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Critical Issues on Certificates of Deposit;
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September 22
FinCEN's Beneficial Owners Proposal: What It Can Mean for You;
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September 23
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Using CPTED to Make Our Banks Safer;
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#1899982 - 02/25/14 05:00 PM Stolen Debit Card
Doug Hendrickson Online
Power Poster

Registered: 10/01/09
Posts: 3362
Loc: NE New Mexico
I searched the threads and saw similar cases, but not one that specifically dealt with this issue.

Customer gave debit card to daughter to use. Debit card was stolen from her. Thief then used stolen cards to purchase merchandise, using SIGNATURE-BASED purchase.

I know that if these were pin-based transactions, we would be out the money, as the customer reports the transactions as unauthorized. But does it make a difference if the transactions were signature-based?

Obviously management doesn't want to eat the loss, but don't they have to eat it according to VSIA/MC agreement? And we can't force them to file a police report, but we can file it, right?

For the life of me I still can't understand why merchants get to shirk the responsibility of asking for a photo id (e.g., driver's license) when performing signature-based transactions.
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I hear and I forget. I see and I remember. I do and I understand.--Confucius

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Operations Compliance
#1899992 - 02/25/14 05:21 PM Re: Stolen Debit Card [Re: Doug Hendrickson]
BrianC Online
Power Poster

Registered: 11/26/04
Posts: 2794
Loc: Illinois
The transactions were unauthorized. A customer does not forfeit Reg E protections or VISA/MC Zero Liability protections by giving the card to a family member. The family member was authorized to use the card, the thief was not.

As for photo ID, remember VISA/MC are advertising ease of use. How happy would we be waiting in the drive-up lane at a fast food establishment waiting for everyone in front of us to dig their IDs out of their wallets. This practice would not stop the biggest area of liability, counterfeit fraud. So I make a fake card with the name John Smith on it and I have a fake DL with the same name. Bottom line it just doesn't make sense for the industry to require the practice.

We'll see what happens in 2015 with EMV cards.


Edited by John Burnett (02/26/14 12:13 PM)
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I can do all things through Him who gives me strength. (Phillipians 4:13)

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#1899993 - 02/25/14 05:31 PM Re: Stolen Debit Card [Re: Doug Hendrickson]
Doug Hendrickson Online
Power Poster

Registered: 10/01/09
Posts: 3362
Loc: NE New Mexico
Much appreciated Brian. I just love when I sit in meetings and folks want to make up their own rules. I repeatedly and tactfully explain that regardless of the circumstances, the customer has no liability and we have it all.

I agree on the photo id, but thanks for letting me vent.
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I hear and I forget. I see and I remember. I do and I understand.--Confucius

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#1900008 - 02/25/14 06:10 PM Re: Stolen Debit Card [Re: BrianC]
Ken_Pegasus Offline
10K Club

Registered: 08/30/01
Posts: 17280
Loc: Another trip around the sun
Doug's question has been asked & answered, so I'll raise a couple others in the hope Brian revisits the scene.

Do the card issuers (VISA and MC) actually prohibit merchants from asking for identification? Obviously, some do on occasion.

Some consumers sign the back of their debit/credit cards "See ID." A highly esteemed authority on financial matters, the USPS, says that such cards are invalid and it will not accept them as a means of payment. Do they know more about this subject than they know about whether the rent on my box is paid?
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The world is not a wish granting factory. Hazel Grace Lancaster

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#1900013 - 02/25/14 06:27 PM Re: Stolen Debit Card [Re: Ken_Pegasus]
Doug Hendrickson Online
Power Poster

Registered: 10/01/09
Posts: 3362
Loc: NE New Mexico
Originally Posted By: Ken_Pegasus
A highly esteemed authority on financial matters, the USPS,


I'm rolling on the floor laughing my *** off.
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I hear and I forget. I see and I remember. I do and I understand.--Confucius

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#1900015 - 02/25/14 06:31 PM Re: Stolen Debit Card [Re: Doug Hendrickson]
Derwood Online
100 Club

Registered: 11/25/09
Posts: 153
Ken - You might find this link of interest. http://usa.visa.com/merchants/protect-your-business/fraud-control/card-present.jsp

It is Visa's information for merchants on card present fraud controls and specifically addresses the See ID issue.

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#1900022 - 02/25/14 08:31 PM Re: Stolen Debit Card [Re: Doug Hendrickson]
BrianC Online
Power Poster

Registered: 11/26/04
Posts: 2794
Loc: Illinois
Quote:
Doug's question has been asked & answered, so I'll raise a couple others in the hope Brian revisits the scene.


So do I go with the Jack Nicholson from The Shining "I'm baaaaack" or maybe General MacArthur "We shall return." but I digress. In the link Derwood provided, you'll note that checking ID is not on the list of steps.

VISA Operating Rules for October 15, 2013 have a chart on page 432-433 outlining what a merchant can do. (Checking ID is only allowed for cash advances.)

1. Verify that the signature on the Card matches the signature on the Transaction Receipt and, if applicable, identification presented. This signature may be different from the name embossed or printed on the Card.

2. Check one or more Card security features, as specified in the Visa International Operating Regulations or the Merchant Agreement, if applicable.

And the kicker...

An Acquirer must not require a Merchant, and a Merchant must not require a Cardholder, to provide any supplemental Cardholder information as a condition for honoring a Card, unless it is required or permitted elsewhere in the Visa International Operating Regulations. Such supplemental Cardholder information includes, but is not limited to:

A government-assigned identification number (or any part thereof)
A government-issued identity card
Fingerprint
Home or business address or telephone number
Driver's license number
Photocopy of a driver's license
Photocopy of the Card
Other credit cards

MasterCard Rule 5.10.4 of the December 2013 edition discusses this issue as well.

5.10.4 Additional Cardholder Identification
A Merchant may request but must not require a Cardholder to provide additional identification information as a condition of Card acceptance, unless such information is required to complete the Transaction, such as for shipping purposes, or the Standards specifically permit or require such information to be collected. A Merchant in a country or region that supports use of the MasterCard Address Verification Service (AVS) for MasterCard POS Transactions may require the Cardholder’s ZIP or postal code to complete a Cardholder-Activated Terminal (CAT) Transaction, or the Cardholder’s address and ZIP or postal code to complete a mail order, phone order, or e-commerce Transaction.

As for "See ID" VISA/MC consider an unsigned card to be invalid. A merchant following VISA/MC rules should instruct the cardholder to sign the card, check ID, and proceed with the transaction. If the cardholder refuses, the merchant should refuse to process the transaction.
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I can do all things through Him who gives me strength. (Phillipians 4:13)

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#1900027 - 02/25/14 08:57 PM Re: Stolen Debit Card [Re: BrianC]
BetsyS Offline
Gold Star

Registered: 06/10/09
Posts: 407
Originally Posted By: BrianC
[quote]
An Acquirer must not require a Merchant, and a Merchant must not require a Cardholder, to provide any supplemental Cardholder information as a condition for honoring a Card, unless it is required or permitted elsewhere in the Visa International Operating Regulations.


This is true unless pre-empted by state law. Oregon Statute ORS 646A.214(3) & (4)(a) & (b) has such a provision:

(3) Any provision in a contract between a merchant and a credit card or debit card issuer, financial institution or other person that prohibits the merchant from verifying the identity of a person who presents a credit card or debit card in payment for goods or services by requiring or requesting identification is contrary to public policy and void.
(4) Nothing in this section may be construed to:
(a) Compel a merchant to verify the identity of a person who presents a credit card or debit card in payment for goods or services; or
(b) Interfere with the ability of a merchant to make and enforce policies regarding verification of the identity of a person who presents a credit card or debit card in payment for goods or services.
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Let's start at the very beginning; A very good place to start...

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#1900055 - 02/26/14 09:02 AM Re: Stolen Debit Card [Re: BetsyS]
Ken_Pegasus Offline
10K Club

Registered: 08/30/01
Posts: 17280
Loc: Another trip around the sun
Any contractual provision not reflective of federal law and contrary to state law is void.

Thank you all.
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The world is not a wish granting factory. Hazel Grace Lancaster

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