Know Your Rights When Paying by Check: What Can Merchants Ask?

California law limits the collection of personal information by merchants when you pay by check. When you pay by check for goods or services sold or leased at retail, a merchant cannot

• Require you to provide a credit card or record the credit card number.
• Require you to sign a statement agreeing to allow your credit card to be charged to cover the amount of the check in case the check bounces.
• Contact the credit card issuer to find out if the amount of credit available to you will cover the amount of the check.

A merchant can request or record a credit card number in connection with payment by check when:

• A check is used solely to obtain cash.
• A check is used as a deposit.
• A check is used to make payment on that credit card account.

The following is also allowed when a merchant accepts a check for goods or services sold or leased at retail:

• The merchant can request that you voluntarily show a credit card. The only information that the merchant can record is the type of credit card (such as Visa and Mastercard), the issuer and the expiration date. The credit card number cannot be recorded on the check.
• The merchant asking to see a credit card must inform you 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 employees to information the consumer that the credit card does not have to be shown to write a check.

Further, the merchant can:

• Require you to provide a California driver’s license or a California ID number. Another form of photo identification can be required if these forms of identification are not available. It is not against the law for merchants to write ID numbers on checks.
• Require, verify and record your name, address and telephone number.
• Require a check guarantee card and record the number, whether or not the check guarantee card is also a credit card.

What happens when a merchant breaks these laws?

Merchants may be fined up to $250 for the first violation and up to $1,000 for each subsequent violation. You, the consumer, can do the following:

• Sue the merchant in small claims court for an amount up to $5,000. (You can only file two small claims court actions in the state within one year in which you ask for more than $2,500.)
• Consult an attorney to bring a “class action suit” if you feel that the merchant has broken the law against many customers.
• Make a complaint to the Attorney General, the District Attorney or the City Attorney. If several complaints are received, they can choose to sue the merchant on behalf of California residents in Superior Court.

Privacy Rights Clearinghouse www.privacyrights.org

Signature Capture devices

Signature capture devices record your signature and stores it is a computer system. Signature capture devices are usually located at the cash register and are used when the consumer pays by credit card.

According to merchants, signature capture devices streamline their operations by saving them time and reducing the amount of paper generated. When there is a purchase dispute, it is easier for the merchant to locate the receipt by transaction number, using a computer, than locating the paper copy. Further, merchants point out that signature capture devices reduce fraud because there is less paper containing sensitive information available for others to obtain.

However, many consumers feel uncomfortable using signature capture devices. They are concerned about the security of having their signatures stored electronically in a computer system.

Most merchants do not require that you sign a signature capture device. However, sales clerks may be trained to encourage you to sign it. If you do not want to use a signature capture device, you may have to be persistent and speak with a store manager.