Stores are violating their contract with the credit card companies if they set minimum or maximum charges, or force you to show ID in addition to your credit card (with the obvious exception being for age-limited purchases). Depending on your state and your card issuer, surcharges or “convenience fees” may be banned as well. The best way to straighten these guys out is to report them to the credit card company. People who have done so on the Credit Boards message board say that when they report a merchant, they get a letter from the credit card company and when they go back to the store, the shenanigans have stopped. Here’s all the contact infos for the credit card companies to file a merchant complaint, as well as links to merchant agreements, in case you feel like standing up for your consumer rights. Someone better warn Amy’s Ice Cream!
Visa
Phone Number: 1-800-VISA-911 (International: 1-410-581-9994). Or call the number on the back of your card
Mailing Address:
Visa U.S.A. Inc.
P.O. Box 194607
San Francisco, California 94119-4607
Online: Your card issuer’s website may let you send them complaints about merchant violations and start a dispute if your were charged a fee to use your card.
“Visa merchants are not permitted to establish minimum transaction amounts, even on sale items. They also are not permitted to charge you a fee when you want to use your Visa card.”
“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 transaction because a cardholder refuses to provide ID. Visa believes merchants should not ask for ID as part of their regular card acceptance procedures.”
See this VISA faq on how minimum charges are not allowed.
Rules for Visa Merchants.
MasterCard
Make a report online.
Phone Number: 1-800-MASTERCARD (International: 1-636-722-7111) Or can also call the number on the back of your card.
“A merchant must not require, or post signs indicating that it requires, a minimum or maximum transaction ammount to accept a valid MasterCard card.”
“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.”
American Express
Make a report online
Phone Number: 1-800-528-4800 (International: 1-336-393-1111)
Mailing Address:
American Express
P.O. Box 297812
Ft. Lauderdale, FL 33329-7812
“American Express’s regulations do not explicitly prohibit minimum charges, but its policy is to discourage any merchant practices that create a “barrier to acceptance.” Amex does prohibit “discrimination” against the Amex card, however, so if a merchant has no minimum or maximum charge or require ID for Visa and MasterCard, the merchant may not discriminate against Amex by imposing a minimum or maximum charge or requiring ID.” [gofso]
RELATED:
MEGA UPDATE: Requiring Minimum Credit Card Purchases is a Violation
Stores can’t set credit card minimum [MSNBC]
California Civil Code Prohibiting Surcharges for Credit Card Use
What Merchants Can And Can’t Do In Regards To Credit Cards
Google Answers on State Laws Regarding Surcharges
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@astrochimp: Sadly you have been misled. They are a per transaction plus percentage.
Questions (ala D. Schrute):
1. A music store in my area has two prices marked on every item: one for paying cash and one for paying via credit card. Is this legal? The cash price is cheaper by a buck or more than I would expect to pay at a big box place, so I’m not complaining, but it still seems illegal.
2. Does anyone here worry about governmental violations of privacy? In many ways, it seems like the Patriot Act allows for digging into any records if you’re a “terror suspect”. I don’t doubt it’s been abused before, though I’m too busy to look up any instances. On top of that, so many telecoms are surfacing that have had the government go through phone call records. My friend got a satellite dish and payed cash because he planned on pirating cable. Makes sense to me.
Asking for ID to make sure you’re not using a stolen CC actually seems like a pretty good idea to me.
@HUMPHRMI-I buy gas from Costco, so what this station does doesn’t generally affect me. They are cheaper, even with their surcharge, than the Chevron station across the street which only shows one price.
But yes, I let this become a crusade and a matter of principle. When I see references like this lead story, I want to tell others not to waste their time complaining about surcharges. No one really cares to enforce most rules, regulations and laws these days. These only apply to individual people, not to businesses.
@STEVIED-You sound like the lawyer these guys probably retained.
It is not illegal or against credit card rules for companies to offer a discount for cash. It also is OK to charge a surcharge for the use of pure DEBIT cards OR the DEBIT function of credit cards. What is illegal or against the rules is ADVERTISING different prices for credit card vs. cash prices, effectively imposing a surcharge on credit card usage.
The rule is that companies accepting Visa and MC (and sometimes American Express) cannot ADVERTISE one price for cash and another price for credit. They have to ADVERTISE AND CHARGE the same price for both at the pump. BUT THEY CAN offer a cash discount AT THE REGISTER (2%, 3%, whatever), which would have to be computed and deducted as a separate transaction. With gasoline prices, this could also cause them tax issues with the tax authorities (is tax being charged on the discounted amount or the full amount? Did the owner also refund the tax difference also or pocket it? Parts of pennies add up over many transactions!).
You will never find major chains adding a surcharge for credit card use (Chevron, Shell, Exxon, etc.) because they know the rules and that this practice is generally illegal. Stations that try this gambit tend to be small independents.
Most people are not aware that this practice is a violation under Visa & MasterCard rules and that continuing violation can lead to loss of the businesses merchant account with the credit card company.
Reporting these violations and getting action taken is never easy. Visa and MasterCard make the task difficult because you are supposed to report such violations to your own bank (the bank that issued your credit card). However, given that your bank may be across the country, they may not be very motivated to do much of anything about the problem reported.
Technically, they are required by Visa credit card rules to investigate the allegation and they are supposed to report it to their own internal compliance department which is then supposed to investigate and/or report the incident to the main Visa/MasterCard compliance group.
You may also encounter customer service people at the bank credit card company who do not know the rules themselves and may give you a hard time. Refer to the links below for further information that you may have to quote. In you keep getting flack, demand to speak to a supervisor.
HOWEVER, NOTE THAT SINCE SURCHARGES ARE AGAINST VISA AND MASTERCARD RULES, you are entitled to a refund for the surcharge amount and should petition your credit card company to get your refund, even if it is pennies. You should file a dispute and demand that the difference between the cash price and the credit card be refunded to your account. Sometimes, you’ll get lucky and the bank will credit your account with the full amount you paid for the gas, meaning you get a free tank of gas.
Here are some relevant links:
From:
[www.usa.visa.com] – (Search the word SURCHARGE here)
“No Surcharging – Always treat Visa transactions like any other transaction; that is, you may not impose any surcharge on a Visa transaction. You may, however, offer a discount for cash transactions, provided that the offer is clearly disclosed to customers and the cash price is presented as a discount from the standard price charged for all other forms of payment.”
For Visa complaints and to bypass your local bank report incidents to:
Web Site: http://www.usa.visa.com
Email: VisaExecutiveInquiries@visa.com
Voice 410.998.8379 or 800.921.5539
Wikipedia entry for Visa:
[en.wikipedia.org])
California Civil Code:
California Possesses a “No Surcharge Rule” for Consumer Purchases
“No retailer . . . may impose a surcharge on a cardholder who elects to use a credit card in lieu of payment by cash, check or similar means. . . .”
Statute: Cal. Civ. Code § 1748.1(a) (West)
Discounts for Cash Payments are allowed in California
“A retailer may, however, offer discounts for the purpose of inducing payment by cash, check, or other means not involving the use of a credit card, provided that the discount is offered to all prospective buyers.”
Statute: Cal. Civ. Code § 1748.1(a) (West)
Statutes cover: Credit Cards only
Statute: (Cal. Civ. Code § 1747.02(a) (West) (defining “credit card”)).
Separate provisions for debit cards (Cal. Civ. Code §§ 1748.30 – .32 (West))
[www.todaysmoneymatters.org]
You can also check your own state rules at the above link.
@astrochimp:
Credit card fees are a combination of various fixed fees and a percentage of the transaction. The fees and percentages are not indentical for all businesses and the percentages for a merchant may vary with the size of the transaction.
The fees and percentage are based upon the primary business classification of the vendor, the volume of transactions typical for that industry as well as the specific merchants volume of transactions. The average size of the transactions for the industry and the merchant, the rate of merchandise returns typical of the industry as well as actual merchant returns. The rate of chargebacks for the industry and the merchant. The risk of stolen cards being used. The percentage of transactions complete over the counter versus online and mail order transactions. And the final factor, whether the merchant accepts more than one credit card.
Do “better” than your industry classification and your fees and % will be lower.
As a general rule jewelry stores are going to pay out their eyeballs in merchant fees whereas car dealerships with similar transaction volumes and transaction rates would pay lower fees simply due to the higher return rate common with the jewelry industry. A sit down family restaurant will have a much higher transaction rate than McD’s, but McD’s could have a greater volume of sales, so restaurants are subdivided into different classes with different fees.
The fees are upfront amounts. Doing this late at night so I am going to skip the details. Basically there are 3 or 4(?) “fixed” fees that are common to every transaction. Does not matter how big or small the sales may be the fees are always accessed. Then other fees are charged and the percentage is charged.
In total, I pay $3.17 right off the bat on any credit card transaction. I pay more in upfront fees because I am charged a variable % based upon the transaction amount and my number of transactions are relatively low in volume. The next business down the road might pay $0.50 right off the bat plus a fixed percentage that is much higher than my variable rate.
@iamme99:
Nope, not a lawyer. Never been to law school. Never had a desire to be a lawyer. I avoid lawyers like a STD.
Part of the reason I can see for Credit Card companies to not require a picture ID is that one is not required to get a credit card. All you need is a credit hitory which also does not require a picture ID.
Credit cards have become a real liability to us. I never use a CC for a purchase under $20. I have had my CC accounts stolen and used on several occasions and it wasn’t nearly the headache to fix that trying to get everything replaced (and changed) when my Dh’s wallet was stolen was. I’ve had my CC number stolen and used from a purchase I made over the phone – luckily it was the only purchase – besides the fraudulent ones- that I had made on that card – it was previously paid off. Made it very easy to track down the phone teller that stole it. I never mind when vendors want to see my ID. I always have it ready to show at the checkout so it doesn’t take up extra time. It’s no more inconvenient than showing ID for a check – and a check has a lot of your information on it. It was really bad back when my state (VA) put your SSN as your driver’s license number. I had to make special request to get a number that wasn’t my SSN. I can’t imagine using a CC for fast food purchases. Unless I was absolutely starving and had no cash. And you wouldn’t believe how many vendors never even look to see if or how the CC is signed nevermind asking for ID.
@StevieD: So you get near lawyers when you are drunk???
@trollkiller: Should have read: “So you ONLY get near lawyers when you are drunk???”
sorry
AT THE BOTTOM OF THE COMMENTS… So nobody will ever read this but… The credit card companies won’t let merchants request ID, but in the next breath the credit card companies REQUIRE an imprint of the card and a visual verification of the signature to “Perfect” the transaction. Anything less and the card companies can force a chargeback on the merchant. It don’t matter if you swipped your card and the mag strip got read. It don’t matter if you signed some receipt. The only locked down transaction is imprint of the card, signed AND THEN it costs the merchant some serious cash… say $20-$50 to actually send all that documentation back to Visa or Mastercard. Nice way to tell the merchants to eat the losses. Hell, it even costs that banks that issue the cards to initiate a charge back against the merchants. I know of one bank that worked a $20 minimum. Any chargoff below that they just credited instead of spending the money.
I wish I knew about no minimum when I last went to NYC. One of the delis in midtown demanded I increase my order before they would take a card.
so if my college charges $15 to pay for tuition i can report them and get around the fee?
I think the reason that most people will go through the hassle of trying to complain to a CC for a minimum purchase is that when you try to persuade the merchant to just accept your card on the basis that they are violating their agreement, they could honestly care less. It can be frustrating, especially when the minimum purchase amount they require is more than the average price of what the lone person might be buying ($5.00 at an ice cream shop when the medium w/topping is $3.50). Yes, I know about merchant fees and I do think that it is unfortunate to have to pay them. But what about the inconvenience that I go through having to tack more purchases on my sale when I made the “mistake” of running out of cash at the last vendor? If you don’t want to pay those fees, just don’t take credit cards!
I have a question for the “SEE ID” camp. Doesn’t the proliferation of the self-swipe machines negate writing it on your card? Most places you use your card now you don’t even hand it to someone anyway. If you’re checking out at the grocery store do you swipe your card yourself, then hand your card and ID to the clerk?
The same people who think showing ID decreases CC fraud (or writing ‘show id’) also think airport security is effective and reasonable.
So far no compelling reasons about all I got was: It’s the principle? Principle to help the credit card companies make more money while you screw both yourself and the small merchants? Do you also carry a balance so that you can pay them interest on principle, too???
If they want to enforce this policy, they can either A) pay me or B) do their own dirty work.
As IAMME99 indicates, they really don’t care to enforce it anyway.
I was riding my motorcycle in the country this past summer and got a flat. It was excruciatingly hot and I had to push my bike half a mile to get it off the back roads with no shoulder to a small liquor store with a parking lot. I didn’t have any cash on me, just my ID and a credit card and my cell phone. So after I called for a tow, I went inside the liquor store and wanted to buy a bottle of water, to which I was refused because it was only a $2 purchase with a CC. I’ve never been so pissed.
Just out of curiosity, if a merchant has two different prices for a good (cash vs. credit), does that practice also violate these merchant agreements as well?
Vendors at computer shows, for example, are notorious for charging a higher price for a product if you are buying it with a credit card.
@surgesilk: How many guns get confiscated at the airport each year? How many thieves get stopped by an ID each year. The answer to both is; more than you will ever know.
Until the credit card companies say “don’t worry merchant, we won’t take away your money for that fraudulent charge due to our policy” businesses will continue to protect themselves by asking for ID.
As you can see there is no huge crackdown, why? The businesses will tell the CC companies to piss off. When the risk out weighs the rewards, businesses will drop the risk. Don’t believe me? Count how many businesses won’t take checks.
@Monster Rain: Depends on how it is presented. If it presented as a cash discount then no violation. If it is presented as a surcharge then violation.
Example: Widget $3.99 cash price $2.99 = no violation
Widget $2.99 credit card price $3.99 = violation
Just a matter of wording.
Merchants are supposed to pay for the right and privilege of being able to accept credit cards. That works fine for the giant chains and corporations who negotiate lower fees, rates, and rules. The local merchant has to accept higher per transaction fee and higher percentage fees than chains across the street. This combined with the way they attempt to charge-back everything to the merchant really puts some mom & pop shops at a disadvantage.
Wonder why some shops want additional ID? They pay a transactions fee plus a percentage on the purchase, and then Visa/MC/AmEx will attempt a charge-back on a fraudulent charge. With the charge-back you pay an additional transactions fee and percentage on the return, again.
How about my buddy’s psychotic wife, who refuses to try clothes on, at the store. She regularly buys thousands worth of clothes on credit and returns them all, only to do it again. Merchant pays all fees both ways.
The neighborhood merchant is forced to sign into these agreements or close shop. Because, like many of you have stated, you will only go to places that accept credit/debit cards. Talk about being stuck between a rock and a hard place. The free lunch you get with the 1% cash back is being made up as merchants slowly raise prices as the cost of doing business has been completely nullified in many cases.
The credit card companies (Visa/MC/AmEx) all seem to have similar rules, with all costs pointing in their favor, and ultimately against the consumer in higher prices. Prove collusion under an oligopoly under the Sherman Act and all consumers and local merchants might win (who’s kidding who, only the lawyers will win). Or, prepare for more bog box merchants with low salaries as they replace the rest of the local and small businesses across the country. Hello Wall-Mart!
Thank you so much for posting this information. I’ve thought of whistle blowing in the past but then it’s such a pain in the patootie. Wish I could just send pictures of the place.
@surgesilk: Very well put.
I’ve worked several retail jobs where we were required by company policy to check IDs with credit card transactions, but I never once rejected a sale based on the signature not matching. I would go through the motions of “checking the signatures,” but even when they were obviously different, I had no incentive to care and every reason not to.
On a side note: I always thank the merchant for checking my ID with my drivers license. I know they get alot of flack from people all day because they check.
@Ben: Since I harshed on you for the last post, I have to say: Great followup. Lotsa good detail. *This* is what Consumerist should always be!
This what i dont understand, which inconvence do you like more. someone checking you id for you to buy something, or you losing your wallet and because they don’t check id you credit card is maxed by the end of the day…and you have the headache of straighting it all out, or better yet your kid takes your card and charges a bunch of stuff on it that you can’t have the credit card company mark as desputed without them arresting your child, and now you have to pay it back…i work in retail, we check id’s to protect customers and business. is it really that big a deal?
small businesses are NOT screwed over by the transaction fees. because on average people purchase more when they use credit cards–often 10% or more on average. also some people purchase things on credit when they would not have bought anything at all if they didn’t have alternatives. this more than makes up for the small cent difference they lose on a $5.00 purchase versus a $10.00 purchase or a $10.00 purchase versus a $20.00 purchase. on average is plays out better for the business–this is why they are accepting credit cards in the first place. they aren’t just doing you a favor by accepting credit cards they are doing themselves a favor.
@Jorel: Please cite where CC user are more likely to buy 10% more.
True businesses normally are not doing you a favor by taking credit cards. If a business does accept a credit card for an amount that fess would negate or exceed the profit then they are doing you a favor.
And yes they are screwed over by high transaction fees. Just because something is still profitable does not mean you are not getting screwed.
@DallasDMD: If the store stops accepting credit cards, this business won’t last long.
@rikkus256: Funny they said the same thing about checks.
Credit vs. Cash for Gas: From the Rules for Visa Merchants: “Always treat Visa transactions like any other transaction; that is, you may not impose any surcharge on a Visa transaction. You may, however, offer a discount for cash transactions, provided that the offer is clearly disclosed to customers and the cash price is presented as a discount from the standard price charged for all other forms of payment.” In fact, California Civil Code section 1748 voids the contract provision if a card issuer prohibits merchants from offering cash discounts.
ID can be required in California: Even though Visa’s rules say that merchants cannot refuse transactions if a cardholder refuses to provide ID, CA state law does allow merchants to require it (from CA Civil Code section 1747.08): “This section does not prohibit any person, firm, partnership, association, or corporation from requiring the cardholder, as a condition to accepting the credit card as payment in full or in part for goods or services, to provide reasonable forms of positive identification, which may include a driver’s license or a California state identification card, or where one of these is not available, another form of photo identification, provided that none of the information contained thereon is written or recorded on the credit card transaction form or otherwise.”
I have a store. Most merchant fees range between ).17 – .22/per swipe and then anywhere from 0.7 – 2.0 percent of the item charged.
So on a $10 swipe… the merchant might lose out on .40.
Not really a big deal. And yes, we do pay higher percentages for rewards + business cards.
I don’t have a minimum. It really only bites into “profit” if you have people charging things that are $1.
I have experience working in a few banks and have dealt with chargebacks and even attended a VISA chargeback seminar which has been a real eye opener. People believe things that are just not true. For one the merchants are NOT required to VERIFY the signature on the back of the card vs the signature on the receipt. They are only required to VERIFY that the card AND receipt are both signed. Technically, the names do NOT have to even match. This is to the benefit of the merchants who do not want to be chargedback due to a signature not matching.
Once the card is swiped and they get the approval, there is nothing more than keeping the signed receipt on file for a potential chargeback that the merchant has to do. If you are a merchant and have $800 in chargebacks this is because you did NOT keep the receipt showing that it was signed. It has nothing to do with asking for ID. In fact asking for ID is acting like all of your customers are thieves much like asking to show a receipt at the door when you obviously just came from the register.
I have refused to show ID when asked and the clerk has just gone through with the sale anyway. I have also shown the ID when I have forgotten to sign a new card.
I did return an item immediately at Radio Shack after showing ID because the other clerk started yelling at me that it was for my benefit so they lost that $30 sale and all future battery sales from me.
Most of the time I avoid this confrontation by having my wife pay. I have called my bank about merchants requesting ID and they seem to think that it is ok so it is a waste of time fighting the ignorance of the retailers and bank reps. I also don’t see the point in fighting over the minimum charge although I have at times not had cash on me.
Lastly, customers are NOT responsible for any charges if your card is lost or stolen. You have to report it right away and dispute all charges as soon as you realize your card is lost or stolen. Also, don’t forget to dispute ATM withdrawals as well if they are not done by you.
Ok, what about the asking for personal information though? Guitar Center in NYC asked for a picture ID, and then my address, and THEN my phone number. When I told them I don’t give out my personal information, they told me they NEEDED it so the banks could prevent credit card fraud involved with the sale of musical instruments. I smelled a lot of bullshit, because I was buying a $20 songbook. Finally I got the guy to admit that they were putting me on some list so they could call me and send me crap in the mail. I reported them to Visa because they lied to my face and had no qualms about doing so.
@astrochimp:
Credit card fees are always two part. A fixed fee and a percent. A normal fee for a merchant would be in the area of 25 cents + 2.5% of the transaction.
@macgyver314:
Sorry. Didn’t see page two of the comments before posting.
@trollkiller: A Dunn and Bradstreet study stated that if you pay with a credit card, you will statistically spend 12%-18% more on your purchases as opposed to paying with cash.
@nemesiscw:
yeah its 75 cents it always pisses me off.
@Troy F.:
They are referring to a minimum charge to use a credit card. The delivery minimum does not count.
A new comment on old article is strangely out of place, I know, but thanks for this post. I just used the instructions here to report a retailer to my card issuer, because they were not only in violation of their merchant agreement, but they were rude and nasty about it, as well.
Thanks Consumerist!
I’ve gotten screwed twice by this: 1. I was kicked out of walmart in Oneida, NY for refusing to show ID with my credit card, and 2. I was fired from Gamestop in Syracuse for putting someones sale through when the customer refused ID with THEIR cc ( management required me to ask, I didn”t know better at the time.) Upstate/Central NY has the most idiotic people running (large) businesses.
This only glances off the surface of *my* favorite card issue: I’ve been told for (literally) decades that merchants aren’t allowed to surcharge card purchases…
so how do gas stations get away with it?
They don’t even bother with the “cash discount” subterfuge these days, though they should never have been allowed to in the first place…
If they *accepted* checks, at the higher rate, then I’d call it a “cash discount”, but most don’t.
I just had a merchant in CA say there is a California state law which allows them to have a minimum purchase when accepting credit cards. Does anyone know if that is correct?
For anyone clicking on this article late (in the 3-1/2 years since it was posted), businesses are now allowed to have a minimum. You may still report a merchant for demanding an ID–though have you noticed that more stores seem to ask for it in–ahem–certain areas?
As to “what’s wrong with asking for an ID”? Many seniors do not have a current drivers license–it’s enough of a hassle for them to find someone to take them to a store. Many of them have their adult children use their cards to get them what they need. It’s just easier for the elderly parent. Also, notice the latest hubbub over the possibility of having VOTERS show ID? It’s very sticky.