Many merchants engraft their own rules to your use of a credit card, usually without the right to do so. What are you required to do and what can you rightfully refuse to do? The Financial Guide explains your rights.

Do sales clerks ask you to write your phone number or address on a credit card slip? Have you been told that "store policy" requires a $25 minimum for credit card use? Have you been charged an extra 3 percent just for using a major credit card? When you pay by personal check, does the clerk ask for two forms of identification and then write your credit card number on your check?

These practices violate your privacy, expose you to potential credit fraud and may be illegal in some cases. We will tell you how to say "no" to a merchant who engages in these impermissible credit card practices:

• Writes your personal information on a bank credit card sales slip
• Imposes a minimum sales amount for credit card purchases
• Charges extra for payment by credit card
• Writes your credit card number on your personal check

Personal Information

When using a credit card for a purchase, some merchants might ask you to provide a phone number, home address, or other personal information on credit card sales slips; however, consumers should always decline. This practice not only violates your privacy, but American Express, MasterCard, and Visa prohibit requiring it as a condition of sale. Furthermore, while credit card policies as well as state and federal laws vary, in California, for example, it is illegal for the merchant to record any personal information other than what is on the front of the credit card.

There is no need for merchants to obtain phone numbers or other personal information from customers. Once they have correctly processed the bank card transaction (gotten an authorization number and made sure the signatures match), they are guaranteed to receive payment.

Tip: If you don't want to provide personal information on a credit card sales slip, you can refuse to do so. The merchant has no right to refuse you the sale (although unknowledgeable clerks may have no authority to vary from store policy).

Further, if you refuse to present identification, such as a driver's license, the merchant may not refuse to make a credit card sale under Visa, MasterCard, and Amex rules.

Tip: If you exceed your credit limit, the card-issuing bank absorbs the loss, so there is no need for the merchant to contact you. Thus, there's no reason to provide your personal information.

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Minimum Charge Requirements

Some stores require consumers to spend at least $20 (or some other minimum) to pay for purchases by credit card. They engage in this practice because they and their banks do not want the expense of processing a credit card transaction involving a small amount of money.

This practice defeats one of the major purposes of credit cards-convenience-and may force credit card users to spend more than they want to. In addition, minimum charge requirements vary from merchant to merchant, and there are no regulations requiring disclosure of these minimum purchase levels.

Visa's and MasterCard's regulations prohibit minimum charge amounts. 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 charge for Visa and MasterCard, the merchant may not discriminate against Amex by imposing a minimum charge.

Tip: If a store requires a minimum purchase for Visa or MasterCard, point out to the store manager that the practice is prohibited by the card companies.

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Extra Charge For Using A Credit Card

Some merchants seek to impose a service fee for all credit card purchases.

When a merchant gives a credit card slip to the credit card company or bank for processing, a percentage of each purchase-usually 1.5 to 5 percent of the purchase amount is deducted. This "merchant discount fee" helps pay for the bank's services and for the credit card system. By charging extra for credit card use, the merchant passes the discount fee on to customers.

Visa and MasterCard prohibit surcharges, and American Express discourages them. Amex does prohibit "discrimination" against the Amex card, however, so if a merchant accepts Visa and MasterCard (and cannot impose a surcharge under those companies' rules), the merchant may not discriminate against Amex by imposing a surcharge.

Tip: Any merchant that accepts American Express cards and also accepts Visa and/or MasterCard may not charge consumers a surcharge on Amex purchases.

Surcharges invite numerous abuses by retailers, including bait-and-switch tactics. There are no laws on how and when surcharges must be disclosed, making it difficult to figure out the total price of an item. Travelers often find it difficult to get out-of-state checks accepted, and should not be penalized for using credit cards. Further, credit card acceptance usually produces higher sales for merchants, offsetting the cost of processing credit card transactions.

Note that a cash discount is legal and permitted under all credit card companies rules. A cash discount offers a lower price for cash than credit; for example, many gasoline stations offer cash discounts. While this may merely be a loophole, it is permitted. In addition, there are a few state governmental agencies, including state tax offices and motor vehicle departments that are permitted to charge surcharges due to state laws that do not permit them to pay discount fees. However, retail merchants may not impose surcharges.

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ID When Paying By Check

Merchants often ask for two forms of identification before accepting a personal check as payment for a purchase: a driver's license and a major credit card. Merchants also believe consumers with credit cards are less likely to bounce checks. This is a misconception: nearly 90 percent of all bounced checks result from arithmetic error, not fraud.

When merchants write your credit card number on your personal check, they are subjecting you to possible fraud.

• Anyone who sees the check sees your name, address, telephone number, and credit card number.

• Further, several states use an individual's Social Security number as the only identifying number on a driver's license. Once a thief has your Social Security number, along with the other information on the check, he or she can get your credit report, and even apply for credit in your name.

• Someone can use your credit card number to order merchandise by phone or through the mail by requesting the merchandise be sent to a post office box or an address other than your own.

• Someone might use your personal information to apply for credit in your name, then run up bills on your account without paying them, of course. People who are victims of so-called application fraud do not find out until months or even years later when they begin receiving letters from creditors, by which time the damage has been done to their credit histories.

Although Visa, MasterCard and American Express do not have the authority to prohibit the practice of writing credit card numbers on checks, the three card companies do prohibit merchants from charging a credit card account to cover a bounced check.

Tip: If a merchant asks for your credit card number, ask why he or she needs to record it, since, due to the above prohibition, nothing can be done with it.

Tip: There is probably no harm in allowing a merchant to see that you carry a major credit card, and even to note on the check whether it is Visa, MasterCard, or American Express. For your own safety, this is the only credit card-related information you should allow to be recorded. You should not allow the merchant to record the credit card number.

If the sale is refused, ask to speak with the store manager. Explain the risks of fraud, and point out that the rules of the three major credit card companies prohibit charging a credit card to cover a bounced check. You might also point out that, if there is a problem, merchants usually have all the information they need to locate the customer written right on the check: name, address, phone number and driver's license number. Also, merchants will not be able to use the credit card number to locate the consumer.

Many store clerks are simply unaware of the potential crimes associated with the use of personal information written on checks.

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Cards Other Than The "Big Three"

Other cards may not provide cardholders with any of the protections described above. However, purchases made with other cards are covered in all states that have laws prohibiting the practices described here.

Tip: Cardholders who experience the practices discussed here should complain to store managers and encourage the card company to change its policies.

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How To Complain

When merchants violate the policies described here, report them to Visa, MasterCard, and American Express.

• Visa USA
  Consumer Relations
  P.O. Box 8999
  San Francisco, CA 94128
  +1-800-VISA-911 (customer assistance)

• MasterCard Worldwide
  Public Relations
  2000 Purchase Street
  Purchase, NY 10577
  Call collect from anywhere globally: +1-636-722-7111 or toll-free from the United States: +1-800-627-8372 (+1 800 MASTERCARD)

• American Express
  Customer Service
  PO Box 297812
  Ft. Lauderdale, FL 33329-7812
  1-800-528-4800 (US) or 1-336-393-1111 (International Collect)

In your letter, give the name and location of the merchant and a copy of a credit card sales slip. The sales slip is needed by Visa and MasterCard to track down the offending merchant. American Express provides cardmembers with a toll-free number to call if they have difficulty with a merchant. Make sure you have the complete details about the merchant and the problem before you call.

If a merchant is uncooperative, take your business elsewhere.

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States That Prohibit Recording Of Personal Information

The following states prohibit merchants from recording certain personal information in connection with credit card transactions:

• California
• Delaware
• Georgia
• Kansas
• Maryland
• Massachusetts
• Minnesota
• Nevada
• New Jersey
• New York
• Oregon
• Pennsylvania
• Rhode Island
• Washington, DC
• Wisconsin

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States That Prohibit Credit Card Surcharges

The following states prohibit merchants from adding surcharges to credit card transactions

• California
• Colorado
• Connecticut
• Florida
• Kansas
• Maine
• Massachusetts
• New York
• Oklahoma
• Texas

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States That Prohibit Recording A Credit Card Number On A Check

The following states prohibit merchants from recording your credit card number on your check:

• California
• Delaware
• Florida
• Georgia
• Illinois
• Iowa
• Kansas
• Maryland
• Massachusetts
• Michigan
• Minnesota
• Nevada
• New Hampshire
• New Jersey
• New York
• North Dakota
• Ohio
• Oregon
• Pennsylvania
• Rhode Island
• Tennessee
• Virginia
• Washington, DC
• Washington
• Wisconsin

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Government and Non-Profit Agencies

The following agencies are responsible for enforcing federal laws that govern credit card transactions. Questions concerning a particular card issuer should be directed to the enforcement agency responsible for that issuer.

• State Member Banks of the Reserve System:

Consumer & Community Affairs
Board of Governors of the Federal Reserve System
20th & Constitution Avenue, N.W.
Washington, D.C. 20551

• National Banks:

Comptroller of the Currency
Customer Assistance Group
1301 McKinney Street
Suite 3450
Houston, TX 77010
Tel. (800) 613-6743

• Federal Credit Unions:

National Credit Union Administration
1775 Duke St # 4206
Alexandria, VA 22314-6115

• Non-Member Federally Insured Banks:

Federal Deposit Insurance Corporation
Consumer Response Center
1100 Walnut St, Box #11
Kansas City, MO 64106

• Federally Insured Savings and Loans, and Federally Chartered State Banks:

Comptroller of the Currency
Customer Assistance Group
1301 McKinney Street
Suite 3450
Houston, TX 77010
Tel. (800) 613-6743

• Other Credit Card Issuers (includes retail gasoline companies):

Bureau of Consumer Protection
Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, D.C. 20580

• The U.S. Postal Inspection Service:

This office covers mail fraud, sexually offensive materials, solicitations that look like government materials but are not. If you suspect such violations, contact your local Postmaster or Postal Inspector or:

Criminal Investigations Service Center
Attn: Mail Fraud
222 S. Riverside Plaza Ste. 1250
Chicago IL 60606-6100
Tel. 877-876-2455

• The Federal Trade Commission:

Does not handle individual complaints, but reporting failure to deliver, late delivery, unordered merchandise, misrepresentation or fraud helps uncover widespread abuses that the FTC might take action to stop.

Division of Enforcement
Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, DC 20580
Tel. (202) 326-2222

• National Do Not Call Registry:

If you wish to have your name removed from telephone lists of marketing companies.

National Do Not Call Registry
Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, DC 20580
website: www.donotcall.gov

• Direct Marketing Mail Opt-Out:

Consumers who do not wish to receive promotional mail at home

Direct Marketing Association
1120 Avenue of the Americas
NY, NY New York, NY 10036-6700
Tel. 212.768.7277
website: www.DMAChoice.org

• Low or No-Cost Credit Cards:

Bankrate.com lists banks charging no fees and low interest rates for credit cards. Visit the website: www.bankrate.com

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