As you might imagine, we get a lot of questions about using credit cards. Based on those piles of emails we’ve put together a list of 10 things a lot of people don’t know about credit cards. Enjoy!
1) Unsigned Cards Are Not Valid And Merchants Can And Will Refuse Them
You might think that everyone knows that you have to sign your credit card in order for it to be valid — after all — there’s a panel on the back that says “Not Valid Unless Signed,” but you’d be shocked at the number of angry emails we get from people who have tried to use an unsigned credit card with “SEE ID” or “CHECK ID” written on it and were turned away when they refused to sign their card.
Here’s what VISA says should happen when you present an unsigned card:
1) The merchant will ask for your government ID.
2) You will be asked to sign the card. If you sign it, the signature on the card will be compared to the signature on the government ID. If you refuse, the card will not be accepted.
Here’s VISA’s official statement on “See ID”:
Some customers write �See ID� or �Ask for ID� in the signature panel, thinking that this is a deterrent against fraud or forgery; that is, if their signature is not on the card, a fraudster will not be able to forge it. In reality, criminals 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. They are actually counting on you not to look at the back of the card and compare signatures�they may even have access to counterfeit identification with a signature in their own handwriting. �See ID� or �Ask for ID� is not a valid substitute for a signature. The customer must sign the card in your presence, as stated above.
Most merchants don’t follow this policy, but some (most notoriously— the U.S. Postal Service), are quite strict.
2) The Maximum Liability For Unauthorized Use Of A Credit Card* Is $50 According To Federal Law
The Fair Credit Billing Act protects you from suffering damages due to unauthorized use of your credit card. If you report a lost or stolen card before anyone uses it, you are not responsible for any charges. If you do not report it before an unauthorized use you are liable for a maximum of $50.
(*Credit cards only. Debit cards and ATM cards are covered under the Electronic Fund Transfer Act, and your liability depends on how quickly you report the loss. Unlike credit cards, debit and ATM cards can have unlimited liability in certain circumstances.)
3) Merchants Cannot Require You To Present ID, Unless Your Card Is Unsigned
Some consumers enjoy it when a clerk asks to see their ID. Others do not. In some states, it’s actually illegal for a store to record any additional information (such as an address or drivers license number) as a condition of processing a credit card transaction (unless the address is needed for shipping, of course.) For some reason this is always a hotly debated topic, so we’ll go right to VISA for the answer:
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 purchase transaction because a cardholder refuses to provide ID. Visa believes merchants should not ask for ID as part of their regular card acceptance procedures. Laws in several states also make it illegal for merchants to write a cardholder’s personal information, such as an address or phone number, on a sales receipt.
We think that’s pretty clear. Don’t want to show your ID? Don’t.
4) Merchants Cannot Require A Minimum Transaction Amount
Unfortunately, all major credit card companies have now changed or are planning to change their policy regarding minimum charges.
5) Merchants Cannot Charge A Surcharge For Using A Credit Card, However, They Can Offer A “Cash Discount”
You may have noticed that gas stations are starting to offer a different, higher price for credit cards. This isn’t technically allowed— unless it is marketed as a “cash discount.” In other words, if you fill up your car and find that you’ve been charged more than advertised because you paid with a credit card — that’s not allowed. If, however, you decide to pay with cash because you saw an advertised “cash discount” to the “regular price” — that’s ok. A subtle distinction, but an important one.
(There is something called a “convenience fee” that some institutions are allowed to charge if they do not typically accept credit cards in their normal course of business. The example VISA gives is a utility company where the customary way is to pay by mail or in person. The rules for charging this fee are somewhat complicated and there are loopholes, etc.)
6) Many Credit Cards Have Programs That Will Automatically Double The Manufacturer’s Warranty And Other Excellent Benefits
We get a lot of complaints that can be easily solved by the complainee’s credit card company. We’ve helped readers get laptops replaced out of warranty, and helped them get their money back when Best Buy sold them a box full of bathroom tile instead of a hard drive. Your card may come with extended warranty protection, 90 day accidental damage protection that includes vandalism, rental car insurance, road side assistance, baggage insurance, and return protection. You should be aware of what benefits your credit or debit card offers so that you remember to use them when you need them.
7) Merchants Are Not Allowed To Make You Give Up Your Right To A Chargeback
You might see a receipt that has suspicious-looking waiver stating that you’re agreeing to give up your right to issue a chargeback against the merchant for any reason, no matter what, period. These waivers are the result of some crafty entrepreneurs selling sales-receipt paper with the waiver printed on it, claiming that it helps protect the merchant. It’s all nonsense and it isn’t allowed. If you see it, you should report the merchant.
8) Merchants Are Not Allowed To Place A Hold For The Estimated Tip
Because so many consumers have instant access to their account information, merchants aren’t allowed to place an “authorization” for an estimated tip. For example, if you go to dinner and the bill is $100 and you pay with a credit card, the restaurant might be tempted to “authorize” your card for $120—a 20% tip. If you choose to leave a 15% tip and then check your balance — it will appear that you have been overcharged. This apparently results in lots of angry customers, so the practice has been forbidden in VISA’s merchant agreement.
9) If Merchants Suspect You Of Fraud They Are Supposed To Call With A “Code 10″
If a merchant is suspicious of you, they are supposed to make a “Code 10″ call. They are instructed to take your card, call in, and say �I have a Code 10 authorization request.” They will then be asked a series of questions that can be discreetly answered with either yes or no. The merchant bank will then authorize or deny the card. They are not supposed to threaten to call the police or try to detain you. Mastercard says that if the police need to be involved, the “Code 10″ operator will call the police while the clerk waits on hold.
10) If Merchants Break These Rules, You Can Report Them To The Credit Card Company
Here’s Mastercard’s Merchant Violation form. To report merchant violations to VISA, they ask that you report them to the financial institution that issued you your Visa card. You should be able to find the number your on Visa statement or on the back of your card.
(Photo: Maulleigh)
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“Ben and/or fellow Consumerists – How do my power and gas company get away with charging a $3.95 processing fee for paying with credit cards? “
They use that “non-standard payment type” loophole.
HOWEVER, some states make this entirely illegal, but a lot of companies still do it. So you should totally research this and make a stink. I’m pretty sure in CA ANY fees for using a Credit/Debit card are illegal, but plenty of companies do it, so knowledge up and take them to task.
Same thing with payment by check fees, etc etc… a lot of states make it illegal to charge a fee to take a pmnt, but plenty of corps do it anyway, so research your state laws!
(I know this because I work for a finance company and we have a complicated grid about who we can collect fees from)
@Jmatthew: Good luck with this one. I’ve had the same issue with Tampa Electric & Florida Power & Light. Be glad they’re only charging $3.95, it’s $5 per $500 paid via credit card down here.
Here’s where it comes from: The utilities’ rates (especially gas/electric) are regulated. They’re given a fixed rate and that’s it. Credit card transactions usually have a fixed transaction fee + a percentage of sale. The regulated fee system in place doesn’t allow for this. So, most utilities will use 3rd party billers + fees to compensate for this.
If the store is willing to give you a cash discount great, otherwise you can assume the charges are already built into the price of the product. When I visited Salem a particular art dealer’, cc system wasn’t working. He was willing to cover my ATM fees and knock of the charges that would have been part of the creditcard fees, which were significant.
Another question, though I doubt this’ll get answered since I’m a bit late to getting to this…
Are these American laws/things…?
Or does this apply to Canada as well?
I work at a liquor store and the owner requires that ID be shown with credit to verify signature and person using it. I have told a few people that they need to sign there card or some places might refuse them service, because I have seen it happen at several stores.
This one person got pissed off at me stormed out of where I was working, that was about 7 years ago though.
@TPK:
“@Scoobatz: The signature on the back of a credit card is kind of like the first signature on a traveler’s cheque. The signature on your transaction slip is then kind of like the second signature on a traveler’s cheque. They are supposed to match. “
Where did you get a silly idea like this? What kind of training did you go through to compare signatures?
The merchant is required only to provide a copy of a signed receipt if a chargeback request is processed. If they can provide the copy of the signed receipt they suffer no loss. The merchant does not have to submit proof he checked for a signature or ID in order to avoid a chargeback.
They are not required to verify signatures at all as they are the ones who wanted this provision when the whole system was set up years ago. For all ViSA cares, you can sign it Santa Claus. I sign my wife’s receipts all the time and that is all that matters; the receipt has A signature NOT a matching signature.
#4 says companies can’t have a MAXIMUM charge either. How are gas stations getting away with stopping my pump at $50, $75, or $100? When it first started, the stickers said that these were VISA and MC rules. That seems in complete contradiction to the quotes from VISA and MC.
I hate having to swipe my card 3 times to fill up my tank.
I wonder why photo credit cards are not mandatory? The credit card companies should be able to pay for those by not losing so much to fraud. You have to have photo id to drive a vehicle, but not to buy thousands of dollars worth of merchandise or services? It has to be a money thing, that’s all those companies care about.
@bostonhockey: See #3: The cashier is not allowed to ask for ID under the merchant agreement.
the bar next to my apt requires $40 minimum. that’s like 7 beers. and there isn’t even a sign posted.
Call me whacky but #4 the minimum purchase is one I disagree with. We run a family business. While we DO NOT have a minimum purchase since I take care of the books I can 100% understand and AGREE with merchants that impose a minimum fee. These fees can be SO HIGH that on some purchases you will actually LOSE money because the margin is so low. Just because a competitor is willing to eat it does not mean you should be forced to as well.
Credit cards are definable as evil. They are literally a modern day legal mafia right up there with banks. When a $12.50 overdraft can turn into nearly $400 in over draft fees (Embezzlement is legal if your a bank they can REORDER your transactions to maximize the number of overdraft fees’ You and me goto jail for this its SOP for them) And then add RICO violations with racketeering. Well you should have had overdraft protection where the FEES are almost as high as the NSF fees!!
And then you have the MANDATORY micro loans with MILLIONS of percent APR. if you have $3.00 in your account and you buy a $3.50 slurpee they will PERMIT the charge and then charge you $35 for the convenience. DO the math on what the equivalent APR is on that.
And you can NO LONGER turn these “micro loans” off IE the right thing is to deny the damned charge and it worked JUST FINE like that for some 10 years before these MAFIA loans started.
Bank says well you need to manage your money. I say If I wanted to manage my money what the hell would I need YOU FOR! Thats the whole damned reason to give a bank your money SO THEY can do some of this work for you. Thats why I never use checks because then “I” have to track the purchases.
AND the banks rape you from both ends. The merchants get it up the wazoo too in fees.
We had to STOP accepting AMEX because the fees they charge were so large they EXCEEDED the dollar amount of charges we got from AMEX customers.
So do not feel bad when they have a minimum purchase price. One might say well have different prices for CC users. Well thats illegal according to the terms of your merchant agreement so there not allowed to. So its screw everyone with higher prices (and go out of business if the big name shop can afford to EAT the loss till your out of business) or have a minimum purchase.
I say good for them with the minimum purchase and screw the merchant agreement.
Want to be a GOOD consumerist? stop using credit cards. Put the bastards out of business.
And the difference between having a surcharge for using a card, and having that surcharge but calling your lower cash prices a “cash discount” is…?
Years ago, on the old manual systems, the clerk would often write down my drivers license number on the top of the form too. When I used a credit card for gas, they’d ask for my car license number.
Was all that illegal? I think I still have some old receipts with my DL number written along the top.
@coren: Surcharge: you go in thinking you’re paying $4.25 per gallon, and then get hit with an extra 10 cents for the surchage because you didn’t notice the little sign on the pump that said surcharge for credit card use.
Discount: you go in thinking you are paying $4.35 per gallon, and then find out you can save 10 cents a gallon if you pay with cash instead, when you notice a little sign that says discount for cash midway through pumping your gas.
Same price either way, but the surcharge is infuriating because you went in not expecting to have to look for fine print that makes the big sign price a liar.
@Nerys: stop using credit cards? Sadly, that’s not really feasible, especially with filling up on gas costing $50-100. Some of us don’t walk around with large sums of money in our pockets, especially when increased cash usage means increased chances of muggings.
I’m not going to try to use cash for appliances or furniture either. In fact, even repairs are better off paid with credit cards, as I have more protection with them than if I used cash or a check.
On the other hand, I’d never use a cc for a $2.00 purchase either. But if visa were to eliminate the no-minimum agreement, what would stop merchants from requiring $50 as a minimum for credit cards.
Merchants need to band together and force the visa to radically lower the fees involved for small purchases. If visa wants to insist people be able to pay $2.00 with a credit card, the fee to the merchant should be small enough not to hurt them on it.
I was charged a .25 service charge fee today at a Texaco station for around an $8.75 in store purchase using my debit/credit card. The station charges a fee on purchases less than $10.00 We had to pay at the pump (which I can understand because of theft) but the $60.00 we spent in gas was not taken into account since it was a seperate transaction.
I was aware the contract that merchants sign with Visa does not allow them to charge a surcharge/minimum transaction fee. I called my bank when I arrived home and they told me to call back when the charge had posted to my account and they would dispute the fee.
…I only intended to buy two waters and picked up a couple of additional items because I am aware the merchants are charged a fee for these types of transactions. If this happens again, I will have them void charges for the items I didn’t need and only purchase what I needed and feel no guilt.
Not excepting amex huh? does that mean the DO accept it?
@josecmelia:
(There is something called a “convenience fee” that some institutions are allowed to charge if they do not typically accept credit cards in their normal course of business. The example VISA gives is a utility company where the customary way is to pay by mail or in person. The rules for charging this fee are somewhat complicated and there are loopholes, etc.)
Anyone trying to pass a “See ID” card in Europe is in for a shock. Here in Ireland (since March 2007) all Visa/MC transactions must be validated by pin. Anyone with Amex (or another non-pin card) must have their card signed otherwise (under Irish law) the transaction will be refused. I have refused transactions on this basis, and taken being shouted at. It’s also standard practice to ask for ID when presented with a version of a card you don’t recognise, or a Visa/MC from a non-pin issuing country. Stores take the hit for fraud, and it’s not just the customers but also the employees that suffer from the repercussions (high fraud levels = good excuse when it comes to refusing pay rises).
From a non-US perspective, looking to charge a 50c stick of gum to a card is ridiculous (probably because the vast majority of people carry enough cash on them to cover small purchases), the only reason people ever try it over here is so they can get cash-back on their debit cards. As for cards being more convenient than cash – I can tell you from experience that around the holiday season card transactions take far longer than cash ones, so much pressure on the system that cards can take multiple tries with long waits each time to go through – excruciating for staff as well as for customers.
Credit card payments are accepted by stores for the *customers’* convenience, in a fair-play system the customer should not seek to inconvenience the retailer by refusing to play by the rules of the credit card companies/national law or to make loss-making transactions so the customer doesn’t have to carry coins/bills. The latter is probably why Visa/MC don’t enforce the “no minimum charge” rule. Think of the income they’d lose if all small businesses started refusing to accept cards!
Most Mom’n'Pop businesses set their minimum charge to a point where they can take the hit on processing fees – I’d rather pay that minimum (if using a card) than see a small retailer go under.
Or maybe all these years behind a till have corrupted me?
*smiles*
To address some of the more paranoid people above (worrying about retail staff using their card/check details for fraud), cashiers have access to tills full of cash all day every day – which would be a far bigger temptation to the dishonest than anything else. The hiring process is there to screen such undesirables out, and till/safe reconciliations are there to catch anyone that might slip through that net. You’re in far more danger using your card at an ATM, with the levels of card-skimming these days.
Why give small businesses a hard time over things like minimum purchases or asking for ID? You’re cutting off your nose to spite your face.
My wife worked at a bakery which at one time accepted CCs, and required a minimum purchase, because if you buy a $1 cookie with a credit card, the bakery actually loses money on the transaction.
Enough people complained about the minimum charge, so they stopped taking CCs all together. The bakery is still doing fine, they make great food and have really reasonable prices, but now nobody can buy anything with CCs, because a bunch of people complained.
It certainly didn’t solve any “problem”, and the customers ended up inconveniencing themselves. Now if they want to buy a fancy cake for $60, they have to stop at the ATM or remember their check book.
4) Merchants Cannot Require A Minimum Transaction Amount
It’s a violation of the credit card company’s merchant agreement to refuse a transaction because it is below the “minumum.”
I have a handful of local businesses to report on this one. Hopefully they get shut down or at least heavily fined. As it is they don’t get my business because I never pay with cash even if I have cash on me.
@Nerys: I’d make an important distinction between requiring a minimum purchase and requesting one.
Unless I am out of cash and fairly desperate (in which case, I will either apologize or buy more to get the amount up), I will honor a sign that says “Due to processing costs, we request a $10 minimum for card transactions.”
In fact, in those cases I might even spend cash for something over the limit, to be nice to the folks who are politely requesting their customers’ help.
I suspect that such a request is also fully in keeping with the Visa/MC/Amex merchant contracts.
I disagree with all the merchant sympathy in regards to minimum charge amounts, very specifically because of the mom and pop convenience store scenario I’ve seen so often, especially in Boston and New York:
I don’t have cash and the store has a minimum fee.
My immediate choices:
-Add to my purchase to reach the minimum.
Cons: I end up buying more than I intended and therefore wasting more money, since the convenience store is already overpriced.
-Use the store’s no-name ATM machine.
Cons: The machine charges a $2.00 transaction fee, a portion of which goes back to the store in exchange for their hosting the machine.
The imposition of a minimum charge immediately results in additional revenue for the store, rather than the break-even situation our more optimistic and apparently generous responders see.
We’re talking about businesses. Businesses exist to make money. These businesses obviously take credit cards in pursuit of profit. We owe them little sympathy for violating their merchant agreements, especially when the other scenarios result not in a break-even, but in additional revenue.
@ChristopherDavis: I do think it’s completely fair to request a minimum and even make a case for it by illustrating the loss the store would incur — but denying a charge based on the minimum is pretty shady.
It really isn’t merchant sympathy it is consumer sympathy. When you use your credit card you cost the merchant more money and then they in turn have to raise prices for everyone.
In situations, where you are out of cash, ask the merchant if you can use your debit card instead. There is a much lower charge for debits than credits. In fact, I use debit most of the time unless I feel I am really being fleeced by the store.
For those, that say they do not like handling cash. There have been many studies that show that you spend less money when cash is involved rather than plastic. So cash not only helps merchants but it also helps you. For big item purchases where warranties and credit card protection applies then by all means use plastic, but day to day purchases really should be made in cash (hopefully with money that you have already budgeted for anyway).
@jccalhoun:
> The “see id” people drive me up the wall.
More incentive for us to continue doing it.
> When is the last time you uses a credit card and it left your hand?
Last Saturday – I was asked for ID and readily provided it. Never been asked to sign a card.
> The only thing “see id” does is create trouble for people who work at places where they will not take a credit card that isn’t signed.
No – see above
Don’t shops have the right to refuse anyone service for whatever reason (and don’t even have to give the reason to the customer) so while they may not be able to apply a minimum charge they can just refuse to serve anyone who has a CC and a pack of gum in their hands?
Does anyone know if municipalities are considered “merchants” under the Visa/MC rules? The city in which I live charges a processing fee for all credit card transactions on tax payments, parking tickets, etc. I have always paid by check as I refuse to give the city any more money and like to make them do the actual work of filing the check (it probably costs them more money to process the check than it does to accept credit card payments over the internet).
It should be noted that all of these agreements with credit card companies are subject to law’s that differ state to state. I live in Pennsylvania and I know from working retail for the last 8 years that any merchant in the state of Pennsylvania may refuse a transaction or sale to anyone without cause or reason. So in other words they can say if the card is unsigned or you are unable or unwilling to produce valid government issue photo identification you cannot proceed with the transaction. They do not have to give you a reason, there fore they can say that they refuse credit cards that are unsigned or that they require ID. When the transaction is challenged by authorities or credit card companies the company in question is within their full legal rights. The same with charge backs, in Pennsylvania a merchant is not required to accept any returns or charge backs unless it is a fraudulent charge to start with (not including stolen credit cards, that is handled by police and the credit card company). Now I know this is all true because we get questioned by various customers on occasion, and we have the state laws pertaining to this posted in the store. We also have copies of court cases stuffed to the side for employee reading in situations where this has become an issue. Now we have never had a major issue with any of this, but the owner of our company likes us to be educated and informed. This also, by the way, would apply towards minimum requirements for transactions. It is true that the merchant must sign a legal agreement with the credit card companies that they will not charge a minimum or require ID, but state law supersedes all private contracts of this nature.
I actually believe that the merchant should be allowed to charge the the percentage that MasterCard and Visa charges to the merchant.
Then again I think that all prices should include the sales tax.
I was in line at Walmart and witnessed the following: A customer was paying with a Visa card. The clerk gave the customer a credit card receipt to sign. The customer signed the receipt in the presence of the clerk and returned it to the clerk. The clerk took the receipt and was going to compare the receipt signature to the credit card signature but the credit card had never been signed. The clerk asked the customer to sign the card. The customer signed the card in the presence of the clerk and gave the it to the clerk. The clerk held the freshly signed card and receipt side by side for about 30 seconds for signature comparison.. After scrutinizing the signatures carefully, she declared that the signatures matched and would then accept the card.
Man I’ve had a lot of stores require a minimum for a credit card purchase. If I knew I could report them I would have. Now I know better
Does the ID thing also apply to bank debit cards with the Visa logo?
I have a business gold American Express card that I put company related expenses on. There is suppose to not be a spending limit, but the entire bill is due on a certain date. I find it hard to believe that American Express can actually turn your spending ability off at any time for any reason..Every month at some point, Amex decides to cut off the spending ability. Now just so you know, the bill is always paid. But this month Amex took it upon themselves to turn the spending ability off BEFORE the due date because they don’t like the fact that we have other credit cards with high balances…which I may add are always paid on time..
I wonder if anyone out there knows if Amex can legally turn the card off before the due date..10 days before the due date? In order to use the card, I had to go ahead and pay the bill, even though I haven’t been reimbursed for my travel expenses, so the money comes out of my pocket. Soon as I paid the bill to Amex, the purchasing power was reinstated. What gives with them?
Currently, I am responsible for the charges on a stolen credit card that was approved at the time of the purchase. If a stolen credit card us used, there will be a charge back. Unless I personally now you, and if you don’t want to show ID then pay in cash. I will demand ID on “large†charges.
As long as I am charged a percentage of every sale for credit card uses, I will pass that cost along in higher prices for credit card users.
As long as I have a minimum charge transaction fee from the bank, I will require a minimum purchase or I will add that fee to the cost of the sale.
You as a shopper are free to go elsewhere.
The consumerist in this case is wrong. These policies are hurting all small businesses and raising costs for everyone. You can call the credit card company and complain, but so what. I post what I do in a big sign and the reason why. Everyone is given a free choice.
I would say that most people don’t know that the banks charge a few percent “tax” against the merchant for every transaction and that most people don’t know that even if approved the merchant is on the hook for the use of a stolen credit card charge even when the sale was approved.
Anything else is unfair and unethical.