From BusinessWeek:

Many consumers say it's about time. The rules were proposed just as the U.S. economy started to tank, when many card holders were falling further behind on their payments at the same time home equity lines of credit were drying up and jobs were disappearing. Regulatory agencies came under fire to act, and Senator Carl Levin (D-Mich.) held hearings this spring to examine card company billing practices.

The proposed regulations generated more than 56,000 comments from individuals, banks, credit unions, and industry associations. That's a record number of submissions, says the Fed, beating the previous record of 45,000 submissions for a proposal that would have let financial firms assume the role of real estate brokers.

BusinessWeek says that since 1996 our nation's credit card debt has doubled to almost $1 trillion dollars. And unpaid credit card bills are growing fast as the economy sours. For their part, the credit card companies are trying to stop the bleeding by raising interest rates on otherwise "good" customers. And those customers have had enough.

Here's how the Federal Reserve describes the proposed reforms:

• Banks would be prohibited from increasing the rate on a pre-existing credit card balance (except under limited circumstances) and must allow the consumer to pay off that balance over a reasonable period of time.
• Banks would be prohibited from applying payments in excess of the minimum in a manner that maximizes interest charges.
• Banks would be required to give consumers the full benefit of discounted promotional rates on credit cards by applying payments in excess of the minimum to any higher-rate balances first, and by providing a grace period for purchases where the consumer is otherwise eligible.
• Banks would be prohibited from imposing interest charges using the "two-cycle" method, which computes interest on balances on days in billing cycles preceding the most recent billing cycle.
• Banks would be required to provide consumers a reasonable amount of time to make payments.

If you'd like to add your comment to the proposal, click here, then scroll down to "Proposals for Comment."

Federal Reserve Proposal Press Release [Federal Reserve]
Credit Card Rage [Business Week]

We found this handy chart on CreditCards.com (a credit card comparison site):

As you can see, you're not automatically covered just because you have a credit card, so make sure you read and understand your credit card's rental car insurance policy. That way you can avoid wasting money on an unfamiliar policy offered by a rental car company.

If you're currently researching credit cards, try CreditCards.com or Bankrate.com to compare offers easily.

Compare credit cards' rental insurance policies [CreditCards.com]
(Photo: Marike79 )

There's a lot of information below, so here is an executive summary:

• Regardless of who the merchant uses to process credit card transactions, merchants that add a surcharge or require a minimum purchase to accept a Visa or MasterCard credit or debit card are violating their merchant agreement, and you should report them to the bank that issued your card.
• American Express does not forbid minimum purchase requirements, but they require parity with the other credit cards, so a minimum purchase requirement just for American Express, but not for Visa, is not allowed. American Express does not allow surcharges, unless they are assessed as a convenience fee...
• Convenience fees are allowable surcharges for specific types of payments, generally to schools and government entities (like taxes or fines).
• Asking for ID is not prohibited, but refusal to show ID cannot, by itself, be a reason for the merchant to halt the transaction.

Does this only apply to credit cards? What about when I use my [Visa, MasterCard, American Express]-branded debit card?

We've mentioned this before, but it's worth repeating: the merchant agreement applies to a consumer who uses a debit card with a major credit card company's logo on it, regardless of whether he signs it or uses a PIN. Note that this is for things like minimum purchases, surcharges, and requests for ID; a credit card often offers additional consumer protections for chargebacks, warranty extensions, and buyers assurance plans.

What's the deal with third-party processors?

After we posted about a McDonald's adding 25¢ to credit/debit card purchases, commenter Corporate Shill wrote in to tell us that many small businesses, like bars, use a third-party credit card processor to offset the expenses of purchasing credit card terminals and accepting different cards:

3rd Party CC Processing Companies offer Merchant Bank services to small businesses that cannot afford to offer CC services to their customers, or to businesses that have been denied CC processing by Merchant Bank.

(In simple legal terms the 3rd Party Companies will act as a straw man between the Merchant Bank and the business that actually accepts the CC from the customer.)

In addition to offering Merchant Bank services the 3rd Party CC Processing Company will often provide the data terminals and supporting equipment at a very low cost or even free to their clients. The data terminals, because they are accessing the 3rd Party network rather than an actual Merchant Bank network, can be programmed to accept an even wider variety of CC's and perform other functions, such as check clearing.

We asked the credit card companies whether a merchant that contracts with a third-party processor still has to adhere to the merchant agreement: MasterCard simply said "Yes," and American Express said that these merchants still sign a contract with the credit card company regardless of how they sign up for card acceptance. Corporate Shill disputes this, saying that using a third-party processor does not require the merchant to sign an agreement with the credit card companies, but the companies, at least American Express, disagree.

Are government and educational entities exempt from these rules? What is the exception for convenience fees?

MasterCard says:

We allow a "convenience" to be charged by certain educational institutions and public sector merchants, including:

• Elementary and secondary schools for tuition and related fees, and school-maintained room and board
• Colleges, universities, professional schools, and junior colleges for tuition and related fees, and school-maintained room and board
• Local, state, and federal courts of law that administer and process court fees, alimony, and child support payments
• Government entities that administer and process local, state, and federal fines
• Local, state, and federal entities that engage in financial administration and taxation
• Government Services; merchants that provide general support services for the government

In addition, a merchant is permitted to charge a fee (such as a bona fide commission, postage, expedited service or convenience fees, and the like) if the fee is imposed on all like transactions regardless of the form of payment used. For example, a merchant that has a website that accepts MasterCard, Visa and direct debit to a checking account as its three forms of payment, may ask for a surcharge IF the fee is applied to all three methods of payment. The same applies to a merchant that has a physical store that accepts cash, checks, MasterCard and Visa. The store can charge a fee as long as the fee is applied to all four methods of payment.

American Express says such fees are only allowed "in very limited industries, for example, taxes."

Can a merchant ask for ID with I pay with a credit card? Can I refuse to show it?

We've addressed this before, too, and it also bears repeating, along with a little elaboration from MasterCard: "However, to be clear, the MasterCard rule does allow merchants to ask for ID. Our rule prohibits the merchant from refusing to perform the transaction solely on the basis of the cardholder refusing to provide the ID. (If the merchant asks for ID and the cardholder refuses, then the merchant can either perform the transaction or call their acquirer for direction.)"

That being said, this isn't going to help you when you're out of cash and the guy at the convenience store won't let you charge that can of Drank. But reporting these violations, to the credit card company, to your issuing bank, and to us (preferably with pictures), will draw enough attention to the merchant that it will, hopefully, change its way.

1. Fees and More Fees

On any given month, you might pay a late payment fee, overlimit fee, cash advance fee, balance transfer fee, foreign exchange fee, bill payment fee, Western Union fee, and whatever else your lender can devise. Not to mention monthly and annual fees.

2. Tricks to Make You Pay Late

These come in many varieties. If you’re late you’ll pay a hefty fee and your interest rate may go up. Check each statement carefully and pay your bill as soon as it arrives.

Changing Due Dates – Your bill will not be due on the same day every month.

Early Due Dates – Bills may be due just a few days after you receive them.

Weekend Due Dates – If your due date is on the weekend and your payment arrives on the date, it
won’t be processed until Monday and you’ll be considered late.

Morning Due Times –Your payment may be due at 9am on the due date, not 5pm.

3. Approved Overlimit Charges

If a purchase puts you over your limit, your credit card company will approve the charge then hit you with an overlimit fee and maybe even raise your interest rate. Keep careful track of your balance and know that even approved charges may put you overlimit.

4. Universal Default

Pay Card A on time but pay late to Card B (or anything else monitored by your credit score) and your interest rate on Card A may jump!

5. “Any Time For Any Reason” Changes

Most contracts include this ominous phrase. It means just what it says – they can increase your interest rate on a whim. Teaser Rates That Don’t Stick – An introductory 0% interest rate can jump to 30% with a late payment or if you go overlimit. Don’t bank on keeping that 0% rate for the entire promotional period.

6. Retroactive Application of Higher Interest Rates

To make things worse, if your interest rate increases, they can apply the higher interest rate to the entire existing balance, not just to new charges.

7. Allocation of Payments

If you end up with two or more different interest rates, they will apply your payments to the balance with the lower interest rate first. The rest of your balance will continue to generate high interest charges until the low-rate balance is entirely paid off.

8. Tricky Interest Calculations

For some cards, you can pay interest on purchases from previous cycles. This is known as double cycle billing. Look for a card that uses the “Average Daily Balance” interest calculation method.

9. Credit “Protection”

Services like this may sound good, but they’re usually useless. The fee for the service likely exceeds the minimum payments it would cover if you became sick or lost your job. Avoid add-on products like this.

10. Binding Mandatory Arbitration (BMA)

This provision requires that you resolve any conflict with an arbitrator selected by the lender, which means you give up your right to take the credit card company to court.

Scan your contract and terms and conditions to see if they apply to you. Don't worry, if you try really really hard, it's possible to understand your credit contract's language...oops, that's trick number 11, not writing contracts in plain English.

[via AFFIL]
(Photo: Ben Popken)

Here's what VISA says should happen when you present an unsigned card:

1) The merchant will ask for your government ID.
2) You will be asked to sign the card. If you sign it, the signature on the card will be compared to the signature on the government ID. If you refuse, the card will not be accepted.

Here's VISA's official statement on "See ID":

Some customers write “See ID” or “Ask for ID” in the signature panel, thinking that this is a deterrent against fraud or forgery; that is, if their signature is not on the card, a fraudster will not be able to forge it. In reality, criminals don’t take the time to practice signatures: they use cards as quickly as possible after a theft and prior to the accounts being blocked. They are actually counting on you not to look at the back of the card and compare signatures—they may even have access to counterfeit identification with a signature in their own handwriting. “See ID” or “Ask for ID” is not a valid substitute for a signature. The customer must sign the card in your presence, as stated above.

Most merchants don't follow this policy, but some (most notoriously— the U.S. Postal Service), are quite strict.

2) The Maximum Liability For Unauthorized Use Of A Credit Card* Is $50 According To Federal Law
The Fair Credit Billing Act protects you from suffering damages due to unauthorized use of your credit card. If you report a lost or stolen card before anyone uses it, you are not responsible for any charges. If you do not report it before an unauthorized use you are liable for a maximum of $50.

(*Credit cards only. Debit cards and ATM cards are covered under the Electronic Fund Transfer Act, and your liability depends on how quickly you report the loss. Unlike credit cards, debit and ATM cards can have unlimited liability in certain circumstances.)

3) Merchants Cannot Require You To Present ID, Unless Your Card Is Unsigned
Some consumers enjoy it when a clerk asks to see their ID. Others do not. In some states, it's actually illegal for a store to record any additional information (such as an address or drivers license number) as a condition of processing a credit card transaction (unless the address is needed for shipping, of course.) For some reason this is always a hotly debated topic, so we'll go right to VISA for the answer:

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. Laws in several states also make it illegal for merchants to write a cardholder’s personal information, such as an address or phone number, on a sales receipt.

We think that's pretty clear. Don't want to show your ID? Don't.

4) Merchants Cannot Require A Minimum Transaction Amount
It's a violation of the credit card company's merchant agreement to refuse a transaction because it is below the "minumum."

VISA says:

Imposing minimum or maximum purchase amounts in order to accept a Visa card transaction is a violation of the Visa rules.

Mastercard says:

A Merchant must not require, or indicate that it requires, a minimum or maximum Transaction amount to accept a valid and properly presented Card

5) Merchants Cannot Charge A Surcharge For Using A Credit Card, However, They Can Offer A "Cash Discount"
You may have noticed that gas stations are starting to offer a different, higher price for credit cards. This isn't technically allowed— unless it is marketed as a "cash discount." In other words, if you fill up your car and find that you've been charged more than advertised because you paid with a credit card — that's not allowed. If, however, you decide to pay with cash because you saw an advertised "cash discount" to the "regular price" — that's ok. A subtle distinction, but an important one.

(There is something called a "convenience fee" that some institutions are allowed to charge if they do not typically accept credit cards in their normal course of business. The example VISA gives is a utility company where the customary way is to pay by mail or in person. The rules for charging this fee are somewhat complicated and there are loopholes, etc.)

6) Many Credit Cards Have Programs That Will Automatically Double The Manufacturer's Warranty And Other Excellent Benefits
We get a lot of complaints that can be easily solved by the complainee's credit card company. We've helped readers get laptops replaced out of warranty, and helped them get their money back when Best Buy sold them a box full of bathroom tile instead of a hard drive. Your card may come with extended warranty protection, 90 day accidental damage protection that includes vandalism, rental car insurance, road side assistance, baggage insurance, and return protection. You should be aware of what benefits your credit or debit card offers so that you remember to use them when you need them.

7) Merchants Are Not Allowed To Make You Give Up Your Right To A Chargeback
You might see a receipt that has suspicious-looking waiver stating that you're agreeing to give up your right to issue a chargeback against the merchant for any reason, no matter what, period. These waivers are the result of some crafty entrepreneurs selling sales-receipt paper with the waiver printed on it, claiming that it helps protect the merchant. It's all nonsense and it isn't allowed. If you see it, you should report the merchant.

8) Merchants Are Not Allowed To Place A Hold For The Estimated Tip
Because so many consumers have instant access to their account information, merchants aren't allowed to place an "authorization" for an estimated tip. For example, if you go to dinner and the bill is $100 and you pay with a credit card, the restaurant might be tempted to "authorize" your card for $120—a 20% tip. If you choose to leave a 15% tip and then check your balance — it will appear that you have been overcharged. This apparently results in lots of angry customers, so the practice has been forbidden in VISA's merchant agreement.

9) If Merchants Suspect You Of Fraud They Are Supposed To Call With A "Code 10"
If a merchant is suspicious of you, they are supposed to make a "Code 10" call. They are instructed to take your card, call in, and say “I have a Code 10 authorization request." They will then be asked a series of questions that can be discreetly answered with either yes or no. The merchant bank will then authorize or deny the card. They are not supposed to threaten to call the police or try to detain you. Mastercard says that if the police need to be involved, the "Code 10" operator will call the police while the clerk waits on hold.

10) If Merchants Break These Rules, You Can Report Them To The Credit Card Company
Here's Mastercard's Merchant Violation form. To report merchant violations to VISA, they ask that you report them to the financial institution that issued you your Visa card. You should be able to find the number your on Visa statement or on the back of your card.

(Photo: Maulleigh )

As we've previously suggested, Brandon reported the violation to Mastercard and Visa, as well as to McDonald's headquarters. To reiterate: most credit card companies' merchant agreements forbid merchants from requiring a minimum charge to pay with a credit card, asking for ID when you pay with a credit card, or adding a surcharge for paying with a credit card (merchants are usually allowed to give a discount for paying cash, however, if it's clearly labeled as such), and we encourage readers to report violations directly to the credit card company using the info here.

As provided Rule 5.6.3, Additional Cardholder Identification, of the MasterCard Rules manual, a MasterCard merchant must not refuse to complete a transaction solely because a customer who has presented a valid MasterCard card refuses to provide additional identification information, such as a personal ID, except as MasterCard specifically permits or requires.

A merchant may require additional identification if the information needed to complete the transaction, such as for shipping purposes. For transactions at unattended terminals such as card-activated gas pumps or transactions conducted on the Internet, by phone, or by mail, a merchant may request address information in order to use the MasterCard Address Verification System (AVS). By using AVS, the merchant can confirm that the address information provided matches the information that the card issuer has on file. Additionally, if the MasterCard card is unsigned, a merchant must request personal identification (but not record it) and require the cardholder to sign the card before completing the transaction.

If a cardholder encounters a MasterCard merchant that refuses to honor a MasterCard card without additional identification information, the cardholder may complete the Merchant Violation form found in the FAQs/Contact Us section of www.mastercard.com. The MasterCard Rules manual is also available at www.mastercard.com(click on “MasterCard Worldwide Rules”).

Regards,

Daniel F. Balistierri
MasterCard WorldWide

(Photo: Sam Wilkinson)

I emailed you about 3 weeks ago regarding a problem with my Rewards Zone MasterCard. I have had it for about 5 months and hadn't been able to activate it online and see my points or get certificates for buying items from Best Buy. Well using my ninja skills I dug up all the executive emails and finally received a response after emailing the VP of customer relations. She had a Sr. Executive Resolution Specialist handle my issue. I even received a $75 gift certificate for my trouble. I'll copy the emails below for you to see.
 
Thanks Consumerist!!!
 

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Email 1: From: Arrighi, Michael Sent: Tuesday, April 08, 2008 12:37 PM Subject: FW: Rewards Zone   Dear [redacted]:   I am writing in regards to your attached email that you directed to Lisa Smith, Vice President of Enterprise Customer Care at Best Buy.   Ms. Smith has referred your correspondence to my attention to investigate and respond accordingly.   I am sorry for any disappointment that has surfaced regarding your Reward Zone experience. I will look into the issue and respond to you shortly.   Thank you, Michael Arrighi Sr. Executive Resolution Specialist Best Buy Corporate (612) 292-0155 Direct (952) 430-2556 Fax michael.arrighi@bestbuy.com

---

Email 2: Best Buy Corporate Offices 7601 Penn Avenue South Richfield, MN 55423 April 8, 2008   Dear [redacted]:   I'd like to apologize on behalf of Best Buy for any difficulties you may have experienced regarding this matter, but I appreciate the time you took to voice your concerns to allow the company an opportunity to properly address them. Indeed, Best Buy values this sort of contact as it provides the corporation with important feedback to make decisions regarding its future direction.   I am sorry for any frustration that has resulted from this unusual situation, for it is not reflective of the optimal experience Best Buy strives to provide to all of its customers. Due to a glitch within the company's computer system, your Reward Zone account has been rejected.   I am working with my contact within Reward Zone to rectify this issue and will touch base with you once the account has been activated. In the meantime, as an invitation back to Best Buy for a better experience, I will send you a $75 gift card. This card will be generated from a separate location and should arrive at your residence within the next two to three weeks.   Thank you again for allowing Best Buy to respond to this issue. Please let me know if you have any further questions or concerns. You can reach me through email at Michael.Arrighi@BestBuy.com or via phone at 612-292-0155.   Sincerely, Michael Arrighi Senior Executive Resolution Specialist Best Buy Corporate

From: Zach
To: Smith, Lisa (VP ECC)
Sent: Mon Apr 07 10:43:24 2008
Subject: Rewards Zone
 
Dear Ms. Smith
 
I have been a loyal customer of Best Buy for over 15 yrs and go out of my way to shop there for my electronics. I hope yourself or someone in your organization can assist me with my problem. Below I have given a brief synopsis of what is going on. Thank you for your time.
 
I have come into a situation with Best Buy Rewards Zone that I could use your help. I applied for and received a Best Buy Rewards MasterCard so when I purchase everyday items I would earn points toward Best Buy certificates. You are usually able to login in myrewardszone.com and enroll your card to view your points and print out certificates. It has been 3+ months and I have yet to activate my rewards zone account to view or use my points. I have called 5+ times to complain and ask why. The call center is off shore most likely India and they refer all account activation requests to America to be looked into. They cannot do anything other than field my call and tell me to wait 7-10 days. I have waited 7-10 days on several occasions and nothing has been done.
 
I have asked to speak with managers and supervisors and they just give me comp points and tell me he can do nothing and that all requests are forwarded to the "backoffice". I have been unable to find a number or person to help me with contacting Best Buy customer service that can help me. It's just become such an ordeal over what I have been told is an invalid expiration date on my Rewards Account.
 
Thank you.

I went to IHOP(INTERNATIONAL HOUSE OF PANCAKES) on March 30th with my wife to eat. After our meal I went to the counter to pay and presented my Visa as payment. I was asked for photo ID, and kindly declined. I was then told that they were not going to be able to accept my card without photo ID.

I then offered my MasterCard(so that I could later fill out a complaint) and was also told a photo ID would be required. I then explained that I had no other form of payment, that it was against both Visa & MasterCard's merchant rules. I was then directed to the manager, who I politely explained to that if he expected to be paid for the meal he offered me, he had the choice of accepting and honoring my card, or not getting paid.

At this point the manager called the police and was attempting to have me arrested for Dine-and-Dash, even though I was the one trying in good faith to present payment, and they were the one's refusing, based on a 'store policy' that was in a direct breach of contract, their merchant agreement. My wife then showed her Visa(same account number) and her ID, and was fully embarrassed and outraged that they were trying to have me arrested because THEY refused to accept payment. I found this completely unacceptable, I called their Corporate Headquarters in Glendale, California, as did my wife, and filed complaints. We were told a Field Rep for the area would call us, but none ever did. I'd plan on going back there with just my card and no ID and let the police come, but as a matter of principal I can simply not got back there after something like that.

— Jered,

MasterCard Merchant Manual (PDF) [MC]

Recently, my husband and I got two new Chase credit cards in the mail. I didn't look closely, assuming that this was a new card for our never-used Chase Mastercard account. This account has been around for seven years, but we prefer another card with a rewards system; the Mastercard account is open only to benefit our credit rating. Therefore, no urgency in activating it — I dropped it in the bill pile to deal with later.

Completely unrelated, I decided the next day that it was a nice time to pull my yearly free credit report. Everything was as it should have been, except an old Visa BankOne account which I had from early 2003 to mid 2004 was not listed as closed. Curious, I called the customer service number from the last bill and found that it did seem to be active — thankfully, with a zero balance on the card. The weird part was that it wouldn't accept my old billing zip code, but was quite happy with my current address; since we moved here only a few months ago, I am positive I never told the credit card company the new address when I was canceling many years ago.

I spoke to the cancellation department, who persistently tried to sell me on the advantages of keeping this account open while her computer "processed the request" to close the account. After three minutes of protesting this account should have been closed years ago, I gave up and let her chatter, grunting every now and then so she wouldn't think I'd hung up.
"My goodness, this account has been open five years and has always been in good standing. That's great for your credit report!" (It should have been closed years ago!)
"We can offer you a very low APR, which is great if you carry a balance!" (You mean that four-year-old $0 balance?)
"You can add a reward system to this card, and get free gas or airline miles!" (urrrrrg....)
"If you ever want to reopen this account, you'll have to go through the approval process all over!" (Whatever.)
After a couple minutes of grunting, she confirmed the account was closed. I hung up and went on my merry way.

At this point, I thought this was just some quirk that had happened in 2004 — either I had not closed the account as I remembered, or a computer glitch had left it open. But, the next day as I sorted through the bill pile, I looked more closely at the two Chase cards we'd received. They were in fact Visa, not Mastercard, and matched the account number I had just closed. Chase had sent me two cards for an account that they acquired from BankOne, found my new mailing address, and reopened the account without my knowledge or permission.

The cards are cut up and the account is closed with Chase. I feel abused, though; I would have been a hell of a lot angrier on the call to close the account if I had known the entire situation. We don't really want to cancel our other, seven-year-old, Chase account, since it's good for the credit rating and all; so unfortunately, the only way I can "punish" them for doing this is continue to not use the old Mastercard account, thereby not giving them any merchant fees.

-Erica

Later, at a staff meeting...

Chase Boi 1: Hey what are we going to do with all these dead credit card accounts we just bought?
Chase Boi 2:I know, let's turn 'em back on and send 'em new cards. Some people will use them and we'll make money off the fees.
Chase Boi 1: If anyone complains, we'll pour sugar in their ears about how great the card is and if they really really push, we'll just close it down!
Chase Boi 2: Brilliant!

It's always important to be mindful and attentive when new credit cards are sent to you in the mail unexpectedly. Also, check your credit report for errors, like accounts you thought were closed, and follow up on any inconsistencies. Annualcreditreport.com is the place to go to get a copy of your credit report for free, once a year, with all the three credit bureaus.

One afternoon, I received a call on my cell phone with "unavailable" appearing on the Caller-id. Ordinarily, I might have just ignored it, but I answered the call and an electronic voice informed me that it was Chase Fraud Services calling about unusual activity on my account—the call continued as follows:

Recording:

Chase: Hello, this is Chase Fraud Services with an urgent call regarding your Chase Credit Card. We have determined there may be fraudulent activity on your account. Please take a moment to confirm recent purchases. Please press one to continue:

Me: One

Chase: Did you make a purchase on (yesterday's date—they waited one day to call me) in the amount of $14.95 at [redacted—internet site]?

Press one for yes or two for no.

Me: Two

Chase: Let me confirm, you did not make a purchase yesterday in the amount of $14.95 at [redacted—internet site]?

Silence...

Chase: Did you make a purchase on (yesterday's date) in the amount of $39.95 at (an Internet Data broker—for what I later found out was a background report on me)

Chase: Press one for yes and two for no.

Me: Two

Chase: Please hold for a representative.

[Five minute hold time in order to speak to a fraud representative.]

Chase: Sir, before we proceed with this call, I need to verify your identity. What are the last 4 digits...?

Me: Excuse me, but I refuse to provide you with any personal information. I did not initiate this call and I have no proof you are who you say you are. And for all I know, this could be a" phishing" scam.

[What in the world is Chase thinking by calling customers asking them to identify themselves? It's no wonder people fall prey to phishing scams.]

Chase: Sir, this is not a phishing scam, this is Chase.

Me: Well, that's reassuring.

Chase: Sir, do you have your Toys-R-us Master Card in your possession?

Me: Not on me, but it is at home.

Chase: So you are confirming that you received it?

Me: Wait a second, this is a phishing scam! I have a Toys-R-us VISA and not a MasterCard. Besides, my card doesn't expire anytime soon, so why are you asking if I received it?

Chase: Sir, I am going to suspend this account, and place a fraud alert on your credit report. Please do not use your card; we will replace it with a new account number.

Me: Wait a second, what the hell are you talking about? I haven't used my card in months. It doesn't expire, and it's a Visa, not a MasterCard! Please explain what's going on here.

Chase: Sir, we sent you a new card about a month ago.

Me: Why did you do that when it doesn't expire anytime soon?

Chase: We had a branding change. The store signed on with MasterCard and as a result, we sent you a new card with a new account number.

Me: And is there a reason why you guys didn't bother to notify me to expect a new card in the mail?

Chase: Sir, we have millions of customers, we couldn't possibly notify every customer each time we send out a new or renewal card.

Me: Why is that? I signed up for Chase alerts, electronic statements and electronic notifications—it doesn't cost you anything to email a customer.

Chase: Sir, I don't make the rules.

Me: This is just outrageous. I don't want yet a third account number generated. Please do not send me a new card. Just close the account.

Chase: Sorry sir, I cannot do that.

Me: What do you mean you cannot do that?

Chase: Sir, when we suspend an account for fraudulent activity, the system automatically generates a new account number. So there is nothing I can do. You will receive a letter from Chase, please sign and have it notarized and return it or you will be held responsible for the unauthorized charges.

Me: Wait a second, something doesn't make sense. How did anyone manage to use the new card
if it requires activation from my home phone number?

Chase: That is a good question. Hold on a moment.

Chase: Sir, it was not activated. And rest assured that all these charges were declined as a result.

Me: Excuse me, but if they were declined, then why are you sending me a letter to be notarized?

Chase: Sir, it's a procedure we must follow under these circumstances.

Still thinking that this bizarre conversation was a phishing experiment, I logged on to Chase online and confirmed that my available credit was reduced to zero on this account. The call was legit, after all! What we have here is a perfect storm of coincidences that led to this incident and if you think ID theft cannot happen to you, think again. The credit card was not stolen. It was not intercepted in the mailing process. It turns out that a careless Postal Service letter carrier delivered it to the wrong address, directly into the hands of a professional ID thief.

Without missing a beat, that person managed to use the card on the Internet for a small purchase at [redacted—internet site] presumably to see if it works, and then proceeded to use the card to pay for a background check on me at two data brokers. The Chase fraud representative lied—Chase did not, in fact, decline these charges.

In an attempt to find out who used my card, I called each merchant and I was informed that they are unable to give me any information because they could ultimately be held liable if I went after that person. I later found out they live in my zip code and through other sources, their name and address. (all three merchants agreed to immediately reverse the charges—something I asked them not to do, because I wanted Chase to investigate this).

I learned that the magnetic strip on the back of the credit card remains deactivated until a phone call is made to activate it. However the account number itself, will work if it is used online. [ed. The magnetic strip is just a dumb magnet. The "activation" occurs within the electronic credit card systems, not within the card itself]

I consider myself a savvy consumer having put in place measures to prevent this from ever happening in the first place:
1) I signed up for a credit report monitoring service that emails me whenever there is new or unusual spending activity.
2) I routinely shred all documents containing personal information.
3) I opted out at the DMA website and subscribed to Catalog Choice to eliminate junk mail.
4) I signed up for electronic statements to prevent misdirected mail
5) I routinely monitor my FICO score.
6) I signed up for credit card alerts sent to my BlackBerry.
7) I pay all my bills using Internet banking instead of sending checks in the mail.

Following this incident, I had to take additional measures to protect myself by placing a credit freeze on my credit report at all three credit bureaus as I learned that the "fraud alert" Chase placed for me is not foolproof. Apparently, if someone applies for credit electronically, the computer does not recognize the alert. (one reason why "Life lock" is a bunch of BS) Additionally, I went to www.optoutprescreen.com to opt out of pre-approved offers for credit and insurance and filed a report with the postal inspector regarding this incident. I also just learned that at least one bank will allow you to pick up renewal cards at a branch, instead of having it mailed to your home.
[Consumerist editors - you may want to use the following for an additional article—although it is related to this incident, it bears a separate warning:]

Do you frequently get a letter in your mailbox addressed to a neighbor? Or, perhaps, addressed to someone living down the block? Did it ever occur to you that if you are receiving that letter addressed to someone else, perhaps they are receiving your mail?

You may not be aware that the postal service has a regular carrier working your route on a five day work week. As mail is delivered six days a week, that means one day each week (usually on a Tuesday) a substitute carrier delivers your mail and they rarely know the route. These subs are not the most accurate to begin with and the postal service rarely keeps them on a regular schedule. So you can be sure that once a week mail will be delivered to the wrong address.

That is generally not a problem when all your neighbors are honest people. But, find someone who just happens to be in foreclosure or is about to be evicted and you may find yourself in my situation.With shoddy mail service, the banks are effectively playing Russian roulette with your account and personal information when they bombard you with balance transfer checks and unsolicited cards at random.

That quote is absolutely wrong. I worked for [redacted] for 3 years as their Merchant Fraud Control Analyst, and now I work for a retail company handling all chargeback situations. Basically, if someone disputes a charge for any reason then I'm the person the bank/Amex gets in touch with. My point is, look at the attachment this is what a retailer gets in fraud case from Amex (for MC and Visa its not much different). No where does it say proof of ID...and how the heck would one send video in the allotted time anyway? Just thought you guys would like a copy of the real thing.

Mr Jobs, and Mr Rhodes,

The Merchant, Apple Inc., at Stonestown Galleria Required California ID as a condition to accepting my Credit Card as payment.

From previous experiences, I have learned that many occasions have occurred where the consumer's identity becomes compromised because merchant's ask for ID and the unknowing consumer gives his ID, which includes his home address and DL#. That is why Merchant's such as VISA/MC have policies that protect consumer's rights. If your Credit Card is signed it is valid, and the Merchant must not require customer's to provide ID as a condition of purchase. My Concern is my personal security and other's that shop at Apple Store.

Cardholder ID
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. Laws in several states also make it illegal for merchants to write a cardholder's personal information, such as an address or phone number, on a sales receipt. P. 29, Visa Merchant Card Acceptance Policy

I gave the merchant at 3251 20th Avenue, Space 235, San Francisco, Ca, 94132 both my Citibank Visa and Citibank Mastercard and the merchant refused to accept them both as payment because I refused to provide them with my Driver's License. Also from previous experience I know that they record your DL# for every Credit Card transaction. Why does Starbucks and other retailers train their employee's not to ask for ID and Apple Inc has entire stores who don't know what a merchant policy is?

The reason that I provided both my Mastercard and VISA is because they both have similar policies, and Mastercard even has a webpage to submit policy obstructions to.

I entered the store and proceeded to an employee to make my purchase, the employee asks for ID and because I was in a hurry I showed him my University ID so I could get done with it. In and out. Well he says sorry I need to see California ID, and I responded, "I am sorry you are not getting that, My Mastercard is signed and that is all you need." He said he couldn't process my transaction so I gave him my VISA card and he still said no. I asked him for his manager because I was sure that Apple Inc., informs their Sales Manager's about Merchant policies and laws. Well Paul [redacted] comes back and isn't any help and tells me that he won't accept my cards with out proper identification for my security and protection. I tell him I'm doing fine and my cards are signed and verified. He can call the bank if he wants to verify anything. He doesn't process my transaction and I take his information.

When you buy online, or visit a restaurant.. A big sign for ID verification isn't showing up anywhere because of merchant agreements. The fact that he didn't take his time to show me some corporate policy on this and just let me leave unsatisfied after he gave me his business card was very disappointing. Many companies either don't have written ID Request policies or have written policies that employee's must not require ID or ask for ID at POS. The fact that I know they record DL#s on the little hand held they have for every credit card transaction made me wonder if everyone else knew they were willingly handing over their personal information. I like to use my Credit Card for all the transactions I do because of the protection I get from Citibank, Sure I had cash but that is beyond my purpose.

I called 1-800-VISA-911 immediately and they forwarded me to my card issuer. After the run around Citibank told me to first to call Visa, that the merchant had the right to refuse my card, and then they finally escalated me because I wanted an explanation as to why they didn't want my business. Finally a Rep (Roxanne), said she would highlight my agreement in the correct places so I could see that the merchant could reject my cards. Wow, UNBELIEVABLE! Prior experiences with Citibank will leave me waiting for that response indefinitely, especially because I know what the merchant agreement says.

California Civil Code 1747.08 States that the merchant isn't prohibited from asking for ID by law, which bluntly says CA doesn't care if they ask/don't ask for ID, as long as they follow certain guidelines if they do. Unfortunately these merchant's are in Agreement's with VISA/MC not to ask for ID. Also this Merchant periodically takes down individuals DL# with every CC transaction at their locations. They broke the merchant policy and were going to break the California civil code for every transaction in the store that is taking place with a credit card.

CALIFORNIA CIVIL CODE 1747.08
(a) Except as provided in subdivision (c), no person, firm, partnership, association, or corporation that accepts credit cards for the transaction of business shall do any of the following:

(1) Request, or require as a condition to accepting the credit card as payment in full or in part for goods or services, the cardholder to write any personal identification information upon the credit card transaction form or otherwise.
(b ) For purposes of this section "personal identification information," means information concerning the cardholder, other than information set forth on the credit card, and including, but not limited to, the cardholder's address and telephone number.
(d) This section does not prohibit any person, firm, partnership, association, or corporation from requiring the cardholder, as a condition to accepting the credit card as payment in full or in part for goods or services, to provide reasonable forms of positive identification, which may include a driver's license or a California state identification card, or where one of these is not available, another form of photo identification, provided that none of the information contained thereon is written or recorded on the credit card transaction form or otherwise. If the cardholder pays for the transaction with a credit card number and does not make the credit card available upon request to verify the number, the cardholder's driver's license number or identification card number may be recorded on the credit card transaction form or otherwise.
(e) Any person who violates this section shall be subject to a civil penalty not to exceed two hundred fifty dollars ($250) for the first violation and one thousand dollars ($1,000) for each subsequent violation, to be assessed and collected in a civil action brought by the person paying with a credit card, by the Attorney General, or by the district attorney or city attorney of the county or city in which the violation occurred. However, no civil penalty shall be assessed for a violation of this section if the defendant shows by a preponderance of the evidence that the violation was not intentional and resulted from a bona fide error made notwithstanding the defendant's maintenance of procedures reasonably adopted to avoid that error. When collected, the civil penalty shall be payable, as appropriate, to the person paying with a credit card who brought the action, or to the general fund of whichever governmental entity brought the action to assess the civil penalty.

I would like to bring to the merchant's, card issuer's, network managers, and fellow consumer's attention that rules and regulations to protect the consumer's are not being executed at the reported Apple Store, and at many merchants across the U.S., and that many bank Customer Service Reps, not limited to Citibank, do not have the correct procedure or knowledge on handle these incidents of privacy. I would like to request that some communication is made with the location mentioned to make sure they don't ask for ID. I really need to buy something.

Thank you,

Ignacio

MasterCard Merchant Manual (PDF) [Mastercard]
Paying by Credit Card or Check: What Can Merchants Ask? [Privacy Rights Clearinghouse]
(Photo:C.Barr)

Here are some highlights from the FAQ:

Q: Do I get a discount at Hooters with my Hooters MasterCard?
A: No, not at this time, but look for special offers with your monthly statement.

Q: Can a Hooters MasterCard only be used for Hooters purchases?
A: The Hooters MasterCard is a card that can be used anywhere MasterCard cards are accepted worldwide.

Q: Can I pay my Hooters MasterCard bill at a Hooters location?
A: No, unfortunately not.

HootersCard

Bryan writes:

I have a Garmin Streetpilot c320 GPS unit. In November the internal battery stopped holding a charge, but the unit would work with direct power. This was only an issue when I started the car as it took much longer to acquire reception or if the power cord would get bumped which would occasionally happen with my stick shift transmission.

I knew that my GPS was out of the 1 year Garmin warranty, but I remembered that I bought it with my World Mastercard which has extended warranty protection. The claim process was much more involved than with American Express. After filling out all the paperwork and sending it to Mastercard, I got this response back:

As the claims examiner for MasterCard I have received and reviewed the documents submitted. The repair estimate submitted is for flat rate repairs. According to the Original Warranty you received with this item it was covered for defects in materials and workmanship for 1 year. I will need to see there was a defect in a part or in the workmanship of the item to extend your coverage.

The original warranty also shows there was no coverage for failures due to abuse,accidents,misuse or unauthorized repairs.

We need to confirm the failure of this item was caused by a defect.

Please secure an itemized repair estimate that will show what caused the failure, parts needed to repair and the final costs.

As shown in the Guide to Benefits this is required information for coverage under this benefit. I have listed the guide to Benefit information below.

Please forward the itemized repair estimate to my attention and I will promptly review this claim for coverage"

I contacted Garmin tech support to see how I can get a detailed repair estimate to complete my MasterCard claim. To my surprise I get this response:

"Dear Bryan,

Thank you for contacting Garmin International, I will be happy to help
you with this. The RMA number given you is for warranty repair. You
will not be charged for this. Just send your unit in with the shipping
address as indicated in the email.

With Best Regards,

Damon M
Product Support Specialist
Automotive Team
Garmin International
913-397-8200
800-800-1020
913-397-8282 (fax) Att: Damon M
www.garmin.com

I shipped the GPS and less than two weeks later a I received a replacement unit with a working battery. So I learned two things from this:

• 1. Garmin has some great customer service even through email.
• 2. I'm going to use my AMEX for all my purchases since their claim process is much easier and actually works to help their customers.

We replied:

Brendan,
Did you purchase the TV with a credit card? If so, you should check to see if your card has extended warranty protection.

Brendan replied:

Holy Crap, thank you! I called my credit card company (Master Card). After a little phone run around I was told they automatically double any manufacturer warranty. I answered a few questions and i'm covered! I'm sure the paperwork is going to be a bit of a pain, but woohoo!

Thank you Consumerist, you guys rock.
-Brendan

(Photo:mod*betty)

RELATED: 5 Ways Credit Cards Can Make You Happy
American Express Extended Warranty Protection Buys You A New Laptop

Visa
Phone Number: 1-800-VISA-911 (International: 1-410-581-9994). Or call the number on the back of your card
Mailing Address:
Visa U.S.A. Inc.
P.O. Box 194607
San Francisco, California 94119-4607
Online: Your card issuer's website may let you send them complaints about merchant violations and start a dispute if your were charged a fee to use your card.

"Visa merchants are not permitted to establish minimum transaction amounts, even on sale items. They also are not permitted to charge you a fee when you want to use your Visa card."

"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 transaction because a cardholder refuses to provide ID. Visa believes merchants should not ask for ID as part of their regular card acceptance procedures."

See this VISA faq on how minimum charges are not allowed.
Rules for Visa Merchants.

MasterCard
Make a report online.
Phone Number: 1-800-MASTERCARD (International: 1-636-722-7111) Or can also call the number on the back of your card.

"A merchant must not require, or post signs indicating that it requires, a minimum or maximum transaction ammount to accept a valid MasterCard card."

"A merchant must not refuse to complete a MasterCard card transaction solely because a cardholder who has complied with the conditions for presentment of a card at the POI refuses to provide additional identification information."

MasterCard Merchant Rules

American Express
Make a report online
Phone Number: 1-800-528-4800 (International: 1-336-393-1111)
Mailing Address:
American Express
P.O. Box 297812
Ft. Lauderdale, FL 33329-7812

"American Express's regulations do not explicitly prohibit minimum charges, but its policy is to discourage any merchant practices that create a "barrier to acceptance." Amex does prohibit "discrimination" against the Amex card, however, so if a merchant has no minimum or maximum charge or require ID for Visa and MasterCard, the merchant may not discriminate against Amex by imposing a minimum or maximum charge or requiring ID." [gofso]

RELATED:
MEGA UPDATE: Requiring Minimum Credit Card Purchases is a Violation
Stores can't set credit card minimum [MSNBC]
California Civil Code Prohibiting Surcharges for Credit Card Use
What Merchants Can And Can't Do In Regards To Credit Cards
Google Answers on State Laws Regarding Surcharges

I have a lovely Citi Mastercard with lots of rewards. I hate having to deal with paper statements, so I signed up for paperless statements (like I've done with all my accounts), available for viewing online at their website.

Now, Citi sends me a piece of mail every month to let me know that I have an electronic statement available to view.

The new estimate is part of a lawsuit by the credit card companies against Fifth Third Bancorp and TJX (parent company of Marshalls and TJ Maxx, among others).

Visa says that their fraud related costs are in the neighborhood of $68 - $83 million, and will only go up as more thieves use the stolen data.

Damn.

TJX data breach may involve 94 million credit cards [USAToday]
(Photo:Getty)

Writes Brandon, "They probably saw the ten thousand dollar balance and figured it was worth it not knowing that 3/4 is tuition that the company pays back next month."

Shop around first for a lower rate card first so you can throw out names and numbers of better offers. If they call your "bluff" and don't budge, then it will probably make sense to do the switch anyway.

(Photo: What Rhymes With Nicole)

I have had a Capital One Mastercard for about 10 years. My interest rate has been 4.99% for as long as I can remember. I received my statement for October to find that my interest rate had jumped from 4.99% to 13.5%.

I called Capital One to find out why. After a completely confusing phone tree and 10 minute wait, I got through to a real person who explained that the increase was not because of anything I did, but because Capital One made an "executive decision" to increase rates "for all cardholders" because of "recent market conditions."

They then offered to transfer me to another person who has the authority to review my account and see if I can get the rate lowered. This second person re-explained the reason for the rate increase and offered to lower my rate from 13.5% to 12.9%. I argued that I would transfer my balance away to another card or pay it off entirely, but this made no difference. I grudgingly accepted the 12.9%.

My wife and I are carrying more of a balance than usual as we just had some work done on the house that we are floating on the card for a few months. The interest rate increase makes our monthly interest (the amount we have to pay to keep the balance flat) go from $59.20 to $147.11. The difference, $87.91, is more that I pay each month for cell phones, satellite TV or even electricity on most months.

We are fortunate in that we have savings and other cards with lower rates which will allow us to transfer our balance away from Capital One. I'm sure many others will not have that luxury. Why is this not big news? Or is Capital One just screwing me because I had such a low rate to start with and that makes me a bad (low profit) customer? For the record, my credit is excellent and I have NEVER had slow-pays or missed payments.

I'm wondering if any other Consumerist readers have had this experience with Capital One.

-Chuck

In any event, Chuck is doing the right thing by doing a balance transfer to a lower interest credit card.

RELATED: Discover Randomly Raises 400,000 Members' APR "To Remain Competitive"

(Photo: taberandrew)

7 Unwritten & Often Forgotten Credit Card Secrets [Blueprint for Financial Prosperity]
(Photo: Getty)

If from Feb 1, 1996 to Nov 8, 2006, you used a Visa or MasterCard credit card or debit card for a foreign transaction, you might be able to get some or all of the related fees refunded if you file a claim here by Jan 9, 2008.

The companies still get to charge the fees, just now they have to disclose them. Somewhere. — BEN POPKEN

(Thanks to Ken! Photo: Sam Wilkinson)

If you have more than one card, shop around for the ideal discount. Both Visa and MasterCard offer savings at ACE Hardware; Visa's is $15 off a $75 purchase and free shipping, while MasterCard offers $10 off a $50 purchase, but no free shipping. If you are hungry, American Express offers discounts at restaurants.

You can't redeem these offer simply by using the right card to by the item at a brick-and-mortar store. The discounts listed on the websites are redeemable either as a printout coupon or an online discount code at checkout. — CAREY GREENBERG-BERGER

Visa, MasterCard & American Express Cardholder Discounts [Blueprint for Financial Prosperity]
Visa Discounts
MasterCard Discounts
American Express Discounts
Discover Discounts (Business Accounts Only)

Monthly Fee $2.95
Overdraft Fee $25.00
PIN Based Purchase $0.50
Each Optional Monthly Paper Statement $5.00
Card Closure Fee $10.00
ATM Cash Withdrawal - Domestic $1.50

"We may disclose information to third parties about your Card or the transactions you make: To our employees, auditors, affiliates, service providers, or attorneys as needed."

We may use Cardholder Information to provide Customer Service, to process claims for lost or stolen Cards, to develop marketing programs, to help protect against fraud and to conduct research and analysis, or as otherwise required by law. In addition, it is often necessary for us to disclose Cardholder Information for the same purposes to companies that work with us. For example, we may provide certain Cardholder Information to companies that perform business operations or services, including marketing services, on our behalf.

Terms and Conditions [Sigo Money]

RELATED: IDT Energy Continues To Con New Yorkers
IDT Calling Cards Are A Scam
IDT Energy Scammers Knocked On Our Door

This is the first we've heard of it. Anyone else receive a similar call recently? If you do receive a fraud alert call, ask questions and see if it's related to this mystery businesses' lax security procedures. The goal being to find out what business this is. — BEN POPKEN

•Blockbuster, Bloomingdale's and Macy's, because of expiration dates.
•Pizza Hut, and Shell for dormancy fees
•CompUsa, Home Depot,Kay Jewelers and Kmart, because the card can not be used on the store's website.

Bank cards, which are "gift cards" that can be used like a credit card, have tons of hidden fees and bullshit—and should be avoided. Also, when giving a gift card, be sure to include the original receipt...so the card can be replaced if lost or stolen if that service is available. Or just give cash. We love cash.—MEGHANN MARCO

Montgomery Country Gift Card Report [PDF]
Gift-card gotchas [Consumer Reports]
Say it with plastic [Delaware Online]

Nokia, Cingular To Try MasterCard Phones in NYC [Gear Log]
NYC Mobile Trial Sign Up, If You Dare...

"But Reid said he is steamed about the fact the perpetrator likely will never be caught. "Something has to be done," he said, holding up his now-deactivated card."

If you would like your Senator to consider addressing identity theft, write a letter. It might be more motivating, however, to steal their credit card.

(Thanks to Gari N. Corp!)

Or rather, as expressed by the Goatsification it was quite ripe for.

Priceless to the extreme.

"Speaking of Logos..." [A Whole Lotta Nothingvia Adland]

Is this a security issue? We think not. We just received our new gold WaMu Mastercard to replace the WaMu Visa, and the letter informed as that as a courtesy, they will let recurring payments and the like be charged for one month on the old card.

Are you reading, John Dillinger? This kind of annoying crap is the fallout from your supposedly victimless crime.

Disappointed's full letter, after the jump...

So Visa bribed Chase away from using MasterCard and the net result was that all the existing Chase debit cards have been replaced with these shiny gold cards with the Visa logo that look more important than they probably are. I activated mine yesterday - one assumes that since the new debit card with the brand new account number and expiration date are now in play, the old card would be no good. I even called Chase customer service to confirm that.
When cancelling my lousy Vonage service they tried to charge me the cancellation fee. I refused and they charged my Chase MasterCard, which I was reassured couldn't be used. Guess what? It went through! I had to call Chase who told me, yes Vonage went through but no, nothing else would. Could they really guarantee that? Probably not. I had to hang around while the customer service rep contacted security to make sure the card was cancelled.

So now if people don't want 2 Chase debit cards around they need to physically call and cancel their old card. I have to say I'm rea