Fraudulent credit card processing costs business billions of dollars a year. Because retailers are bound by their merchant accounts to not ask for identification from the shopper it is hard to stop the fraudulent buys.
However, there are some times when a merchant may actively step into the middle of a purchase and stop or delay a sale. If he has reasonable belief that the card was stolen or being misused, he must take required steps.
A credit card reported stolen triggers a decline/pickup alert on the processing terminal. The merchant tells the customer that the card is triggering an alert and must be kept by the store until the situation is resolved. The merchant should never fight over the issue and should avoid provoking violence. The safety of the store employees is the higher priority.
After the customer leaves, the merchant cuts the card number lengthwise, doing no damage to the magnetic stripe. He notes the physical description of the customer and any other pertinent information. The merchant accounts agreement provides a template for the necessary information provided to the credit card company and the address it is sent to.
Two other situations may require a “Code 10” call into a special toll-free number. The terminal may respond with a message to investigate further. Or, the merchant may has his own suspicions about the transaction. In either situation, the merchant tells the customer that a further check is required on the card and he dials the phone number provided on the face of his credit card terminal. The merchant chooses “Code 10” when prompted. This takes him to a voice authorization representative who will ask a series of “yes or no” questions.
If the card is declined by the representative the card is given back to the customer. The merchant has no authority at this point to keep the card. The merchant is directed to request an alternative payment. After the customer leaves the merchant is free to notify the local police if he believes that an attempt was made to use stolen property for credit card processing.