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What can merchants ask when accepting cheques or c
Fact Sheet No. 15
**Paying by Credit Card or Check: What Can Merchants Ask?**
Copyright July 1994, Center for Public Interest Law
This copyrighted document may be copied and distributed for nonprofit,
educational purposes only. The text of this document may not be
altered without express authorization of the Privacy Rights
Clearinghouse.
This fact sheet should be used as an information source and not as
legal advice. Privacy Rights Clearinghouse materials are designed
primarily for California residents. Laws in other states may vary.
**************************************
The Privacy Rights Clearinghouse
The Center for Public Interest Law
5998 Alcala Park
San Diego, CA 92110
(619)260-4806
(619) 260-4753 (fax)
e-mail [email protected]
Hotline: +1 800-773-7748 (Calif. only)
+1 619-298-3396
***************************************
**Paying by Credit Card or Check: What Can Merchants Ask?**
Two California laws limit the collection of personal information
when paying by credit card or check.
o When a consumer pays with a credit card, the merchant cannot
record any personal information other than what is on the front
of the credit card. (California Civil Code s. 1747.8)
o When a consumer pays with a check, the merchant cannot
record the credit card number. (California Civil Code s. 1725)
*Credit Card*
What personal information can't a merchant collect when a
consumer uses a credit card?
o Merchants cannot request or require that the consumer write
any personal information, including address and telephone number,
on any form associated with the credit card transaction when the
consumer uses a credit card to pay for goods or services.
o In addition, the merchant cannot ask the consumer to provide
personal information that the merchant then records.
o Merchants cannot use forms with pre-printed spaces for
personal information.
*Are there any exceptions?*
Yes. A merchant can collect personal information when:
o The credit card is used as a deposit.
o The credit card is used for a cash advance.
o The personal information is needed for something incidental
but related to the use of the credit card.An example would be the
address to which the purchased product is to be shipped.
o A merchant is required by contract to collect personal
information for the credit card issuer. For example, some
gasoline companies that issue their own credit cards require
their stations to collect personal information.
In addition, merchants can require a consumer who desires to pay
for goods or services by credit card to show positive forms of
identification such as a California driver's license or ID card.
However, merchants cannot record any information from these
documents.
*Checks*
What personal information can't a merchant collect when a
consumer pays by check?
Merchants who accept a check cannot:
o Require or record the credit card number in connection with
any part of the transaction.
o Require a consumer to sign a statement agreeing to allow the
consumer's credit card to be charged to cover the amount of the
check in case the check bounces.
o Contact the credit card issuer to find out if the amount of
credit available to the consumer will cover the amount of the
check.
*Note: Check must be for goods or services sold or leased at
retail, not for resale.
*Are there any exceptions?*
Yes. A merchant can request or record a credit card number in
connection with payment by check when:
o A check is used solely to obtain cash.
o A check is used as a deposit.
o A check is used to make a payment on that credit card
account.
The following is also allowed where a merchant accepts a check
for goods or services sold or leased at retail:
o The merchant can request the consumer to voluntarily show a
credit card. The only information that the merchant can record is
the type of credit card (Visa, Mastercard, etc.), the issuer and
the expiration date. The credit card number cannot be recorded on
the check.
o The merchant requesting to see a credit card must inform the
consumer that the credit card is not required to write a check.
This can be done by either posting a notice that states "Check
writing ID: credit card may be requested but not required for
purchases," or by training and requiring the employees to inform
the consumer that the credit card does not have to be shown to
write a check.
Further, the merchant can:
o Require the consumer to show and record identification such
as a driver's license.
o Require, verify and record a consumer's name, address and
telephone number.
o Require a check guarantee card and record the number,
whether or not the check guarantee card is also a credit card.
*Enforcement*
What happens when a merchant breaks these laws? Merchants may be
fined up to $250 for the first violation and $1,000 for each
subsequent violation. In addition, the court can order the
merchant to stop violating the law. (California Civil Code s.
1747.8 (e), 1725 (e))
*Who can sue a merchant who violates the law?*
o The consumer who has paid with the check or credit card may
sue the merchant who broke the law in small claims court. (A
lawsuit may be brought in small claims court for an amount up to
$5,000).
o If the consumer feels that the merchant has broken the law
against many customers, the consumer may want to consult an
attorney to bring a "class action suit."
o Another option is for a consumer to make a complaint to the
Attorney General, the District Attorney or the City Attorney who,
if several complaints are received, can choose to sue the
merchant on behalf of California residents in Superior Court.
(California Civil Code s. 1747.8(f), 1725(f))
*Free Resources Available*
o Copies of the credit card and check cashing laws are
available from the Clearinghouse.
o The Clearinghouse offers a free "Wallet Card" for consumers
stating merchants' information-gathering limits under California
law when a consumer pays by check or credit card.
o The Clearinghouse also offers a 5x8 inch "Merchant Placard"
to post next to cash registers to remind clerks and consumers of
the provisions of these laws.
o To order, call the Clearinghouse at (800) 773-7748. Feel
free to order as many as you need.
Fact Sheet No. 15
Copyright _ July 1994, Center for Public Interest Law
* * * * * * * * * *
The Privacy Rights Clearinghouse is a nonprofit consumer
education service funded by the California Public Utilities
Commission through its Telecommunications Education Trust. It is
administered by the University of San Diego School of Law's
Center for Public Interest Law.
* * * * * * * * * *
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