risk if the personal information on those IDs gets into the wrong hands.
“I think people are nervous that this information will be recorded and that an employee will find it and use it for fraud or ID theft,” Sherry says. “If you look at someone’s license, you’re going to know their date of birth, their address. Then you look at their credit card and you not only have the credit card number, but you have the secret code on the back, so you could steal their identity or actually buy something with the credit card.”
Stephens says customers paying with Visa or MasterCard who want to protect their personal information can reasonably push back if a store clerk asks for an ID. “There are various reasons why they may not want to give out that information, and certainly they are within their rights to refuse to do so,” Stephens says. “The only exception would be, after the card was run through the system, if there were some sort of flag that came back to indicate that the card had been reported stolen or there was something suspicious about the transaction.”
Though Broder strongly advocates checking IDs, she says there’s no need for store clerks to record the information. “If the employer wants to know that an employee is following their strict rules for accepting credit cards, all they have to ask them to do is put a symbol on the [receipt] indicating they verified ID,” she says.
Visa’s guidelines state that, when validating an unsigned card, merchants should write a customer’s ID serial number and expiration date on the sales receipt “where permissible by law,” while MasterCard rules say not to record information from the cardholder’s ID.
More than a dozen states have laws restricting the recording of personal information during credit card transactions. California led the way with the passage of the Song-Beverly Act of 1971.
In one test of the law, the Californa Supreme Court ruled that asking for a ZIP code is personally identifiable information, so merchants that do so as part of their marketing efforts risk fines under the state law.
That law and others like it don’t prohibit merchants from checking IDs. But “the minute you record that information, either by writing it down or entering it into an electronic system, at that point you most likely have broken the law,” Stephens says.
Overall, I think the customer I served had a good intention by asking for ID on his credit card. For him, it worked out well– I am not a nefarious cashier. I did not steal his information or make copies of his license to commit identity theft.
But I could have.
At the same time, the customer proved to me that he held both a license and credit card with matching names, and the picture on his license was without a doubt his image.
I think the debate can swing either way. What do you think? Leave a comment below!