Should You Ask for Identification for a Credit Card Sale?



On the Surface

Consumers and merchants already know the dangers of today’s data breach culture. Businesses both large and small have fallen prey to criminals who use various modes of identity theft to hack into systems and steal valuable customer information for their own evil purposes. Perhaps one of the most common of these activities happens when someone steals a person’s credit card and then takes it into a physical store. If you accept credit card payments, this could happen to you. While there, the thief simply swipes or dips the credit card, perhaps providing a bogus signature if you require it. Then they simply walk out the door, product in hand. Unless you have great surveillance equipment, a vigilant police force, a savvy customer who reports the loss of their card, or a large helping of luck, chances are good that the bad guy won’t get caught.

Is Requiring an ID a Solution?

In light of how easy it is for people to make counterfeit purchases with our current system, doesn’t it make sense to require all customers to show state or federal identification each time they make a credit card purchase? You and your staff could even make copies of the cards if there were any questions about a customer’s integrity. Therefore, you may believe that it stands to reason that you should institute an ID-required-at-all-times policy.

Not So Fast

While this might seem like an idea that everyone can get behind, the major credit card companies have other opinions. Both Mastercard and Visa actually prohibit you from requiring ID cards as a condition of taking their particular form of plastic as long as the customer has signed the back of the card and that signature matches the one on the receipt. American Express is less firm; it does not restrict you from demanding that customers show ID, but it does stipulate that you treat its customers no differently than others. What that means is that if you don’t require ID from a Mastercard patron, you can’t expect it from the Amex holder who is next in line. Discover allows you to request identification from customers if you like.

Other Ways to Enhance Credit Card Security

Fortunately, looking at identification is not the only way to safeguard yourself against credit card fraud. You can also do the following:

  • Use an address verification system to compare the numbers in a customer’s address to information on file. Available only from banks, this software isn’t fool-proof, but it can help you to identify red flags that warrant further investigation.
  • Monitor suspicious behaviors such as if the customer does not have a wallet, purchases very expensive items, has a strange variety of goods such as multiple identical sweaters of different sizes, buys right when the store is ready to close, or tells you that their card does not work and can’t be swiped.
  • Make your network secure by upgrading all software, limiting employee access, utilizing encryption, and keeping business and personal accounts separate.
  • Report suspicious incidents immediately. Don’t wait to notify a card issuer of suspected fraud. The situation should be dealt with right away, minimizing the risk that you will be held accountable.

As you can see, the issue of whether to request identification from a customer is not as clear-cut as it may first appear. It is just one imperfect monitoring method that can be used in limited circumstances to aid you in safeguarding your business. The more you employ the full toolkit of security measures, the safer your small business will be.