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Checking out with charge cards?

YOU'VE FINALLY MADE IT TO THE cash register in a crowded department store. As you ask if you can pay by check, you hear sighs and rustling behind you as people shift their purchases in their arms. You try to ignore the eyes boring holes in your back as the salesperson copies your license and charge card numbers onto your check. Finally, you're free to go.

Although the origin of the practice is obscure, most retail businesses require customers who write checks to produce two forms of identification. The first is a form of positive identification-usually a valid driver's license with a picture and an address that matches the address on the customer's check. The second most preferred identification is a national bankcard or charge card. Also acceptable are local or regional department store charge cards, preferably in the customer's name.

Most customers have their driver's license number printed on their checks. Once a check is presented for approval, a salesperson has to match the address on the license with the address on the check and verify the driver's license number and expiration date. An expired license is not positive identification. Some retailers also require that the customer's date of birth be copied onto the check. When all is in order, the customer's license is returned.

Next, the salesperson copies the type of charge card and its account number onto the face of the check. Theoretically, that practice serves two purposes: It encourages the salesperson to examine the check for accuracy, and it allows the store to assume that a person who possesses a charge card is likely to write a valid check.

That assumption can be traced back to the early days of charge card history when a customer had to maintain an excellent credit rating to qualify for a charge card. That is certainly not the case today. Almost anyone-even a person with a known bad credit rating-can obtain virtually unlimited credit. In fact, neither of the assumptions stated earlier is now likely to prove empirically valid.

First, salespersons often overlook customer check errors. Whether most errors are deliberate or accidental is questionable but irrelevant because discovering any errors is the salesperson's responsibility. A second form of identification is not likely to improve the chances of discovering check errors.

Second, all charge cards are generic for identification purposes, except the American Express card. Spouses carry and use cards issued in each other's names, children frequently use a parent's card, and cards are often loaned to others for shopping excursions. Some customers carry stolen or canceled charge cards for the sole purpose of check-cashing identification.

More often than not, a customer writing a check does not own the charge card presented as a second form of identification. That is, he or she cannot be held responsible for payment if the card goes into collection. Therefore, no inference should be drawn about whether the check writer has an acceptable credit rating or is writing a valid check.

NATIONAL BANKCARD COMPANIES have begun to caution their customers against allowing retailers to copy account numbers indiscriminately. That measure is intended to prevent illegal use of card numbers obtained from checks and other documents. Retailers recognize this problem and now return carbons to customers or use charge ticket carbons that destroy the account number when the carbon is removed.

Currently, no legislation exists at either the state or federal level regulating the request and recording of customer charge card numbers. Like charge card companies, however, consumer groups such as Bankcard Holders of America are urging consumers not to allow retailers and other businesses to copy charge card numbers onto documents or to request charge card numbers over the phone or by mail. Once consumer groups become active, state or federal legislation usually soon follows.

With consumer group involvement, more and more customers will object to salespersons copying card numbers onto checks. The procedure, in fact, serves no purpose. No bankcard company will reveal any information to retailers about a customer's account, credit history, address, or phone number. Copying a long charge card number onto a check is time-consuming, worthless to retailers, and irritating to customers.

For the foreseeable future, retailers will continue to accept customer checks, and customers should be required to show positive identification, regardless of the check's amount. That requirement should be waived only when the salesperson knows a customer, including where he or she lives, if then.

When a check sequence number exceeds 1,500, however, only one positive identification should be required. Customers do not continue services with their banks for long periods by maintaining bad accounts. When a second form of identification is required and that identification is a charge card, only the card name and expiration date should be recorded. When the card does not have an expiration date, the card name alone should suffice.

Again, in an upscale retail market, when over 95 percent of all customers can produce at least one national or major department store charge card on demand, retailers should ask whether charge cards are useful as a second form of identification.

Now some retailers instead ask customers for workplace identification their business's name and telephone number. Requiring proof of employment is much more likely to lead to successful bad-check collection than recording a charge card number.

When accepting customer checks, either for cash or to pay for a purchase, retailers should use the following guidelines:

* Checks should be reviewed for accuracy according to the retailer's training guidelines.

* Salespersons should ask customers for positive forms of identification.

* When a check's sequence number is 1,500 or higher, it should be accepted without further comment after positive identification.

* When a charge card is used as a second form of identification, only the card name and expiration date should be recorded, for example, "Visa-10/ 90."

* Stores should contract with a check guarantee service for certain checks, such as those from out of state or over the store's limit.

Adopting this check acceptance system leads to faster check approval, greater customer satisfaction, protection of charge card account numbers, and information useful for bad check collections.
COPYRIGHT 1990 American Society for Industrial Security
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1990 Gale, Cengage Learning. All rights reserved.

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Title Annotation:copying charge card numbers onto checks increases risk of illegal card use
Author:Suggs, Jack A.
Publication:Security Management
Date:May 1, 1990
Previous Article:Information exchange for success.
Next Article:Can you keep a secret?

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