According to the 2006 Nilson Report, net (not gross) industry losses on bankcard (debit and credit) fraud and theft amounted to $990 million in 2006 in the U.S. The report does not break down how much of the fraud occurs at retail points of purchase, but for the purpose of this estimate, I will assume that ALL of it occurred at a face-to-face transaction.

As of 2006, there were 984 million bank-issued Visa and MasterCard credit card and debit card accounts in the U.S. (Source: Visa USA, MasterCard International)

I will ignore Amex and Discover due to their lower market shares. If you include them, the cost per card drops.


So, on average, bankcard fraud costs approximately $1 per card per year. (Inclusive of all types of fraud - Retail, Internet, gas pump, etc)

I could not easily find cohesive statistics as to how much of the fraud occured outside of a face-to-face retail transaction. We know that plenty of fraud is present on the Internet and at automated locations (gas pumps, etc), so retail fraud and theft cost less than $1 per card per year.

I could not easily find cohesive statistics as to how many bankcard transactions occurred in the United States. For the purpose of this post, we will use very rough numbers to demonstrate the magnitude of the resources required to check ID on 100% of face to face transactions.

Assume:

-A proper ID check takes 5 seconds, assuming the cashier is fast and the customer is ready. (In reality, not everyone is fast or prepared)
-A retail employee costs $8 per hour (wages, employer payroll taxes, unemployment contributions, etc)

Therefore, it costs a merchant 1.11 cents to check an ID

If the average consumer uses a card once per day over the course of a year (a very, very conservative assumption), then the annual cost for checking that consumer's ID will be $4.06, based on 1825 seconds spent checking ID. (well over a half of an hour per person!)

If there are 100 million daily active bankcard users in the United States (a conservative number, once again), then the annual cost of checking all those IDs amounts to $406 million in employee time alone. That does not include customer time wasted standing in line, or customer time wasted when an ID check is required but the customer does not have ID present, or has differing names due to legal name changes.

$406M is rougly 41% of the $990M total fraud.

If ID checks stop 100% of fraud, then the net gain to society by implementing ID checks can be NO HIGHER THAN $0.59 per card.

I used the numbers I did to establish an upper limit on how effective ID checks can possibly be. Of course, in the real world, there are always non-face-to-face transactions and cashiers in on the fraud. ID checks can't stop that. There are always professional criminals who have fake IDs, who cannot be stopped by ID checks. Criminals will always skim and clone cards, which ID checks can't stop, unless the clerk takes additional time to compare the ID to what prints on the receipt. The total bankcard fraud is not 100% retail use of stolen plastic, either.

Depending on these other parameters, it is very possible that ID checking would produce a net tangible loss to society.

These are all hard dollar figures - they do not include such intangibles such as privacy, dignity, avoiding ID theft from showing ID, not being robbed by thieves who know your address, customer time spent waiting in line, etc, that are all lost by the implementation of ID checks.

Given the large amount of frauds that cannot be stopped by ID, and a MAXIMUM THEORETICAL GAIN to society of $0.59 per card per year, why do people continue to think that ID checks are essential to keeping prices low?

This involved all of about 15 minutes of Google, and is hardly scientific. The networks have the real numbers. They have hired people to analyze them over and over, and have allowed the current policy to stand for a reason.

My DRIVER'S LICENSE is a permit to drive a car/truck

My DRIVER'S LICENSE is not a permit to use my signed credit cards

...and far as "READY" to show ID...AIN'T GONNA' HAPPEN

What is the "COST" of lost sales???

(ID AS A CONDITION OF SALE)

Very nice and I agree. Sometimes I feel like a criminal trying to get through the line at a store.

There are no "ID checks" allowed with credit cards.

CREDIT CARD SIGNATURE IS ALL THE ID NEEDED

When you pay for merchandise with a Visa card, MasterCard, or American Express any store that accepts these cards should accept yours too, no questions asked. It's part of the deal that merchants agree to when they become participating members.

They must check your signature and the card - electronically or by telephone - to be sure it's valid. Once the answer comes up yes, they can go ahead and charge. They can't ask you for any further identification - not a license plate number, Social Security number, proof of address, phone number or photo ID.

Your personal ID isn't needed because Visa, MasterCard, and American Express all guarantee payment on cards that have been properly checked. If the issuer mistakenly authorizes a sale on a bad card, it should make good. MasterCard says that merchants receive instant settlement. The contract MasterCard merchants sign specifically prevents them from asking for personal ID.

Unfortunately, not all merchants play by the rules. Some, apparently, haven't read them.

WHAT YOU CAN DO

MasterCard wants to hear about merchants who break their rules. Send the name and address and an account of what happened to MasterCard WorldWide 2000 Purchase St. Purchase, NY 10577 or call 1-800-300-3069. The merchant's bank will get a stiff letter, ordering it to investigate and bring the offending store into line - or pay a $2,000 fine. You may also report violations online:

http://www.mastercard.com/us/personal/en/c...violations.html

Visa enforces the same rules as MasterCard. "When we hear about a violation, we ask the bank that signed the merchant to get together with the merchant and see that the practice is stopped," Visa representative states. To report a merchant, send a letter to the bank that that issued your Visa card or call 1-800-VISA-911.

American Express also prohibits merchants from asking for IDs. "All a merchant is supposed to do is take an imprint, make sure the signature matches and swipe the card through the terminal, to get authorization."

So, we take a report... mix in an infinite number of assumptions... then we have the audacity to use such words/phrases as 'numbers don't lie' and 'truth' in the title.

Doesn't matter what the numbers say, anyway. THEM'S THE RULES...the merchants need to DEAL WITH IT.

If a clerk asks for your ID, ask them if they're a police officer.

I don't show my ID to strangers.

You can void the sale.

Have a nice day...buh bye!

One of the last times I was asked for ID on my signed credit card (before they even looked) was at SEES CANDIES

I had custom packed boxes

$70--->$80

Had they not backed off...they would have had fun putting all the candy back (or trashing it) what ever their policy is

I always ask people why they will show a cashier that they don't know their ID

But won't show it to some guy walking at the mall

...or the lady washing her car at the car wash

...or the guy mowing the lawn at the golf course

...or the family in the park

WHY IS THAT???

One of the last times? How long ago was that?

The week before MOTHER'S DAY a year ago since you MUST know

The time after that was at a BUFFET that cost less than $15 for the two of us

The "net (not gross)", along with "industry" is an interesting qualifier. I would assume it means the credit card industry. "Net industry losses" to the credit card industry would exclude any of the charges which they foisted off onto the retailers. Those charges are the entire reason the retailers want to check ID in the first place, because the credit card companies often make the retailers eat the charges.

How much does the LOST sale cost???

How much future business did you lose???

Did they tell their friends about the issue???