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408. I paid by check, and the merchant wrote my credit-card number on the back. If the check bounces, can the merchant charge my card?




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This article is from the Credit cards and Consumer Credit FAQ, by adams@spss.com (Steve Adams) with numerous contributions by others.

408. I paid by check, and the merchant wrote my credit-card number on the back. If the check bounces, can the merchant charge my card?

The answer to this one boils down to "There are two kinds of
prevention, and an ounce of either is worth a pound of cure."

First, in CA, DE, FL, GA, IA, IL, KS, MD, MN, ND, NJ, NV, NY, OH, VA,
and WA it's illegal for merchants even to write your credit-card
number on your check, so don't let them do it. (Note: In Illinois,
they can request a look at your card, but can't write the number on
your check. They CAN write the type of card and expiration date)
Source: Bankcard Holders of America. (I understand some banks are
tying check guarantees to their credit cards. I don't know whether
that's legal in the above states, but it seems to be a bad idea. If my
bank did that, I would question them closely about the potential for
fraud in using the same number for my credit cards as for check
guarantees. Giving someone your credit- card number with your name
and address -- possibly even your phone number -- on a printed check is
an open invitation to scam artists.)

Second, In states other than those listed above, the merchant has
the legal right to refuse the sale if you refuse to give the
informa- tion. However, Visa, MasterCard, and American Express all
forbid merchants to charge a credit-card account to cover a bounced
check, or to use card numbers to locate a customer whose check
bounces. Since the merchant can't do anything legitimate with the
card number, and since providing it makes you a possible victim of
fraud, you should politely decline. One possible compromise, if
you're at an impasse, would be to show the card with your name on
it, but to cover up all or part of the card number and to insist
that no part of the number be written down. Source: Bankcard
Holders of America. (The situation may be different if your credit
card is also a check-guarantee card; see the preceding paragraph for
cautions.)

Nearly 90% of bounced checks are due to consumers' math errors in
balancing their checkbooks. Despite this, the law in some states is
that if you bounce a check it is assumed to be deliberate unless you
can prove otherwise, and deliberately bouncing a check is a crime in
every state.

It's better never to get into this hassle than to deal with it after
the fact. If you've got credit cards, why pay by check at all?
(See "Is it better to pay by check?" earlier in this section.) If
you do pay by check, don't give a credit-card number. And if you
bounce a check, don't make the merchant come to you but go to the
merchant immediately to make things right. Give the merchant a good
check (probably a cashier's check) or cash for the amount of the
purchase, and expect to pay a reasonable fee to the merchant in
addition to your bank's fee.

 

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previous page: 407. I made a hotel reservation, and guaranteed it with my credit card. When I showed up, the hotel denied my reservation. Have I any recourse?
  
page up: Consumer Credit and Credit Cards FAQ
  
next page: 409. Can mail-order merchants charge my credit card before they ship?