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May 16, 2007

Visa Merchant Agreement Violations

Coffee County Tennessee charged me ten dollars today for the service of allowing me to pay for my speeding ticket with a credit card, which is in clear violation of their merchant agreement with Visa.

Visa and MasterCard both have "merchant agreements" with companies that are authorized to accept Visa and/or MasterCard payments. Both of them have stipulations that 1) you can't have a minimum charge for a credit card transaction and 2)you can't charge more if the customer pays with a credit card. The reason for this is that they want to penalize the customer for using a credit card. They want it to be essentially like paying with cash.

In theory, if a merchant violates the merchant agreement, then Visa or MasterCard could revoke their permission to process payments.

The Consumerist has some of the low-down on the MasterCard and VISA merchant agreements. MasterCard has a Merchant Violation Form. Visa does not. Or, rather, if they have one, I can't find it. And I've looked.

Visa, unfortunately, doesn't really care if their merchants violate their merchant policy or not.

I deduce this from the following under Ask Visa:

Minimum Purchase
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.

If you run into a problem like this with a merchant, please notify the financial institution that issued you your Visa card. These institutions have access to the appropriate Visa rules and regulations and can help you document and file your complaint. You'll find their address and/or telephone number on your Visa statement. Their telephone number may also appear on the back of the card itself.

As in, no matter what happens, don't call us. Call your financial institution. So, obviously, Visa doesn't care diddly about whether or not people are violating their precious merchant agreements. If they did, then they'd have an online form or email addres that said "Please report any violations of our merchant agreements immediately to us." But, instead, I did as I was told and contacted my Credit Union and they were, of course, absolutely clueless. No clue. Way out in left field. So eventually, I explained to them that they needed to help me.

However, after some research on their end, my financial insititution was very clear with me that there was no other recourse than to dispute the charge. As in, there is no "Merchant Agreement Violation" document to fill out. So, this pretty much sucks because, what about the case where RPM Motorsports in Lakewood refused to take my credit card without fingerprinting me? The merchant agreement does not allow them to fingerprint you. So were violating the contract. But, I paid in cash in that case, so there was no charge to dispute.

So, based on this, I can only assume that Visa does not really care if their merchants are violating their agreement. But I do. So, if you know of any merchants that are in violation of their merchant agreements, post it here. Maybe a class action lawsuit will help Visa to see the light.

I'll start it off.

Merchants known to be openly and flagrantly violating their Merchant Agreement with Visa:

1) RPM Motorsports in Lakewood Colorado requires a fingerprint on the credit card transaction for payments over $100.00. This is in direct violation of page 29 of the Visa merchant agreement which states:

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.

My position is that you can't get much more personal than recording a person's fingerprint on the check.

2) General Sessions Court, Coffee County - Manchester TN. Merchant ID=542929802414987. General Sessions Court in Coffee County charges a 4% fee above the normal cost for processing with a credit card. This is in clear violation of the Visa Merchant Agreement.

Please post others in the comments section as you find them.

Update 1: After talking with my credit union at 303-989-3300, Claudia indicated that won't even dispute the charge unless I fill out a bunch of forms in triplicate and then got get the forms notarized. So, my credit union obviously doesn't care. They won't even dispute the charge for me. Christ.

Update 2: I found this web site which suggested reporting violations to a Visa email address. So, I emailed Visa at askvisacorporate@visa.com on 5/17/07 as follows:

I would like to report a merchant violation. The Sessions Court of Coffee County in Manchester, Tennessee charges a 4% additional charge to accept a credit card payment.

Merchant:
General Sessions Court, Coffee County
30 Hillsboro Blvd.
Manchester, TN 37349
931-723-5110
Merchant ID: 542929802414987

I tried to dispute the charge through my financial institution (Jefferson County Credit Union) as described in Ask Visa, but my credit union refused to dispute the charge.

Please let me know how what Visa will do to address this problem.

Update 3: The email was forwarded to askvisausa@visa.com and then I got the following reply later today.

Thank you for contacting us. Visa has certain regulations that all merchants which accept Visa cards must follow. Visa merchants are not permitted to:

Establish minimum or maximum transaction amounts, even on sale items.

Submit a Visa sales draft for a dishonored check.

In general, pass on the merchant's transaction fee to the cardholder as a Visa "service charge," "service fee," or "surcharge," even on sale items. A merchant may offer a discount for cash however, the cardholder must be made aware of this prior to entering into the transaction.

Require a Visa cardholder to sign a sales draft that does not have a specific amount indicated.

Merchants may not refuse to honor a Visa card simply because the cardholder refuses a request for supplementary information/ID.

To report any merchant practices that you feel are inappropriate. please contact the Visa Customer Care Services at 1-800-VISA-911 (1-800-847-2911). Please advise them that you were referred to file a complaint. The staff will be able to initiate a complaint form over the phone.

We hope this information proves helpful.

Thank you for writing,

Visa Webmaster


So, on 5/17/07, I called 1-800-847-2911 and didn't choose any options from the phone tree menu and I got a human named Mary and I told her that 1) General Sessions Court in Coffee County violated the merchant agreement and 2)Jeffco Credit Union refused to dispute the charge for me. So, they're both in violation of their Visa agreements. She said I'd get a written letter in 6-10 business days acknowledging my complaints.

She also pointed out, however, that Visa requires me to sign a document before a public notary in order to dispute a charge. This, to me, sees like a glorious waste of my time. Like, my point is, all you have to do is pick up the phone and call them and they'll tell you over the phone that they charge more if you use a Visa card. So, they're clearly in violation of their merchant agreement. However, instead of them picking up the phone and calling them and asking them if they charge more for accept a Visa card, they tell me to go to a public notary to dispute the charge. So, my thought is that this is basically little more than a stalling tactic to prevent them from actually having to enforce their agreements with their merchants.

Posted by Rob Kiser on May 16, 2007 at 1:07 PM

Comments

I'm watching this post with interest. There are so many merchants around here (San Francisco area) that try to set minimum purchase requirements. Just too many to list. I am fed up with it, and I am also finding it difficult to find somebody that cares at my bank (Wells Fargo).
Thanks for posting this, and thanks for the Visa phone number. Hopefully enough people will find this information and these merchants will get the point.

Posted by: Jeremy Brooks on May 29, 2007 at 5:17 PM

Jeremy, I'm considering filing a class-action lawsuit against Visa and MasterCard for refusing to enforce their merchant agreements. Basically, we are being harmed as consumers by their failure to enforce their merchant agreements. As for Wells Fargo, there is nothing you can do but bank with a local bank, or join a credit union. The large national banks do not see you as a customer. They see you as a source of revenue generated by exhorbitant, dubious fees.

Posted by: Peenie Wallie on May 29, 2007 at 9:28 PM

That's not a bad idea. Discover also has a similar policy, so you could add them in. And possibly any financial institution that issues Visa/MasterCard cards.

Posted by: Jeremy Brooks on May 30, 2007 at 2:24 PM

As a retailer who follows all the rules, I am frankly disgusted with all the merchants out there who do NOT follow the rules and get away with the kind of garbage that they do. Part of accepting credit cards is to suck it up and pay your 1, 2, or 3 percent or whatever it is-- so that you can serve your customers better by accepting whatever method by which they wish to pay. American Express has an online form which allows a card user to report a merchant violation. I have yet to find one of these for Visa. What has gotten Visa into trouble is giving out WAY too many cards. They need the arms of an octopus to frantically process all the transactions that are taking place all the time, which depletes their resources for taking care of a problem situation.

We use AMEX for every possible charge for our company, and I personally use AMEX for all my own purchases. However, when a "business" doesn't take AMEX I'm forced to whip out my personal Mastercard or business Visa. Dollar stores, cleaners, and small restaurants are the WORST with the minimum charge bulls**t from what I have seen. So what if my copies cost $0.46? I expect to be able to put this BUSINESS CHARGE on my card. If I paid this out every day for a year, I'd be owed a lot of money!!

Keep pestering those IDIOTS over at Visa so you can get the money-- which they never should have taken in the first place-- back in your wallet where it belongs!

Posted by: the lily on September 5, 2007 at 6:25 PM

I have the same problem right now with a company who wants to charge a 3.5% surcharge to a $487 bill when I pay with my VISA. I've taken VISA cards for 18 years in my business and have never been allowed to add on a fee. I also got a much better discount rate than 3.5% when I did accept VISA, so I know these jerks are making money on that side of my purchase too. I called 1-800-VISA-911 and reported these people, but I have to wonder if it was just a big waste of my time. Needless to say, I did not complete the transaction and will try to find a way around dealing with this company at all.

Posted by: Paul on September 7, 2007 at 2:39 PM

Mom Siam's Thai restaurant in Richmond, VA has a $15 (!!) minimum policy, and you don't find this out until AFTER you have eaten your dinner and are ready to pay. I actually had to buy a desert so that my bill would meet their minimum amount. I tried to explain the rules, but of course the waitress barely speaks English so it does no good. I complained to my bank's credit card department and I also sent a letter to the restaurant with a copy of the Visa clause forbidding the practice. I don't eat there any more, but my friends still do and they tell me that not only are they continuing the practice, but--I assume so that their waitresses don't have to explain this to people over and over-- they present a copy of their policy to each customer when they present the bill.

Posted by: jennifer f on October 16, 2007 at 10:41 AM

I'm having similar issues with two businesses in Charlotte, NC. My husband used to work for the credit card of one of the "big" banks here, so believe me - we know the rules. To name names, the businesses I'm referring to are:
1) Something Classic Catering - charges a 3% surcharge to pay by credit card; and
2) Extravaganza Depot, an events venue that also rents props - also charges a 3% surcharge.
Is it worth my time to report these people??

Posted by: Christi R on October 23, 2007 at 9:15 AM

I have created a site where you can identify the merchants who impose minimum credit card purchases. At the moment it's here, but I am in the process of writing a more sophisticated interface. Come on over and join the good fight!

By the way, when I spoke to my Visa issuer (M&T bank) about minimum purchase requirements, after some digging around, they found the correct procedure for reporting these violations to Visa. It's not that Visa doesn't care; rather, they want everything reported through the banks.

Posted by: Marnen Laibow-Koser on December 5, 2007 at 6:20 AM

Alright. Thanks peeniewallie.com for answering some questions I had!

Anyway, here's a really really long almost "essay" of how I feel on this particular item of interest.

I'm a member of a retail store company that sells many popular items which I will not delve into.

Basically however, I am a register-rat, an "Advisor" is my basic title in the store, and I ring people up when we're busy, and help other customers with their consumer needs and questions.

I personally deal with roughly anywhere from 500 to 7000 $ at the registers working part time, with the store itself dealing with much more, especially during the Holiday season.

Where I work, it is VERY common practice to check anyone's ID when using a Credit Card, and sometimes even a Debit card, although I personally allow Debit Cards to go straight through as the holder would need to know the PIN which counts as a form of authorized identification despite the possibilities of fraud in that as well.

Ever since the holidays however, we have been told to do a double check on all purchases made with Credit Card that exceed 250$, for whatever reason.
Most items in the store cost anywhere from 50 dollars and below, with a couple of expensive items that cost about 250-500. This would mean, any purchase of that least most expensive item would make us refer to the double check policy. What that means for us is that we actually call in to Visa, Mastercard, etc themselves to do a direct authorization. We'll manually enter the Credit Card information(not swiping it) and then we are told to do the next few steps from the card companies themselves.
Firstly, make sure the CardHolder is present, no kids, or over the phone sales(which aren't allowed anyway)
Verify that the CardHolder is in fact who they say they are (In Other words check a valid state/picture ID)
Then release the purchase amount
Then use the given verification number to authorize the purchase.

Course that was a hassle ever since the Holiday Season officially came.(Thanksgiving, we started a few weeks before)

So, we were just told to instead, manually verify everything and to just do an old school card stamp (make an imprint of card and get signature)

That was just standard procedure.

Now.

Just as good practice we practically ID on all credit card purchases. I've never had ANYONE refuse to show me ID.

Until...

Yesterday.

A man had come in, purchased 40-some odd dollars worth of goods, and I was helpful in offering some additional purchases which he nicely refused, so I went on with the transaction.

He had given me "his" Visa.

No problem.

Swipe.

Now, what happens here is that we get prompted to Check the last four digits of a Card's number to assure it matches the Magnetic strip as there has been times where people will use their own card and a stolen card's magnetic strip.

But, what I usually do here is ask for ID before confirming the Card's Numbers.

The man had looked up at me and got his wallet ready, looking for his ID. But very slowly, he progressively started to tremble. More of a disorder-ish way, not like in fear.

He then proceeded to say, before pulling out the card, "You know you are doing something illegal by asking for my ID, you are violating your agreement with Visa." Which is where I got confused.

I've done a years worth of transactions, a number which surpasses the thousands. And I've never been told this. Usually I get told ' thanks! I appreciate you checking my ID! '

So I ask, "Hmm? To see your ID?"

Of course, at the time I was temping for a Mall branch of the store, so I guess it was a little loud, and my throat was injured so I may of been a little hard to understand. But he snapped at me.

"Hey! Don't cut me off! I told you that's a violation of your store's agreement with Visa!" This was when he started to stutter a little bit, and move a lot.

He demanded to see my Manager. This brought a quiet over the entire store.

We were VERY busy, but this man was obviously making enough commotion to bring a halt to it all.

Well enough the store manager was standing one person away from me.

He asked what the problem was.

The man now shaked even more, his fingers trembling as they held his ID card face down, still in his wallet sleeve. He explained himself again, saying I cut him off as he was explaining the violation I was making on behalf the store by checking his ID.

Now firstly, I waited till he was done talking the first time before I asked my question, so he obviously misheard me either because of the aforementioned terms that we were in or because he was getting nervous.

The Manager and I were now on the same page of confusion. We personally were never told of any such agreement to not ask for ID.

Of course, this was when our District Manager(who manages over 6-8 stores) cut in, which I forgot to mention to you readers, was also in the store that moment, finishing up a routine stock check.
The District Manager then questioned the store manager what the store's personal policy was, as all stores follow their own version of the greater policy depending on location and average customer intake.

The Store Manager told the District Manager we only enforce(by enforce, I mean enforcing the register-rat to follow ID checking procedure) the ID Check on purchases that surpass 100$ to ensure that there is no fraud being done.

Of course at this moment the customer was only getting more jittery.

The other customers were also starting to get nervous and the children were being huddle behind their parents legs and the teenagers were snickering in the corners as they talked amongst each other.

The man repeated himself.

"I'll show you my ID BUT that means you are violating the agreement you made to Visa and I will confront Visa about this!"

To which my district Manager finally said, go ahead, do the transaction.

I had no problem and I never faltered in my actions, just trying to understand the situation and trying to ensure the customer was getting what they wanted, while still making sure I was not breaking any of the store's procedures. But My District Manager gave me a direct order so... I agreed.

I was still going to need him to Sign which is something Visa enforces us to do, so, the Man didn't have an argument there.

However, he could barely write. His hand could barely keep still as he wrote his name. The pen he used was NOT out of ink, but needed to be kept steady for a moment and done not too quickly and jaggedly, but he threw it down demanding another pen, to which I gave him a nice Gel-Ink Pen. This one was perfectly fine, but his hand was still shaking. He took seconds to breathe and calm down, but as soon as he went to write his name, it was more of a scribbled mess.

He left with his goods and the rest of us behind the counter looked at each other with looks but went back to work instantly.

The snickers continued and a few people outright laughed, a few customers were next to the man even called him a freak and etc.

This only led me to become more curious so I know what the man was talking about.

I do not disagree with the man, I just wanted to know what the man was talking about.

And technically the man had actually approached the violation wrong.

He had called the asking to check ID a violation. Then when we tried to ask what he meant, he instead of trying to explain in any civilized way, he only got more nervous looking and shaky which in merchant's eyes means a possibly fraud.

Of course, we believe in customers before stereotypes, so I assumed the best for the Customer.

However, this was the first case of a ID check refusal I've ever come across, and thanks to this website I now know what to properly do, and I will in fact make sure to pass on the knowledge to any of the stores I work if such an instance arise, even as to post this at my Native Store.

Now the details so you can understand who I am and where I work.

I work at one of almost 4000 GameStops in the Nation, particularly in the East Coast.

I am a Sales Advisor / Game Advisor.

I work close to Full Time hours, still under Part Time pay and designation.

I am 18.

If you've read all of this, thanks for taking the time.

Just want to let you know, we don't have a Credit Card Usage minimum, most of our stores here in this area do usually ask for an ID, a picture ID that is, to ensure credit card validity.

And to be honest, it's more for the protection of the Credit Card Holder, and as I have been personally thanked by hundreds a month about my ID checking, I would say most of the Card Holders are more than grateful that we do check.

P.S.

There is a lot of consumer hate going around on the internet about bad GameStop customer service in stores.

All I can say is, GameStop cares. If a store under the GameStop name has hired a jackass for a register-rat or even just a shelver, go ahead. Tell the Manager, go to another gamestop and ask them for the District Manager's Number, contact the GameStop customer hotline.

GameStop cares alot, we just don't get calls from the complaining customers enough to know when what stores are failing to provide the kind of service my native store provides.

An example of GameStop's devotion?
ONE customer has called in saying their usual store had absolutely no idea or could help find them a game that was girl-friendly for a certain console.

The next week, a region wide notice went out, a region is controlled by one Regional Manager, who controls a few, up to 10 District Managers, which in total can be up to even 70 stores, and the notice stated we had to create a Girl-Friendly Section of Games for that console, which was the Nintendo DS.

Again.

Thank you.

Posted by: Kev S. on December 15, 2007 at 11:08 PM

Kev S.,

Thanks for your comments. It is a clear violation of the MasterCard and VISA Merchant Agreements to require ID for a purchase.

MasterCard:At this link one of the reasons for reporting a merchant is “The merchant/retailer required identification.?

Visa:"When should you ask a cardholder for an official government 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."

Probably the reason the guy was shaking is because he was nervous and intimidated by the line and the store and the crowds. But he’s right. He doesn’t have to show you his ID and you have to sell it to him. That’s the terms the store GameStop agreed to when they agreed to accept MasterCard credit cards. That’s how it works.

You indicated that asking for ID is for his protection, but it isn’t. If someone else steals his credit card and rings up phony charges on it, he’s not responsible for the charges because he didn’t sign the receipts. He couldn’t have because he didn’t make the charges. So he’s not responsible for the charges. So, it’s not protecting him, it’s protecting VISA or MasterCard.

The real problem here is that Visa and MasterCard really don’t give a tinker's damn about merchants violating their agreements and one day they’re going to get a fat class-action suit slapped on them for refusing to enforce their merchant agreements.

Again, thanks for your feedback.

Rob Kiser
www.peeniewallie.com

P.S. - Heres a link to my earlier post on MasterCard Merchant Agreement violations.


Posted by: Rob Kiser on December 16, 2007 at 12:36 PM

Marnen Laibow-Koser,

I’m glad to see you that you’re helping to fight the good fight.

However, I would like to take exception to one thing you said. You said that “[snip] It's not that Visa doesn't care; rather, they want everything reported through the banks.?

I beg to disagree. In the end, the people that need to know about the merchant agreement violations are not the banks, but VISA. The banks don’t give a tinker’s damn about merchant violations. They don’t know what the merchant agreement says. Don’t know what a violation is if you explain it to them, and don’t know who to report it to or how. So, obviously, what VISA is doing is filtering the complaints through the banks, knowing full well that 90% of the complaints will be dropped, and that they’ll only get true-blue-died-in-the-wool valid bonafide complaints because the average person will drop it long before their bank figures out if there is a violation and if so, how to report it.

This would be roughly equivalent to the police requiring that all reports of crime be channeled through the stores that they occurred in. So, if you saw a man kill someone in a grocery store and then you called the police, they’d say “uh…huh…well…tell the grocery store...no...no..just report it to them…and then we’ll take it from there?. And you go..."What? Y'all are the police. Why can’t I just call y'all directly? I saw the guy. I know who committed the crime. I could take you right to him. I know where he lives." But they say "No – that’s not the way we do things. Call the grocery store and tell them. They’ll collect all the pertinent details and then pass it on it us. Thanks for your help. Good day."

Rob Kiser
www.peeniewallie.com

Posted by: Rob Kiser on December 16, 2007 at 12:56 PM

Again, I don't think you're right here. The banks do know what violations are, and they know how to report them to Visa.

I think that if Visa really didn't care about the issue, there would simply be no mention of how to file a complaint. The fact that they bother to mention it suggests that they care to some degree, although a Web form like MasterCard has certainly would be more convenient.

Anyway, why wouldn't Visa care? Merchant violations like these impede the use of the Visa card. It does Visa no good not to pursue these issues.

Posted by: Marnen Laibow-Koser on December 16, 2007 at 1:20 PM

I should also say that Visa apparently will take violation reports if approached directly -- they just don't seem to be encouraging that, probably because they don't have the staff for it.

Posted by: Marnen Laibow-Koser on December 16, 2007 at 2:27 PM

Marnen,

You're wrong on several counts.
1)Visa won't take violation reports if approached directly. I tried this and they flatly refused. They told me to take it up with my bank.
2)My bank does not know what violations are, and they do not know how to report them to Visa. (Your bank might, but mine does not, hence the obvious problem with forcing the merchant violations through thousands and thousands of banks.)
3)Visa doesn't care about merchant violations because it doesn't hurt them, it hurts the card holder. For instance, if they require a photo id, it's an inconvenience for the card holder, but it actually helps Visa because it reduces fraud which comes out of their pocket. If they tack on a surcharge for using a Visa card, it actually results in more money to the credit card company.

I have opened numerous complaints with Visa and MasterCard and none of the merchants has ever stopped their flagrant violations of the merchant agreements.

You can still call the court house in Coffee County Tennessee and ask them if they charge more to process a credit card transaction and they will tell you they do. You can still call RPM motorsports in Lakewood Colorado and ask them if they require a fingerprint to process a credit card transaction and they still do. I have reported these merchant violations and nothing has been done.

I would turn it around and ask you this...if you're so sure that the credit card companies are concerned with merchant violations, can you point me to one instance where you have been able to get a company to stop violating their merchant agreement? Hmmmm? I'm all ears.

Posted by: Rob Kiser on December 17, 2007 at 2:24 PM

OK, I'll respond to these one at a time.

1)Visa won't take violation reports if approached directly. I tried this and they flatly refused. They told me to take it up with my bank.

You're wrong on this, and I can prove it. I e-mailed Visa to let them know about poor customer service from my bank when I reported a violation, and the reply from Visa (sent on 15 October 2007) included the following:

As an alternative, you may report inappropriate merchant practices and/or non-compliant issuer practices, by contacting the Global Customer Care Services at 1-800-VISA-911 (1-800-847-2911). Please advise them that you were referred to file a merchant complaint. The staff will be able to initiate a complaint form over the phone.

Note that I have not yet tried reporting a violation this way. If you have, and they would not take it, I would like to know about your experience.

(I read your summary of your conversation with Visa, and it does not speak to this at all. You ran into trouble disputing a charge, which is completely different from reporting a merchant violation. If you don't understand the difference, I urge you to look it up.)

2)My bank does not know what violations are, and they do not know how to report them to Visa.

Then your bank is not doing what Visa requires, and you should take the matter up with Visa.

3)Visa doesn't care about merchant violations because it doesn't hurt them, it hurts the card holder.

Then why do they have the rules in the first place? I doubt that anyone forced the rules on Visa -- particularly since Amex's rules are slightly different. If the rules had been forced on credit card companies by regulatory agencies, I would expect them to all be the same.

Besides, your argument that merchant violations don't hurt Visa is simply false. If a cardholder can't use the card, then that's one less transaction that Visa can process, and one less satisfied Visa customer. In this particular case, what is good for the cardholder is good for Visa. (Of course, the merchant is left holding the bag to some degree, but that's another issue.)

You can still call the court house in Coffee County Tennessee and ask them if they charge more to process a credit card transaction and they will tell you they do.

Which courthouse? What's the phone number (the county website is unclear)? How recently did you call? Give me these specifics and I'll be happy to check out the case.

if you're so sure that the credit card companies are concerned with merchant violations, can you point me to one instance where you have been able to get a company to stop violating their merchant agreement?

I'm actually a poor person to ask, since I haven't been at this very long (the answer is "not to my knowledge", but I'm not convinced that it's significant yet). However, if I don't get results after a reasonable time, I have some other avenues to pursue.

Posted by: Marnen Laibow-Koser on December 17, 2007 at 8:18 PM

VISA told me that the only way to file a complaint was through my bank. They may have told you something different. That's good for you. They never told me that I had other options. In fact, they told me very clearly that there was no other option. You haven't successfully filed a compliant using the "alternate" method. So, the jury is still out, although I appreciate the additional information you provided on this issue, it's the first I've heard of it.

You said You ran into trouble disputing a charge, which is completely different from reporting a merchant violation. If you don't understand the difference, I urge you to look it up.

I certainly don't need you insulting me on my website. I know the difference. The reason that I disputed the charge was becuase my bank was so stupid they didn't know what the merchant agreement was or what it said or how to report a violation and VISA wouldn't let me report it to them directly so I thought "then fine, I'll just dispute the charge, hoping to do an end run around their miserable little fucking reporting system. Does that clear it up for you?

You said: "Then your bank is not doing what Visa requires, and you should take the matter up with Visa.

This is just so absurd I don't know where to begin. I'll go back to my analogy of the police telling me to report the crime to the grocery store it occurred in. Now, I call the police to tell them that the grocery store doesn't know how to take the report. This is stupid and you should be able to see this. I should only have to call Visa. This is intuitively obvious to the casual observer and if you can't see this then I can't help you.

You said: Then why do they have the rules in the first place?

They have these rules to benefit the consumer. Visa is competing with MasterCard is competing with AmEx and the rules are there to benefit the consumer. Obviously. Who could it possibly benefit to have a rule that says "we do not require a photo ID"? Obviously this could only benefit the cardholder. Again, patently obvious. Anyone could see this.

You said: Besides, your argument that merchant violations don't hurt Visa is simply false. If a cardholder can't use the card, then that's one less transaction that Visa can process...

You're missing the point though. Most people don't know about the merchant agreements, and even if they do, the normal response to a violation is not a non-use of the card. That's your assumption which I believe is an erroneous one. If they ask for an ID, most people would rather just show it than walk away without their purchase.


So, in summary, I'm going to say this. You have never successfully reported a Merchant Violation and had the merchant change their processes. I'm telling you that I've opened cases on businesses and nothing has ever been done. There is something called Occam's Razor that says roughly "the simplest explanation for an observed set of results is usually the correct one."

So, if you step back and look at the problem, which I have, what you see is 1) rampant violations of the merchant agreements all over the planet 2) a cumbersome awkward reporting system (which you think is brilliant and efficient) and 3) violations that are reported do not result in changes in the merchant's behavior.

So, Occam's Razor says this - it says there's a very simple explanation for the observed behavior. The reason is that it is in the merchant's and the credit card company’s best interest. It helps the stores and it helps MasterCard and it helps VISA. And that's why it doesn't change. You may live your whole life and not come to this conclusion, but that is the simple explanation.

Furthermore, it hurts the cardholder, but it only hurts them a little. And that little fraction of an inconvenience isn't enough for the average person to stop everything that they're doing and try to get some random merchant in hot water because they asked for an ID.

The reasonable person just shows them their ID and goes on with their Christmas shopping. So, all progress depends on the unreasonable (irrational) man.

"The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man. (George Bernard Shaw)"

Your premise, as I understand it, is that VISA/MasterCard are both fine upstanding institutions and that the merchants are violating the agreements, but that reporting them will get it fixed. To prove that you are wrong, I’ll do this. I’ll give you $100 cash for each merchant violation that you can find, report, and then have VISA/MasterCard cause the merchant to correct their actions. You have six months. Get going.

Posted by: Rob Kiser on December 17, 2007 at 8:46 PM

You haven't successfully filed a compliant using the "alternate" method. So, the jury is still out, although I appreciate the additional information you provided on this issue, it's the first I've heard of it.

I filed a complaint by direct e-mail to Visa shortly after making my previous comment. We'll see what happens.

I should only have to call Visa. This is intuitively obvious to the casual observer and if you can't see this then I can't help you.

Just because it's intuitively obvious -- and arguably the way it should work -- doesn't mean it's actually the way it does work. The fact is that Visa has a documented procedure for reporting violations. I agree that it's a strange procedure to the extent that it involves the issuing bank, but the procedure is there, and it's reasonable to assume that Visa informs the banks of the procedure when they sign up to issue Visa cards. Therefore, it is reasonable to conclude that if the bank is incapable of following Visa's documented procedure, the proper thing to do at first is to report the error to Visa so they can instruct the bank in what is required of them.

They have these rules to benefit the consumer.

If they have rules for the consumer's benefit, and if they're actively publicizing these rules, then I have to believe that they will enforce them. If not, then there's no earthly reason to have the rules in the first place...and that was my point. If you think I'm wrong, please tell me: what is your theory for why they have these rules if they're not going to enforce them?

Most people don't know about the merchant agreements, and even if they do, the normal response to a violation is not a non-use of the card.

And that non-use hurts the card company. If you can't see this, I can't help you.

Your premise, as I understand it, is that VISA/MasterCard are both fine upstanding institutions and that the merchants are violating the agreements, but that reporting them will get it fixed.

I am going on that assumption until I have good reason to believe otherwise. We shall see.

I’ll give you $100 cash for each merchant violation that you can find, report, and then have VISA/MasterCard cause the merchant to correct their actions. You have six months. Get going.

Sorry, I don't hop, skip, or jump on your timeline. I will keep you posted, however, and I know that others have reported success in similar endeavors.

Now, a question for you. I asked for contact information for the courthouse you dealt with in Coffee County so that I could verify that they were still surcharging credit card transactions. You have not given me that information. Presumably if you're so interested in proving me wrong, you'll do so at some point.

Posted by: Marnen Laibow-Koser on December 18, 2007 at 1:45 AM

I said: Most people don't know about the merchant agreements, and even if they do, the normal response to a violation is not a non-use of the card.

You said: And that non-use hurts the card company. If you can't see this, I can't help you.

I don't know if you misunderstood what I wrote or what, but if they still use the card to process the transaction, then the merchant makes money and the business makes money and the consumer loses.

The reason that they have these merchant rules in place is for the consumer's benefit. If Visa dropped them, then MasterCard would be crowing "OMG Visa requires you to show a photo ID". It's called competition. Look into it.

So, they all have similar merchant agreements with similar protections for the card holder to be competitive. Unfortunately, most card holders don't read the fine print on the merchant agreements, so they don't all know what their rights are as card holders, the same as they don't know what their rights are under the constitution. They have a lot going on and it isn't a high priority to them.

You keep harping on the Coffee County episode, but I don't have that one right in front of me. I mentioned another merchant violation that I've also posted about and you can look it up in 4 seconds. It's RPM MotorSports in Lakewood,Colorado. Google it. Call information. They require a fingerprint on any credit card purchases over $100.00. Why don't you research that one?

Another reason that it doesn't make sense to go through the banks to report merchant violations is that this limits the reporting of merchant violations to people that actually own credit cards and use them to process transaction.

If you see a sign that says "Minimum Purchase with Credit Card is $10.00", then you and I are smart enough to know that this is a violation. But, if you don't have a Visa card, then you can't report the violation to the "Issuing Bank" because there is no issuing bank.

Since you don't hop, skip, or jump on my timeline, I rescind the offer. I was trying to make a point. That the credit card companies aren't really interested in resolving these merchant violations. This is readily apparent to the casual observer.

You don't have the experience in dealing with this that I have. You will need to report some violations and have them do nothing about it before you come around to my way of thinking. You will get there, but it will take you a few years. Check back in a year or three when they haven't done anything at all about your reported merchant violations and you walk into the same store and nothing's changed and then post back here and tell me how stupid and wrong I am.

In the meantime, I leave it for you to consider the following: How is it that one person working alone for a few hours can set up a database of shame for merchant violations for all the world to see. A database that anyone at all can access from anywhere in the world to report violations anonymously, quickly, and easily. These alleged violations can then be easily identified and verified. Why do you suppose it is that 1 person working a few hours managed to set this up, but Visa didn't?

Do you think that it didn’t occur to them, or do you think it’s because it wasn’t in their best interest?

That’s right. You win. Ding! Ding! Ding! It’s not because you’re smarter than them. It’s because it isn't in their best interest to do this. It's in their best interest to yawn and look the other way when people report merchant violations. That's why. It’s called Occam’s Razor. Look it up. Seriously. Google it. You might learn something.

Again, one day, even you will come to understand this, but you're obviously a long way off from that realization at this point. Check back in a year or three. ;)


Posted by: Rob Kiser on December 18, 2007 at 5:03 AM

I don't know if you misunderstood what I wrote or what, but if they still use the card to process the transaction, then the merchant makes money and the business makes money and the consumer loses.

Quite true, but irrelevant. In the case of a minimum purchase requirement, it is far more likely that the customer will pay in cash if he or she doesn't meet the minimum. Thus, the card is not used and the card company doesn't benefit. (The merchant, however, does, from not having to pay a fee on a small transaction.)

If Visa dropped them, then MasterCard would be crowing "OMG Visa requires you to show a photo ID". It's called competition. Look into it.

Not necessarily. Amex has different rules regarding minimum purchases from Visa or MC, and you don't hear anyone crowing about it.

I mentioned another merchant violation that I've also posted about and you can look it up in 4 seconds. It's RPM MotorSports in Lakewood,Colorado. Google it. Call information. They require a fingerprint on any credit card purchases over $100.00. Why don't you research that one?

I'll be happy to.

Another reason that it doesn't make sense to go through the banks to report merchant violations is that this limits the reporting of merchant violations to people that actually own credit cards and use them to process transaction.

Actually, this does make sense, since if you don't have a credit card, then the violation doesn't actually affect you.

You don't have the experience in dealing with this that I have.

And what experience is that? As far as I could tell from your blog, all you did was make a couple of blog posts and a phone call or two.

[Regarding Visa not making a database like mine] Do you think that it didn’t occur to them, or do you think it’s because it wasn’t in their best interest?

Well, of course Visa isn't going to publish a list of non-compliant members -- among other things, it could invite legal action from the members in question. That doesn't mean they're "yawning and looking the other way" (it doesn't mean the opposite either, of course).

Again, one day, even you will come to understand this, but you're obviously a long way off from that realization at this point. Check back in a year or three. ;)

Please spare me the condescension. Rather, if you think it's hopeless, and if you have more experience at this than I do, please tell me what action you suggest instead of the action that I currently am taking.

Posted by: Marnen Laibow-Koser on December 18, 2007 at 9:42 AM

By the way, I have an update on the first violation I reported directly to Visa. The e-mail autoresponder said to call (800) VISA-911, so I did, and gave the complaint information to a very nice customer service representative who seemed to know exactly what to do with it. She said that they'd be contacting the merchant and sending me a letter of acknowledgement in a few days.

So if Visa was refusing to take violation reports, you'll be happy to know that that isn't the case anymore.

Posted by: Marnen Laibow-Koser on December 18, 2007 at 10:02 AM

Nothing you do and say will change one merchant's behavior. You will learn this, but this will take time.

You're happy right now because you got a little letter in your mailbox. I have a stack of them. They're as useless as tits on a bull.

How long do you think it would take from the time they receive a report of a merchant violation to straighten out this merchant you reported? A day? A week? A month?

Eventually you will realize that nothing you do and say will change one merchant's behavior. When you get there, check back here and I will explain to you why the merchant's behavior doesn't change.

It's because the credit card companies don't care. If they did, the Visa would allow anyone on Earth to report merchant violations. It doesn't matter if they have a card or not. If they're violating the agreements Visa should want to know about it.

If Visa doesn't want to know about it then the only logical explanation is that they don't really care. If they did, then they'd take a report from anyone on earth. Because, if the goal is to identify the merchants violating their agreements, then you'd set up a little online database and allow anyone on earth to report merchant violations and you could pick up the phone and call the merchants and ask them if they had minimum purchase requirements, or if they require photo id or fingerprints or charged more for a credit card transaction.

And if you're worried about liability issues, then allow anyone to update the table, but don't make the data in the table available to the public, but use it to contact the merchants. You could call in them in a matter of seconds and determine if it was a valid merhcant violation.

Of course, alternately, you could send out a communication to your merchants periodically reminding them what the most common violations are and to be sure not to violate them or you'll stop them from using your card.

Visa and MasterCard don't do any of these things.

Citizen - “I wish to report a murder.?
Policeman - “Report it to the store it occurred in.?
Citizen – “I tried. They told me I couldn’t report it because I wasn’t a customer.?
Policeman – “Then I’m afraid our hands are tied.?

By your logic, this makes perfect sense and it’s the best that can be done.

By my logic, if the police really wanted to find out about crimes, then they’d take reports of crimes from anyone at any time in any place. This is, by the way, how police operate. You can pick up the phone and call them day or night and anonymously leave tips on their tip lines or directly to the police station. This is what you would do if you were seriously trying to identify merchant violations. You don’t want to understand this for some reason, so I give up. God speed. I wish you the best in your endeavours.

- Talk sense to a fool and he calls you foolish.
Euripides, The Bacchae

Posted by: Rob Kiser on December 18, 2007 at 10:52 AM

Nothing you do and say will change one merchant's behavior. You will learn this, but this will take time.

Then I guess the reports I've seen of people getting minimum purchase restrictions removed are all false. :) I am well aware that I may not see much, if any, effect from what I'm doing, but it's a start. As I said, I have some other ideas if this doesn't work.

But of course, you've already decided that these other ideas won't work -- even without knowing what they are. Oh well. I argued as long as I thought you were interested in an actual debate. But from the sentence I've quoted above, it appears that you're not. There is no point in my going further here, since I'd just be repeating myself. If I observe any progress with the merchants I've reported, however, I'll be sure to let you know.

Posted by: Marnen Laibow-Koser on December 18, 2007 at 11:08 AM

I googled something about visa card violations and found this post. Good post, by the way.

According to Visa's rules that I read recently, a merchant cannot force you to run a card as a debit. They can "steer" you towards that choice, but in the end, the choice is supposed to be the customer's.

There is a gas station in Birmingham, Alabama that is forcing people to use debit if their card has the word "debit" on it.

I found this out when I tried to buy something. The lady said, "go ahead and enter your PIN number on the pad."

I said, "I want it run as credit please."

She said it HAD to be run as a debit because it had debit on the card.

I explained to her that it has a Visa logo and I would like it run as credit. (Banks will many times charge a fee the other way.)

She said management told her she had to run it as a debit, so I handed her a MasterCard credit card for my purchase.

A family member ended up running her card as a debit - for a Pepsi - and her bank charged her a dollar fee. That's a $2.50 Pepsi, which, if you're wondering, tastes exactly the same as a $1.50 Pepsi, but the experience is more bitter.

I'm glad I found this post. I think I'll call the 1-800-VISA-911 and see if I can get this merchant to follow the rules.

Thanks.

Posted by: Josh Carples on December 28, 2007 at 2:58 PM

Thought you might like to know of a possible success story. I reported Yoshi Sushi in Latham, NY, to MasterCard on 5 Dec 2007. I just ate there tonight (15 Jan 2008), and the minimum purchase sign seemed to be down! While I can't prove that this was due to my reporting them to MasterCard, I strongly suspect that this was the case.

Posted by: Marnen Laibow-Koser on January 15, 2008 at 7:59 PM

I was interested to hear that VISA would not take reports about merchant violations. Actually, the 'Visa911' number is based in a tall building at Owings Mills, MD, right across from the mall. I worked there for many years, and also at their chargeback unit in VA.

Calling them WILL allow you to make a report. It's called an 'Incident Report', and the rep will take it. They will need your card number, name, and the merchant in question. They should then give you a verification number.

This procedure has been in place since Visa took it over in 1994 from State Street bank, who ran it as a service to Visa..

Now, as to the merchant violations. One large clothing firm insists on a $25.00 minimum on purchases. We received a lot of calls. I followed up with the merchant's acquiring bank (the one that gets the deposits). The response was this: "These folks put $30Million plus through us each year...the fine for these violations are about $200.... send them to us, we'll pay them...we don't want to lose their business....."
It's as simple as that....

Posted by: Dudley on January 17, 2008 at 7:25 AM

Dudley, thanks for your comments. This goes along with my thoughts on the matter. VISA isn't really concerned with enforcing the Merchant Agreements because they are more interested in taking in money. So, if they violate the agreements, who really cares. The problem is that the client is the one that gets hurt. And this little $200 fine is just a slap on the wrist. What's really needed is a class action suit against VISA for failing to enforce their merchant agreements because the person that's hurt in the end is the person attempting to use the credit card. They are the losers in this deal.

Posted by: Rob Kiser on January 17, 2008 at 3:17 PM

The company concerned is a 'Coat factory' and the bank is P*C. The little merchant is the one who gets the shaft, yet the big merchants can ride roughshod over the regulations. Happens all the time...

Posted by: Dudley on January 17, 2008 at 10:04 PM

A convenient store near my house has time and time again forced on me the 10$ minimum for credit card purchases, I let them know that they were violating the merchant agreement and they laughed at me. They said that they weren't franchised so it didn't apply, but I responded back that it is ANY merchany, franchised or not.

They refused, so i called VISA-911 and I submitted a complaint. They said I would get a confirmation letter in about a week, but how long will it really take to see any change in this store?

Is there really going to be a class action lawsuit agaisnt VISA because I beleive there needs to be one. Things will never changed when the system in burried in all the technicalities.

Can I expect a change in the future of this store?

Posted by: mike patient on January 29, 2008 at 5:10 PM

Mike, what happens is this: The first 6 digits of your credit card number is called a BIN (Bank Identifier Number). The incident report you submitted will be sent to your "issuing" bank. They can:
1 Ask Visa to find the merchant's (acquiring) bank. Then ask them to send a 'warning' letter to their client.
2. Find the transaction by contacting you
3. Look it up themselves....and contact the merchants bank.

Remember that most issuing banks are also acquirers....

You draw your own conclusions. Just don't hold your breath unless you are figuring on setting a world record doing it.

Posted by: Dudley on January 29, 2008 at 7:14 PM

Mike,

I'd be willing to bet you money that nothing ever comes of it. You may get a letter, but if you think they're going to change their policy, you're mistaken. The reason they won't is that VISA doesn't really care about merchant violations. Oh, sure. You can report violators, and they'll yawn and send you a form letter in the mail. But they don't really care about merchant violations. Here's how you can tell. 1) The merchants don't know what's in the agreements. I believe that this is true because, without exception, the people that accept VISA act like they've never heard of a "merchant agreement". 2) VISA does not periodically remind merchants of the terms of their agreements. They could send periodic emails, phone calls, letters, etc. 3) They could tell the merchant that all new employees must be explained the most common violations of minimum purchase requirements, requiring ID, or credit card surcharges. 4) They could require the merchant to put up a sign on the counter facing the clients that explains the three most common violations and have a hotline listed to report merchant violations.

They don't do any of these things, so they obviously aren't really serious about enforcing the agreements. There's a drivethrough near my house that has a sign posted right at the drivethrough that says "if you are charged an amount different that what's on this screen then call this number". Now that's someone that's serious about solving a problem. That's how it's done. Let me know next time you see a sign like this from VISA. ;)

Posted by: Rob Kiser on January 30, 2008 at 12:36 PM

Yea well if the merchant is knowingly violating their agreement then I feel someone should be sued. It is so obvious what is going on. Both Visa and the merchant are aware and choose to do nothing then I feel like legal action is necessary. Anyone know the law well enough to shine a light on the situation?

Posted by: mike patient on January 30, 2008 at 1:23 PM

I agree with you. I think that we do need to institute a class action suit against VISA on behalf of the VISA cardholders. It would be very easy to demonstrate that they are not enforcing the merchant agreements. I'd say that probably 1 in 20 merchants are violating the agreements in some way. VISA is complicit in this because they obviously aren't forcing the merchants to honor their contractual agreements. The person it hurts is not VISA, it's the consumer. So, that's why the don't enforce them. They sort of turn a blind eye and only do something when you really press the issue.

Posted by: Rob Kiser on January 30, 2008 at 7:48 PM

So I dont see why this isnt done? I know it costs money for a lawyer, but if there is definitive proof, than court fees will be coverd by Visa.

I think it is time for the consumers to stick it to Visa, or Visa to stick it to the merchants.

Is there any way that people who have proof to make it verifiable so that this can take course?

Posted by: mike patient on January 30, 2008 at 9:29 PM

I have tons of proof. I think, what would help make the case though, would be to get a hidden camera and start catching the people on camera, flagrantly defying the merchant violations. I can name several off the top of my head that flagrantly violate the policy. We could take pictures of the hand-written signs that advertise a minimum charge. I see these all the time. Then, I think the next step would be to show all the open cases that I (we) have that have never been addressed. I can tell you that last weekend, I was told that I'd have to show my photo ID to use my credit card at the Aquarium in Denver. They said it was their company policy. RPM Motorsports still requires a thumbprint for charges over $100.00, and the Court Clerk at Coffee County Tennessee still has a surcharge for using a credit card. You know any good attorneys?

Posted by: Rob Kiser on January 30, 2008 at 10:02 PM

So I got my letter from Visa today. They told me to file a complaint with the card issuer (my bank). So I figure next week I will try to with my bank, it is a credit union, so maybe they will pay attention to it, but I dont hold any hope for them to even know what I am talking about.

:(
This company and Visa are laughing at us

Posted by: mike patient on February 2, 2008 at 5:15 PM

See, I have an ongoing open argument with Marnen Laibow-Koser on this (see above). Obviously, VISA doesn't care about this issue, or they wouldn't tell you to report it through the issuing bank. This is just a smokescreen designed to filter out complaints. The thought being, that if they make it difficult enough, you'll just forget about it and get on with your life. Obviously, if they really cared about it, they'd be like..."h0ly sh1t...who is doing this? hang on. We'll check this out right away." And, of course, all it would take is a phone call and normally, the offending merchants aren't secretive about the fact that they violate the agreements. They post signs about it for christ's sake. If VISA cared about the violations, then they would investigate it instead of trying to route you through the credit union. They don't give a sh1t about the violations and you're about to find that out in a big way. ;)

Posted by: Rob Kiser on February 2, 2008 at 8:52 PM

Remember, it took the threat of a lawsuit to get Visa/MC to change their interchange fee on Debit cards. They were charging merchants the same amount for Debit cards (electronic checks) as Credit Cards. It wasn't until the 'big guys' started making noise that they changed the structure.
As for proof...remember the phone calls to Visa? Every one of those is logged as being received, with your name and card number. A certain code is given (1 for lost card, 2 for Emergency card, 3 for Merchant Complaint etc...) Any decent lawyer could subpoena those records, and there are MANY..
If you call again, ask for a Verification number and the Operator number. They can't give names, just their op number.

Posted by: Dudley on February 3, 2008 at 8:09 AM

Ok so I got the letter in from Visa and their explination goes like this:


"Visa USA is a membership corporation made up of over 14000 financial institutions. These institutions issue their own Visa cards and sign up merchants to accept Visa cards. They also set the terms and conditions for their merchany relationships and handle any customer service matters relating to them. Visa does not have access to cardholder accounts or merchant records; and, as a resuy, we cannot contact merchants directly to resolve cardholder complaints.
What we can do is suggest that you notify your Visa card Issuer of any merchanypracties that you believe are inappropriate, such as establishment of aminimum or maxium amount limits for Visa card transactions. Your card Issuer has access the appropriate Visa rules and regulations as well as to the Notification of Customer Complaint forms which should be used by your Issuer to document and file merchant complaints. It is not necessary for your Issuer to be the merchant's financial institution in order to file a complaint for you."

what crap, what is by bank going to tell visa that I cant. This is the biggest F U CK you to consumers in a while. If only Visa made a bunch of money off one person they could care about customers.

Posted by: mike patient on February 5, 2008 at 8:07 PM

One more success: Spice World in Latham, NY, whom I reported to MasterCard on 19 Jan, has just removed its minimum purchase requirement. I think you owe me $200. :) I take PayPal.

Posted by: Marnen Laibow-Koser on February 21, 2008 at 11:49 AM

""Visa USA is a membership corporation made up of over 14000 financial institutions. These institutions issue their own Visa cards and sign up merchants to accept Visa cards. They also set the terms and conditions for their merchany relationships and handle any customer service matters relating to them. Visa does not have access to cardholder accounts or merchant records; and, as a resuy, we cannot contact merchants directly to resolve cardholder complaints."

Visa is indeed a cooperative...FOR NOW. However, SOON they will be a public company. Their IPO is being touted already. If people buy shares, there has to be a Shareholders meeting with the new company. When shareholders start complaining, maybe, just maybe, the fat cats in San Mateo will listen.

Posted by: dudley on March 2, 2008 at 7:41 AM

For those that are most uninformed, I must take issue with you on the whether you can require a customer to provide an ID. You are completely mis-informed.

Read MC rules at:
http://www.mastercard.com/us/wce/PDF/12999_MERC-Entire_Manual.pdf
Note Page 3-1, section 2.1.1.2 Determine whether the Card is Valid & Page 3-2, section 2.1.1.3 Unsigned Cards which both state to check signature against a government issued ID.

Visa uses the same rules.

As a merchant, anytime I have to call in for a verification, they usually ask if I've checked the customer's ID for verification. On occasion, they have asked me to verify the address on the Identification card to make sure it matches their records.

I don't know what you're reading, but reread the above sections.

Posted by: Jim on May 18, 2008 at 7:42 PM

Jim,

I did as you suggested, and I did go back and re-read the sections above.

http://www.mastercard.com/us/wce/PDF/12999_MERC-Entire_Manual.pdf

2.1 Acceptance Procedures
2.1.1 Acceptance Procedures for Purchase Transactions
2.1.1.1 Card Must be Present
2.1.1.2 Determine whether the Card is Valid
The card acceptor must complete the following steps to determine whether each card presented is a valid MasterCard card:
• Check the valid date and the expiration date on the face of the card. If the card is expired or not yet valid, the card acceptor must obtain an
authorization from the issuer.
• Check the Electronic Warning Bulletin or international Warning Notice(s).
If the account number is listed, the card acceptor must not complete the transaction without obtaining an authorization from the issuer.
• Compare the four-digit truncated account number imprinted in the signature panel with the last four digits of the embossed account number on the face of the card.
• Unless a hybrid terminal is used, compare the embossed account number on the face of the card with the number displayed or printed from the POI terminal.
If a photograph of the cardholder is present on the card, compare the photograph on the card with the person presenting the card.
• Check that the card is signed.

Note: These are the rules for accepting the card. That is all that you have to do for the merchant to determine if the card is valid. There is an additional stipulation that follows, but it is only for "Unique Transactions":

• For unique transactions processed in a face-to-face environment (with the exception of truck stop transactions and card-read transactions where a non-signature CVM is used), request personal identification of the cardholder in the form of an unexpired, official government document.
Compare the signature on the personal identification with the signature on the card."

Now, the question is What constitutes a unique transaction?

"Unique Transactions" are a special class of transactions such as Money Transfer, Quasi Cash, Gambling Transactions, Truck Stop Transactions and Remote Stored Value Load (MasterCard Chargeback Guide p.119-120)

So far, you'll notice that it does not mention asking a regular average guy buying some snacks from a store for a photo ID. They talk about "Unique Transactions", but obviously they don't mean your plain-run-of-the-mill standard transactions or they wouldn't say "Request a photo ID for unique transactions". They'd say "Require a photo id for the sale." They do not say this. Now, for the next part:

"9.11.2 Cardholder Identification
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, except as specifically permitted or required by the Standards. A merchant may require additional identification from the cardholder if the information is required to complete the transaction, such as for shipping purposes. A merchant in a country or region that supports use of the MasterCard Address Verification Service (AVS) 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."

So, they can't refuse to complete a transaction solely because a cardholder refuses to present identification.

Notice here that they say that "A merchant may require additional identification from the cardholder if the information is required to complete the transaction, such as for shipping purposes."

So, obviously you can see here that they're dancing around the photo ID issue and what they're clearly implying is that, if you don't need the Photo ID for shipping purposes, then you can't require it as a condition of the sale.

Furthermore, to make it painfully clear that MasterCard cannot require identification, here’s MasterCard’s Merchant Violation link, and you’ll notice that one of the boxes you can check for reporting violations says very clearly “The merchant/retailer required identification.?

http://www.mastercard.com/us/personal/en/contactus/merchantviolations.html

So, that's MasterCard. Now, here's the deal at VISA, which I've already posted above, but I'll repost for your edification:
rules_for_visa_merchants.pdf

Visa:"When should you ask a cardholder for an official government 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."

http://www.privacyrights.org/fs/fs15-mt.htm#2b

Posted by: Rob Kiser on May 19, 2008 at 12:20 AM

I never indicated that such ID info be recorded. However, as a matter of security for the merchant and the customer, requesting an ID is the best policy. Should a customer's CC information be stolen, they will be the first to cry "foul" and question the security measures of the merchant.

To request an ID for identification purposes is not a violation of privacy, if such information is not recorded. So, there should be no reason for someone to be concerned, unless they may have other reasons, such as "it's not their card" or other fraudulent use.

It certainly makes you wonder why anyone would object to such security measures, unless they had some reason to believe that it would be used against them in the commission of a crime. Honest people don't find it to be anything, but as intended... to protect them from the unscrupulous creatures of society. So, what is it that you're really worried about?

Posted by: Jim on May 19, 2008 at 10:27 AM

Jim,

I'm assuming by your post that you have conceded the point that the Merchant Agreement, in fact, does not allow you to require ID as a condition of the sale. You didn't mention it, but your post leads me to believe that you have conceded this critical point and now have moved on to a bold attempt at justifying your actions, even though they're clearly in violation of the Merchant Agreement.

OK. Fair enough. I understand your position. And I can totally appreciate where you're coming from. But I believe you're missing a few of the finer, more subtle nuances of the transaction here.

1) VISA and/or MasterCard are liable for fraudulent use of the card - not the Cardholder and not the Merchant. All the Merchant has to do is follow the terms of the Merchant Agreement, and they'll get paid, even if the card was stolen. All the Cardholder has to do is report the theft, and they're off the hook for any fraudulent use of the card. So asking for photo ID isn't protecting you (the Merchant) or the Cardholder. It's protecting MasterCard and MasterCard only. And they've spelled out very clearly in black-and-white that you can't require a photo ID as a condition of the sale.

2) I don't want to provide any ID, because I don't have to provide ID if I pay with cash, and that's the goal of VISA/MasterCard is to make the transaction as convenient as possible for me to use. I don't want to show my ID, nor should I have to. Let's say, for instance, that I don't drive. And I don't have a passport. What would you have me show the Merchant? We don't live in the Soviet Union just yet. It isn't quite "Papers Please" when you walk into a mall. Not yet, anyway.

3) When I signed up for the card, I agreed to the terms of the contract, and have and will continue to abide by them. The contract is a legally binding contract. VISA/MasterCard, however, does not explain to the Merchants what their obligations are, and you make that painfully clear. And it's not just you. A large percentage of the Merchants feel as you do, and again, I can understand where you're coming from. But the point is this - you can not require identification as a condition of the sale. It's spelled out very clearly in the agreement that you signed with MasterCard, and you choose to ignore it and so does MasterCard.

The reason that you and MasterCard choose to ignore the legally binding contract is that you perceive it to be in your best interest. But it comes at the cost of privacy and convenience and expediency of the Cardholder. You can't just infringe on the rights of the Cardholder because you feel like it's the right thing to do and if they have nothing to hide, then they shouldn't mind. You can't require it as a condition of the sale. Period-end-of-story.

You claim that you wouldn't record the information and store it, but why not? You're already violating the Merchant Agreement and making up your own rules. Why stop there? RPM Motorsports of Lakewood wants to collect my fingerprints for processing a MasterCard transaction over $100.00. What would they do with the fingerprints? I have no idea. And no contol over what they would do with them once they collected them. So I refused. Do you think that what they do is a good idea also? Why not collect fingerprints, store them, and turn them over to the TSA? What harm could it do to an innocent citizen, komrade? You have nothing to fear if you have nothing to hide. Right?

If you don't want to follow the terms that you agreed to when you signed the Merchant Agreement, detailing the acceptance of the MasterCard brand credit card, then I suggest you terminate your agreement with MasterCard and tell them that you don't approve of the polices you agreed to under the terms of the contract. Either you didn't understand them, and now that you do understand them, you don't like them, or you're a conscientious objector, or whatever.

By requiring ID at the point of sale, you are in clear violation of the legally binding Merchant Agreement contract, and consequently exposing your business to a very real and serious legal liability. You are are not following the legally binding agreements, and are demonstrably harming a potentially infinte number of Cardholders in doing so

This is not a trivial matter. It is not a joke. I'm very close to taking them to court over this (the Merchants and MasterCard). Such a case could very easily end up being granted class-action status, with all MasterCard Cardholders as plaintiffs.

See, the problem is that, let's say there are people out there that don't want to have to show their photo ID at the point of sale. [You can argue why 'till the cows come home, but lets assume for a minute that they exist - honest, law-abiding citizens that own MasterCards but don't want to be required to show a U.S. Passport to buy a pack of chewing gum. I know, it's hard to imagine, but bear with me for a moment] I could make a very good case that you have damaged them, even though they never conducted a business transaction with you. Maybe they balked and walked out of the store empty handed. Maybe they knew/heard/read that you required a photo ID as a condition of the sale and therefore never set foot in your business. Maybe they went somewhere else to do conduct their business. Not only did you lose their business for no good reason, but by colluding with MasterCard, you violated their rights and cost them time, money, and emotional angst by driving them away.

Image, for a moment, if you will, all of the millions of Cardholders out there that you've never done business with because you colluded with MasterCard to violate their rights. How much was each one damaged? How much is each one owed?

Well, they had to drive somewhere else, so there's lost time and money, possible mental anguish. This assumes they didn't purchase anything from you. As for the people that did, I think they're entitled for something for you violating their privacy, if nothing else. And we haven't even gotten to punitive damages. I'm thinking this is not where you want to put yourself.

But, don't take my word for it. You're operating a business, so presumably you have some access to legal counsel. Pick up the phone and call your attorney and say this...say "I signed a legally binding contract that involves three parties (MasterCard, Merchant, Cardholder)...yeah...and...uh...so....one of the parties..(MasterCard)...is advising me to deliberately, intentionally, and systematically ignore the written terms of a legally binding contract I've entered into, in oder to protect their profits, at the expense of the third party (Cardholder)."

See what your legal counsel says and then post back. I'm seriously interested in what they would say. I've never gone to an attorney with this, but every time I have to explain a)the terms of the Merchant Agreement to a Merchant and b) why they should follow the terms of a legally binding written contract they signed, I get a little closer to pitching the idea for a class-action suit to the attorneys. And hearing that MasterCard is conspiring with you - brazenly encouraging you to systematically violate the written terms of the Merchant Agreement at my expense - well that may be the straw that broke the camel's back.

Finally, just for clarification, I didn't make up these rules, I just agreed to play by them. If VISA and MasterCard want to change them, then so be it. They can change the rules and then I'll start my own credit card company, but I don't think we want to go changing horses midstream. So, until that day comes, I suggest we all play by the rules we all collectively agreed upon – the Merchants, the Cardholders, and MasterCard.

Posted by: Rob Kiser on May 19, 2008 at 4:56 PM

If the place accepts Vista and MasterCard, just file the vilation with MasterCard. The merchant is still requiring the same fee whether you use your Visa or MasterCard typically.

Posted by: Jack on June 17, 2008 at 8:13 AM

Jack is completely right. MasterCard & Visa are both nearly universally accepted. If you encountered a violation while trying to use your Visa then just contact MasterCard. The merchant will get the same letter reminding them of their obligations in the end.

Posted by: Brian on June 24, 2008 at 4:42 PM

I would love to be apart of your class action suit if you are still pursuing this matter, or involved in providing any information regarding my particular circumstances, specifically regarding VISA's flagrant disregard for their own policies regarding merchants.

I had an experience just today in which I refused to show ID at Harmon's Grocery stores. The Visa card I had was signed, and clearly and I advised the clerk of her obligation per the VISA contract. She not only refused to allow me to leave (after already having charged me) But she also refused to return the card to me. She called her manager who explained that they would no longer be following VISA policy, rather their own which required identification for all credit card transactions. He then indicated that he would have me arrested for theft should I not show ID.

I encouraged him to call the police, which he refused to do (know what kind of trouble it would lead to for him) At which time I left with my groceries and my card. However as I was walking out the door he stopped my wife and held her against her will. I put the groceries in my car and then went back for my wife, where the manager forced her to show HER ID or be arrested for theft. My wife being the sweet innocent woman she was believed that she was at risk for arrest and showed her ID. He then advised my wife that we had better get use to it because it will soon be required ANYWHERE to show ID.

I have had similar circumstances as this in the past. Never have I gotten any response from VISA nor is there any legal recourse I can take against this store. However in this circumstances, the threats and holding us against our will and accusing us of theft, could be used to sue the store involved. I Will pursue that matter but think that VISA should be made to hold to these policies. I am interested in being contacted about this in the future and discussing the specific circumstances more should it help out your cause.

Posted by: Paul B. Yorke on June 28, 2008 at 8:23 PM

Just as a follow up to my previous comments, After having this experience I emailed visa and received pretty much the same response that all of you have:

Thank you for contacting Visa. Merchants may not refuse to honor a Visa card simply because the cardholder refuses a request for supplementary information. The only exception is when a Visa card is unsigned when presented. However, "See ID" is not considered a valid signature. In these situations, a merchant must obtain authorization, review additional identification, and require the cardholder to sign the card before completing a transaction.

Many cardholders have expressed concern about the recording of supplementary personal information on a bankcard sales draft. In response, several states have passed legislation that prohibits requiring such information on the transaction form. To find out if your state has passed such legislation, please contact your state legislator's office.

To report any merchant practices that you feel are inappropriate, please notify the disputes area at the financial institution that issued your card account. Your card issuing bank has access to the appropriate Visa rules and regulations as well as to the Notification of Customer Complaint forms which should be used by your bank to document and file merchant complaints.

As an alternative, you may contact the Global Customer Care Services to report merchant practices that you feel are inappropriate. Please contact the Global Customer Care Services at 1-800-VISA-911 (1-800-847-2911). Please advise them that you were referred to file a complaint. The staff will be able to initiate a complaint form over the phone.

Thank you for using Visa.

Visa Webmaster

In addition to receiving that response I have also spoken with the director of Loss Prevention for the store at question. I discussed with him in full the situation and although he disagrees with how it was handled (in his opinion they should have refunded my credit card the money, taken the groceries away and kicked me out of the store for not paying) Rather than threatening to have myself and my wife arrested for shoplifting. He is launching an investigation as to how and why this so called manager responded in this manner. BUT has clearly stated that they will NOT be removing this policy, and that he works as a loss prevention manager for the shopping industry for this state and has informed me that he is trying to:

Make it so that ALL stores in this state require ID as a condition of acceptance.

and

Ensure that this becomes normal practice, in a sense ensuring that those who refuse to show ID are suspects of crimes as well as possible felony charges when misrepresenting themselves by not showing ID.

Interestingly, he admitted to me that Yes VISA has a policy against them requiring ID, but that he and his company will continue to do so regardless and that it was none of my business because it is a contract between them and VISA that does not involve me. He also explained to me that even though it is violation of my right to privacy, that it wouldnt even take his employees still info off my ID for them to use my credit card (Which is obvious) but in most cases, this is a level protection for all the information on my ID. He also advised me that if I have any other ID on my possession or show it when ID is requested, that it is a felony with a prison sentence. (as if the local clerk at the grocery store is a legal authority allowed to require valid ID of me).

He explained to me that my business wasnt important enough for them to change their policy and that if I am not willing to show ID then I should shop elsewhere (Although soon ALL stores will require it)

Posted by: Paul B. Yorke on July 1, 2008 at 10:39 AM

The VISA merchant agreement states that merchants can charge a convenience fee as long as credit card payments are not the usual form of payment accepted by the merchant. The merchant must disclose this convenience fee and allow the customer the opportunity to decline paying by credit card if they do not want to pay the convenience fee.

http://usa.visa.com/download/merchants/rules_for_visa_merchants.pdf

Posted by: Help for Debtors on July 15, 2008 at 4:02 PM

I had a dispute with a hotel. a cousin of mine gave me a employee family discount and so i check into the hotel it was 105.00$ thats the discount rate. so when i check out a week later the put a 500.00$ charge on m credit card saying my cousin sent a fraudulent letter. so she did not get the letter sign by human resource. so they want me to pay for something the employee made a mistake on. I called visa to dispute the charges with great evidence and it like they work for the hotel and not for the customer. i signed the receipt for 105.00$ not 500.00$. it just so much corrupt stuff going on with this whole issue. i would love to get pointers or ideas to help out with this issue.

Posted by: Terrell White on July 15, 2008 at 9:21 PM

Help for Debtors - Um, in some excruciatingly rare circumstances, VISA can charge a "convenience fee". But the terms of the convenience fee are very specific. The fee:
– must be disclosed to the customer as a charge for the convenience of using the alternate method to pay
– is applied only to non face-to-face transactions
– must be a flat or fixed amount, regardless of the amount of the payment due
– is applied to all forms of payment products accepted in the alternative payment channel
– is included as part of the total transaction amount
– cannot be added to a recurring transaction
– is assessed by the merchant that provides the goods or services to the cardholder and not a third party
• The customer must be given the opportunity to cancel prior to the completion of the transaction

So for face-to-face transactions they can't charge a "convenience fee".

Read the agreement again if you missed that.

Posted by: Rob Kiser on July 16, 2008 at 12:08 AM

Terrell,
I would contest it, but unfortunately, I think you're hosed. My experience has been that whenever I contest a charge, they (VISA/MC/etc) invariably side with the merchant and shaft the cardholder. Unless you can prove that it's a completely fraudulent claim (like you never stayed there at all) then they probably will rule in favor of the hotel. Good luck. Join in my class action suit and we'll see what happens then. :)

Posted by: Rob Kiser on July 16, 2008 at 12:15 AM

Rob! For all this talk of a class-action suit, why have you not talked to a single lawyer?

I finally got fed up with this minimum-charge bullshit and so today I decided to start reporting every merchant who has this policy. I did one today.

My point is, I think you have a good idea for the class action suit, so start talking to lawyers! If you find one who will do it, he will do it on a CONTINGENCY basis -- meaning he doesn't take any money upfront, he only gets paid when Visa/MC settles the suit.

Believe me, if you can convince a good lawyer of the seriousness of this, they will do it. I have successfully won two lawsuits (much smaller than the scope of this) with lawyers working for me on a contingency basis.

Posted by: Theo Bromin on August 8, 2008 at 1:44 PM

I just contacted Visa at the 1-800-847-2911 about minimum purchase amounts at 3 shops today. They said they do not take those complaints but they would connect me with my card holder. They then transferred me to their "visa dept" at one of the country's largest banks, Bank of America. My card issuer. The representative on the line said she had never heard of that policy and that she thought it was up to the merchants to set their own policy. She was very nice about it. She wasn't TELLING me that was the policy, only that that was what she had understood and that she never thought about it even though she personally sees it all the time when she's shopping. She thanked me for the info but said she couldn't find any information or anything regarding that policy on her system and wouldn't be able to do anything about it. She seemed pretty sincere and sounded like it was something she wanted to look up when she got home and could get on the internet. But so much for the merchants gone wild with min charges. And I'm including Mom Siam with their last minute min charge they spring on you after dinner.

Posted by: Bob on August 12, 2008 at 4:34 PM

Marnen Laibow-Koser; I got my local store to take the signs down, too. Now they just TELL everyone it's $10 minimum for Credit/Debit, & when someone (namely me,) balks, the manager comes out & explains why (although it's still a breach of the merchant's agreement.)

Posted by: Lana on August 15, 2008 at 12:44 AM

I just got this from Bank of America:
Please note that merchants are allowed to have a minimum or maximum purchase amounts when using a credit card. Be advised that this limit may vary between merchants.

Posted by: Kristin on August 22, 2008 at 7:11 PM

Yeah, they're dead wrong on that, Kristin. Not surprising, though.

Posted by: Rob Kiser on August 22, 2008 at 8:55 PM

Ever see that Visa commercial where a busy assembly line operation of customers using Visa cards is going on? And someone jams up the works by stopping to write a check, necessitating ID? The implication, no, the statement of that commercial is that you DON'T need ID when using your Visa card, not even when you use your Visa debit card as a credit card.

It used to be that the FTC would prosecute companies for false or misleading advertising, but I haven't heard much in the last several years about such enforcement.

Any law, rule, or agreement without teeth for enforcement is totally worthless. 150 years ago, they were called Snake Oil Salesmen. Now they're Marketing Execs.

Posted by: Garret Kim on June 30, 2009 at 9:03 PM

The merchant violation is in fact a breach of contract by the merchant with the card but also by the card with the user. Issuing the card suppose to guarantee certain conditions of its use indirectly guaranteed by the merchants agreements. There is no wonder that the merchants try to recover their costs of using the card from you, the user. Its easy. But that means that this is an increased cost to the user above the one indicated by the issuer in the contract. As for checking identity, the credit card charges insurance which should cover fraudulent use so the merchant and the user should be covered for such cases provided that there will be no obvious negligence in reporting theft and checking authenticity of the card. The latter is however pretty difficult, hence the extrame of finger printing. Here the merchant took on himself the job of Police. The banks have their investigating units to prevent losses but all too often they are staffed with incompetent people like the sweet idiot decribed by Bob. The immediate solution for restaurants is to refuse to wash the dishes after finishing the meal. The small shop round the corner may want your business more than you want theirs - try it. And if all else fails don't buy if you feel so strongly about it. The most idiotic violation I encountered is by Orange cell phone provider in Poland who actually limits amount of daily transactions on prepaid and sets the monthly limit as well if oyu try to recharge over Internet. This should hurt the credit card a bit in revenues and elicit reaction but I do not even bother anymore to notify either Visa or MasterCard.

Posted by: Tpa on August 22, 2009 at 9:56 AM

Link may help

Posted by: Tim on September 14, 2009 at 9:05 PM

for instance the visa and MasterCard rules do apply to merchants we have a company friend that works in 1 of the top merchant account businesses. In the Merchant services they do see it as a major problem (First Data) and try to do their best in fighting the merchant violations. They try and leave these tasks to companies such as us. Visa and MasterCard respect the consumer and keep as much business as possible. We have several large cases already rolling here in Corvallis which you may want to see. http://blog.americanlibertyrights.com/2009/09/16/whats-hot--whats-not-hot-to-shop.aspx

Posted by: American Liberty Rights LLC on October 21, 2009 at 7:26 AM

I also read the rules for merchants on Visa's website. It does state they are not allowed to set minimum amounts on purchases. They pass the buck and don't back up what they say. They want you to call your financial institution,..,yadda yadda yadda
The only way to get them off their asses and start enforcing what their rules is to file a class action suit. I would love to, anyone know any attorneys in Ohio? The squeaky wheel gets the grease! In other words the only way to get anything done is to raise 10 shades of hell!

Posted by: Anna Eastman on February 22, 2010 at 1:55 PM

VISA INTERNATIONAL DID RESPOND TO MY COMPLAINT:
I wanted to file a complaint against two merchants in particular for requiring a minimum so I sent a picture of the merchants posted signs along with a letter detailing my experience and their refusal to accept my Visa transaction. I mailed it to VISA INTERNATIONAL, PO Box 649, Owens Mills, MD 21117-0649. I received a letter (dated 9/19/2007) from Robin Campbell thanking me and informing me that my complaint was being processed. Two weeks later, the signs were down at BOTH merchants so I don't think it's fair to say that VISA doesn't care. Ms. Campbell did say that it was VISA policy to have the complaint filed directly FROM the card issuer however it's obvious from my experience that it's not mandatory. (Although I have had success filing other complaints directly with my card issuer although I DID have to get to a supervisor who knew HOW to do it).

Since Ms.Campbell's letter stated that the VISA policy does not allow merchants to establish minimum or maximum amount limits I make it a point to carry a copy of her letter in my wallet. Discreetly showing it to the store manager has so far worked wonders and I'm amazingly allowed to use my card under their minimum. Today however I ran into a merchant who informed me that a NEW credit card law allows him to charge a minimum. Not true of course and I've filed complaints with both VISA and M/C and will make it a point to continue until this merchants sign are removed.

Posted by: NancyDrew on August 28, 2010 at 1:45 AM

CLASS ACTION LAWSUIT????

For those of you who want to start a class action lawsuit I'd like to just remind you that you cannot FORCE a business to enforce their own policy. For instance, if I happened to own a consignment shop (example purposes only) and my store policy was to be open on Wednesday evenings but you showed up several Wednesday's only to find that my store was closed, you'd have every right to get angry and could take your business elsewhere (as we can do with VISA and MASTERCARD) but you cannot start a class action lawsuit with other customers to FORCE me to keep my own policies. If VISA or M/C was breaking a law, then of course you could file a lawsuit of which the intention would be to FORCE them to follow the law and/or pay compensation to the customers who were injured/damaged ONCE VISA, M/C was found to be guilty of violating such law or as in many class action suits - agrees to a settlement without admitting fault and without a trial.

Posted by: Nancy Drew on August 28, 2010 at 1:55 AM

Despite their Web form, I don't think MasterCard cares about merchant violations either. I've submitted numerous complaints via their site about several merchants blatantly violating their agreement. None of these merchants have changed their behavior, and I've never heard anything back from MasterCard. I'm about ready to just go back to cash.

Posted by: Bob on October 18, 2010 at 2:28 PM

I have 2 comments:

1. I just read that somebody posted this:

"1) VISA and/or MasterCard are liable for fraudulent use of the card - not the Cardholder and not the Merchant. All the Merchant has to do is follow the terms of the Merchant Agreement, and they'll get paid, even if the card was stolen."

In my experience, the above is a nice dream, but is TOTAL BS. Especially with Visa and Mastercard, even if the merchant follows 100% of the terms, Banks just debit the merchants when there's fraud, and there's nothing a merchant can do about it. Maybe if you are Walmart or Amazon, but a small merchant has absolutely no pull and complaining is like talking to a wall. I am a merchant and we have been hit with a few chargebacks (luckily only very few and not much money) and it didn't matter that the AVS was YYY and we shipped to the billing address, with signature required. We got the chargebacks, disputed the chargebacks with plenty of documentation and still lost them. We had much better luck with Amex and Discover, because you can call and talk to them. And Amex has a "charge verification" service for orders over $200, which works very well. But with VISA/MC there's no way to talk to anybody. Everything is in writing and they can just reject your chargeback dispute without telling you why. I guess that if the chargeback is $20,000 you might hire a lawyer and win. But most merchants will have much lower amounts of chargebacks and it's not worth hiring a lawyer, so the merchants just have to "eat" the losses.

2. About the minimum purchase amount there are 2 issues here:

a. From reading the agreements of both VISA and MC, what I would understand is that a merchant cannot have a minimimum or maximum amount when accepting the cards. But I would argue that this applies if a merchant has no minimum with Cash but a minimum with credit card. What if a merchant has a minimum purchase for ANY type of payment? The essence of what Visa/MC require is that transactions with credit cards are not penalized when compared to cash or check transactions. But if the minimum is for all types of payments, then the rule, in my opinion, doesn't apply.

b. All I see in this thread is cries from consumers about the minimum purchase. What about the merchants' point of view? If for example you are an eCommerce merchant that uses drop-shipping suppliers, processing an order is very expensive. When you get an order, first you have to check availability and confirm price with the supplier. In some cases you have to calculate or request a shipping quote. Sometimes you need to interact with the customer. Then, you have to enter the order in your accounting system, send a PO to the supplier and hope they ship on time. Then you have to contact the supplier to get tracking info and email it to the customer. Then there's Billing and Accounting work. Then, a percentage of orders result in customer service cases (wrong product, transport damage, defective product, customer didn't like, etc) and you have to spend time servicing those case. All that is a lot of man-hours. Depending on the type of products sold, all the payroll of all the employees involved in servicing all the orders could amount to $10 or $25 per order. If an ecommerce merchant accepts an order of for example $15 and the profit margin is 10% for a profit of $1.5, then you can easily calculate a loss of $8 to over $20 per order. So why is it that wrong to have a minimum purchase for all types of payment?

Posted by: Ben on December 1, 2010 at 10:30 AM

In response to those issues, MasterCard changed its convenience fee program in November 2007. The company's new convenience fee rules apply to government and educational entities for all payment channels with no restrictions on other forms of payment. The credit card company allows convenience fees to be assessed as a fixed or percentage-based fee by either the local government or a third party on the government's behalf.

Posted by: Robert Byrd on May 24, 2011 at 12:07 PM

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