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New credit card law pits Texas against merchants and financial companies


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8/28/2017
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Texas Legislative Issues/News: During the regular session, the Texas Legislature passed a law allowing merchants to ask to see a photo ID when processing a credit card or debit card transaction and to decline the transaction if the customer refuses. The law, which goes into effect January 1, may have placed the state of Texas on a collision course with merchants and financial institutions that issue credit cards, according to the Texas Tribune. The problem is that many financial institutions prohibit merchants from declining a transaction in their contracts. The position of these banks is that their contracts supersede the new law. The state of Texas, even though it does not require merchants to ask for ID, takes the opposite view. The matter may have to be settled through litigation.

 

Attorney Jake Posey noted that the argument for the new law is that it will help to cut down on credit card fraud. Texas community banks, which supported the law, have become greatly concerned about this problem. However, a number of arguments exist against the law.

 

Opponents point out that many poorer Texans who lack a photo ID use government-issued debit cards to acquire needed goods and services. Others say that asking for a photo ID grants store clerks information about a customer that might be used for identity theft. Having store clerks ask for ID could expose them to discrimination law suits.

 

Some who are concerned about fighting credit card fraud suggest that technology such as chip cards and biometric identification would be better solutions than requiring a photo ID for transactions.

 

For more information contact us.



Category: Texas Government Relations Solutions


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