A Small Victory in the Battle Over Privacy

Thanks to recent laws in a number of states, including California, merchants in many places can no longer write a customer’s credit card number on his personal check. Nor can they make customers write their telephone numbers or addresses on credit card slips.

Sometimes called, too grandly, credit card privacy laws, they provide only slightly more protection than the operating rules of most credit card systems and depend mostly on consumers for enforcement. What’s more, they provide a mere ounce of protection against a problem that’s almost overwhelming.

But they’re at least a rare reversal of the current trend toward leaving no information private, chipping away at the consumer privacy to the advantage of business. Every little holding action helps.

Many consumers express annoyance that merchants insist on noting both driver’s license and credit card numbers on the back of personal checks. But merchants explain that the card number guarantees payment if a check bounces, or guarantees that clerks at least look at identification before taking a check.

For card purchases, they often demand phone numbers and sometimes addresses. Some explain that they may need to call if the number or amount didn’t imprint, or the card was left behind. Some (rarely) explain that the information is used to build “targeted” marketing lists for their own use or for someone else in direct mail or telemarketing. “Lists of consumers and what they’ve bought are worth money,” says Elgie Holstein, director of Bankcard Holders of America, a consumer organization in Herndon, Va., that helped spur the new laws.

More probably, there was no explanation. Many merchants write down such numbers just because they’ve always written them down.

But there’s danger as well as annoyance in the practice. A credit card number is thus exposed to everyone who handles the check, increasing the possibility of fraud. Someone could bill more goods to it, or double-bill the same goods, or use the number and the credit history to apply for more credit--with messy effects on the cardholder’s own credit history, if nothing else.

The danger in putting extra personal information on credit card slips seems less, but not if privacy is worth preserving. Who wants specific information on their expenditures added to everything already in the hands of marketers and fund-raisers?

The current rash of laws--a dozen states have passed one or both--shouldn’t even have been necessary, given existing regulations. Under both federal truth-in-lending rules and the operating rules of such charge systems as Visa, MasterCard and American Express, merchants weren’t allowed to cover a bounced check by charging a credit card--even if customers signed a stamped statement saying they could.

Nor did Visa, MasterCard, or American Express, among others, require merchants to get addresses or phone numbers for credit purchases. It’s not necessary: The card-issuer stands behind its cardholder, and the merchant is guaranteed payment of all valid charges if he fills out the slip correctly, checks the customer’s signature and gets required authorization.

But the laws are useful and generally easy to pass. State legislators tend to like proposals that draw great consumer interest and have virtually no effect on state budgets.

They do sharpen existing rules. The card networks may not have required telephone numbers for credit card sales, but the laws--starting with New York’s a year ago--specifically forbid merchants to require them, under normal circumstances. California’s law, authored by Assemblyman Rusty Areias (D-Los Banos), says merchants can’t require or even record a customer’s credit card number “in connection with” a check transaction.

They’re even useful when redundant, informing merchants of proper practice, perhaps for the first time. Operating rules of Visa and MasterCard, after all, go only to the merchants’ banks, which may not pass them on.

Before New York’s law took effect in January, for example, “it was common practice to ask for home address and telephone numbers,” says Nancy Connell, spokeswoman for New York Atty. Gen. Robert Abrams. Now, though they can still request it voluntarily, “stores have stopped asking.”

Such laws also inform consumers of their rights, and not just to their own advantage. While there may be provision for enforcement and subsequent fines, government action may prove unnecessary. “One of the things we’ve found,” says Connell, “is that consumers are enforcing it themselves.”