Next time you’re playing a true or false game at a party ask that question…and the answer is….
No! Legally, you never need an I.D. to use your credit card! Seriously?
A merchant is not allowed to require your I.D. for a credit card transaction. Your signature is all that is needed. Whether you’re buying Starbucks or a shopping spree on Rodeo Drive – you literally don’t have to prove you’re the person who owns the card! That’s the policy set forth by Visa, MasterCard, American Express and Discover in their merchant bylaws and agreements, believe it or not.
Don’t buy it? I Know, most stores would never believe this was true. The authorities might not either if I were using someone else’s credit card. But here’s the proof – straight from the horse’s mouth. Let’s start with the world’s most popular credit card… Visa. Below is an excerpt from their merchant rules:
“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.”
…and if you think I’m making this stuff up you can view the official policy pdf from their website here:
Not only can a store not require a drivers license or other I.D., but Visa actually discourages them for asking for it! MasterCard also has an equivalent policy, which can be found here if you still don’t believe me:
American Express and Discover both have similar policies, and not only prohibit I.D. from being required, but also strongly discourage it.
Often when people hear of this, they are either delighted or discouraged. I’ll address the later, first. By federal law, you can only be held liable for up to $50 of fraudulent credit card charges. That was enacted decades ago, and today, I have never heard of any credit card company, even the scummy ones, enforcing the $50 deductible. Simply put, you’re not responsible for charges. So before you blow your stack, remember it’s not your money that’s liable!
Now that brings us to the question “If a store can’t ask me for I.D. to use a credit card, wouldn’t that hurt the credit card companies?” Well theoretically, yes, they take the liability. But with modern automatic fraud detection techniques, such as unusual spending patterns or use of card outside of your normal areas, the crime is usually caught (as in new charges prevented) early on, even if the consumer doesn’t notice them.
Credit card companies want their products to be as user-friendly as possible, and they know requiring I.D. isn’t exactly user-friendly and could add friction to the process. God forbid the customer might reach for their debit card, cash or especially their checkbook! Therefore, they’ve concluded they’d rather take the risk with their money than to impede the check out process. There is a very simple reason for this seemingly foolhardy business policy by the card networks. They make a massive fortune from merchant swipe fees (2 – 3% of every transaction) and this far outweighs the cost of fraud, which they’ve been able to hold steady at a fraction of a percentage point over the decades with increasingly sophisticated technology.
Personally, I am glad merchants can’t require an I.D. for a purchase. There’s been countless times I don’t have an I.D. on me. Also I think requiring an I.D. for smaller purposes is too much of a hassle anyway. Plus let’s admit it, everyone nowadays has Photoshop and photo printers that can crank out a fake drivers license that would suffice anyway. In reality, requiring an I.D. is no foolproof way to prevent fraud at all. Criminals will simply turn to different avenues to use the stolen cards instead, such as on the internet.
Next time a store clerk asks for your I.D., you may want to point out the agreement they have with the credit card associations. If that doesn’t work (because, in reality, not every store clerk knows about that kind of detail), and you really feel wronged, you can file a complaint with one or the other card networks:
So, next time someone asks you “Do I need an I.D. to use a credit card?” you can tell them… “ID? I don’t need no stinkin’ ID!, or something to that effect”. Or, you could just tell them you are tired of big brother watching over everything. Even though it has much more to do with the four major card networks’ desire to remove friction from the card usage process, we all gain some privacy rights in the bargain.
Last updated on November 3, 2015