If I Can't Check ID's, How Am I Supposed To Prevent Credit Card Fraud?

We’ve told you that it stipulates in the contract between merchants and credit card companies that stores aren’t allowed to force you to show ID when you buy stuff, but what about the other side of the story? Alex is a 26-year old small business owner and Consumerist lover, but he doesn’t know how he’s supposed to prevent fraud if he can’t check people’s ID’s. Contrary to what some commenters assume, when a stolen credit card is used, the money gets yanked out of Alex’s bank account and he is unlikely to get it or the missing merchandise back. He gets jacked twice: once by the fraudster, and once by the credit card company. What should he do? Switch to cash only? His story, inside…

Alex writes, “I am a 26 year old small business owner with a brick and mortar retail location, and also a loyal consumerist reader for years. I have read multiple articles posted on your site how merchant agreements between retailers and CC companies do not allow the retailer to require ID from a consumer with a CC purchase. In fact when I read these articles the posts in the comments sections tend to get very heated against the retailer.

My question is as a small business owner and retailer there does not seem to be any safeguard to protect me against CC fraud. Most recently the article you posted about a consumers problems while trying to make a purchase at the Disney store requiring ID with CC purchase, the OP stated that even if the card was stolen VISA would surely cover the the loss to the retailer. This is not true!

If I or one of my employees makes a sale, and the card is later reported stolen the CC companies pull the amount in question immediately out of my bank account with no forewarning, no recourse and I am left holding the bag for the entire purchase amount. Just to be clear I can dispute charge backs, however a stolen card has no recourse from a retailers standpoint. Typically I receive a letter regarding the charge reversal a couple days after it disappears out of my account, and this letter also states my limited methods of recourse.

The credit card companies do not offer any sort of fraud protection to the retailer. This is incredibly frustrating since I am the one paying the CC companies for the “privilege” to accept their credit card on every single transaction I swipe. I am now the victim, this gets especially dangerous to my ability to keep my doors open when my cost on a large ticket item is in the hundreds to thousands of dollars. So what am I to do?

In my opinion the CC companies are at fault, they continue to do nothing to increase the security of their cards. This is blatant negligence on behalf of CC companies in the U.S. Especially when this issue has been directly addressed in the E.U. where credit cards have smart chips and a user defined pin is required for the majority of CC purchases.

If I am not allowed to safeguard myself and my business against CC fraud, then eventually I will be forced to go cash only, a growing trend.

Please offer some advice or at least words of encouragement.


What should Alex do?

I’m Happy When Clerks Demand I Show My ID With Credit Card Purchases
Starbucks Told Me It’s Corporate Policy To Check My ID With $27 Credit Card Purchase
10 Things You Might Not Know About Your Credit Card

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