A customer has told me that our restaurant is obligated to accept a credit card if it is signed on the back even though the person presenting the card is not that person. A teenager had his mom’s credit card, which was signed, and we asked him for his ID since he was not she. He said we must take it anyway. Can you tell me what our responsibility is in this?
– Dan Nix, Owner, Western Ribeye & Ribs, Evansville, Ind.
Restaurant owners often tell me that they feel the chips are stacked against them: labor laws, consumer protections, health regulations and building codes, for example, often put the owner on the defensive and seem to favor the other party. Here is an example where the policy defies logic. While your merchant agreement and state law vary, in this case, the customer is likely right.
Author Sonya Stinson says, “You may never give a second thought to a store clerk's request for identification when you pay with a credit card. But as long as you have signed your card, you may not be required to show that ID to make a purchase. … All the networks allow a merchant to ask for identification. MasterCard and Visa, however, explicitly prohibit retailers from requiring an ID to accept a properly signed card.” The reasons, ostensibly, are to help protect consumer privacy and also to make using a card easier for consumers. But, as you note, restaurants then bear the burden of charge-backs.
When I told the scenario to Ben Fileccia, general manager in the Philadelphia market for Reserve, a restaurant reservations and payment app, he said, “I would not have taken that card signed or unsigned. I also have every right to ask for ID in my opinion if I have any doubts. … Imagine if they had accepted her card from a complete stranger. The restaurant would have never won that charge back. The mother could have made the reservation through the Reserve app, a credit card authorization form, or prearranged with the restaurant to pay for the child's meal through a variety of different ways.”
My advice is to carefully review the applicable policy based on your agreements and state and local codes. Train your staff accordingly so they are acting within those guidelines. Unfortunately, to some extent, that’s all that can be done without pressure to change legislation or agreements to allow merchants to verify ID.
More on carding with cards here.