Companies Challenging Use of Credit Cards as ID

Once upon a time, credit cards were simply for buying things on credit. But that was in those dim, dark days when a driver’s license was for driving and a Social Security number was for old age benefits.

Today those three items are evolving into a kind of unofficial but very real universal identification system. And while it is often against the rules--or even downright illegal--to use them this way, those who resist find the full weight of the nation’s commercial Establishment brought against them.

One increasingly common practice--that of using credit cards as a backstop for bad checks--is coming under attack.

According to Bankcard Holders of America, a Herndon, Va.,-based consumer group, when a merchant writes your name, driver’s-license number (which in many states is your Social Security number) and major-credit-card number all over your check, he is exposing you to fraud at least as much as he is protecting himself from it.

Checks travel a lengthy route from the merchant to his bank to yours, and anywhere along that line “anyone who has access to the check, or even gets a quick look at it, has all the information he needs” to buy merchandise over the phone and charge it to you. Or a thief might apply for a credit card in your name, said Elgie Holstein, director of Bankcard Holders.

“Application fraud” is one of the fastest-growing new scams, he said.

Finally, many merchants use a credit card as a fallback for a check that bounces. Stores of The Limited chain even stamp the check with an authorization, which they have the customer sign, so that the amount of the check plus a $15 fee can be charged to the customer’s credit card if the check is returned.

Visa and MasterCard say this is not permitted.

“If the personal check is returned, the merchant is not permitted under Visa regulations to submit a sales draft to cover the returned check,” Robert H. Miller of Visa wrote to Bankcard Holders. “Even if the customer has provided his permission to do so, this is considered a refinancing of an existing obligation and is strictly prohibited under Visa regulations.”

Darold D. Hoops of MasterCard wrote, “A merchant may not submit a credit-card slip for the amount of a returned check.”

But since merchants do it, “it is possible to conclude that Visa and MasterCard have to some extent looked the other way,” Holstein said.

A Visa spokesman said last week that “it is our position that a merchant cannot refuse to accept a Visa card if the consumer refuses to provide a phone number.”

He added that Visa is “studying new rules” on the subject. And a MasterCard spokeswoman said the company may not know about merchants’ using credit cards to cover bounced checks unless the consumer complains.

Holstein acknowledged that merchants have the right to ask a customer to show a credit card as identification when seeking to pay by check. It is when the merchant starts recording the credit-card number that it becomes objectionable, he said.

He urged consumers to resist when they encounter a clerk or other salesperson insisting on doing so, although it may not be easy--many stores will simply refuse to take the check.

But he said consumers should stand up for their rights. Merchants are not anxious to lose sales or see checkout lines delayed by such disputes.

“We expect a lot of nasty scenes at checkout counters,” he said. But in the long run consumers will find it worthwhile to protect their privacy and to protect themselves from fraud.

Bankcard Holders is offering a pamphlet entitled “Writing and Cashing Checks: Your Consumer Rights.” It includes a cutout “consumer-action card” to wave under the merchant’s nose in a dispute.

It is available for $1 from Bankcard Holders of America, 460 Spring Park Place, Suite 1000, Herndon, Va., 22070.