By Mabel Doge Luhan for Mabel’s Table, Kandit News & Views
Oh my!
On the federal side, the Trumpists are about to take away our Medicaid, our hospital, our schools, our tourists, our consumers, and our workers. On the local side, Zoning, Labor, Commerce, Revenue, and all the letter agencies of the CNMI government continue to do their best to destroy the last businesses standing.
But the CNMI Senate is more worried about protecting Saipan’s banks and credit card merchants from the costs of doing business.
Senate Bill 24-22 seeks to require merchants to require photo ID from customers using a credit or debit card.
Which sounds like a great way to protect the community from credit card fraud. If you’re twelve. Or just have no idea how anything works.
Let’s start off with some definitions. We have the customer, who’s the buyer in the store. We have the merchant, who’s the retail store, like Joeten. Everyone knows those. There’s more though. There’s the customer’s card issuer, which is the bank whose logo is on their credit card. There’s the merchant’s card processor, which is the company (often but not always a bank) that converts credit card swipes to money in the merchant’s account. And then there’s the card network company, usually Visa or MasterCard.
If you read and understood that, you’re way ahead of the CNMI Senate on this issue. But let’s go on.
Everything that happens between and among those parties is governed by contracts. For example, the merchant, when they signed up for credit card processing, agreed to a bunch of things. Most merchants in the CNMI have no idea what they signed, and don’t care. But one of the provisions they signed — if they are accepting Visa cards, because this provision is required by credit card processors in the Visa network — is that the merchant is not allowed to ask for ID on Visa purchases unless they have some specific reason to suspect fraud. Routinely asking for ID is grounds for getting their credit card processing account taken away. (Fun fact: Once you get a credit card processing account taken away, you will never, ever get one again! Imagine if our own Casino Commission was so strict about financial malfeasance!) (I’m too lazy to look up the requirements for the other networks, but I know from direct unprofessional experience that this is a requirement on the Visa network.)
So our esteemed senators and senatrices are already asking the merchants to violate their agreements with their card processors. Sure, the merchants have no idea that this is in the agreements, but they might find out at some point, and not with a gentle reminder but with a one-paragraph notice of merchant account cancellation.
But wait: there’s more!
“It’s for protecting consumers” is pure malarkey. On every major card network, consumers are never liable for fraudulent charges. Actually, the networks allow card issuers (say, Bank of Hawaii if it issued your card) to hold consumers liable for up to $50 (yes, fifty bucks) per incident, and no more, but no bank that I’ve ever heard of uses that provision, and every bank has a policy of consumers not being liable for any fraudulent charges.
So who eats the fraudulent charges? Usually some combination of the merchant and the card processor, depending on what agreements they have in place. It often depends on the specifics of the case. For smaller fraudulent charges (say, under $100), the card issuer might just eat the charge, because pursuing the merchant and the card processor for such a small amount of money isn’t worth their time. In any case, the consumer is not liable for any of the fraudulent charges. (And yes, the perpetrator, if caught, might be made to repay whoever ate the initial fraudulent charge — but smalltime credit card fraudsters, especially in the CNMI, are usually poor addicts, and are as destitute when they’re caught as they were when they first stole the card.)
So no, this bill has nothing to do with protecting the manamko, at least not in their role as consumers. If those manamko own merchants or card processors or issuers, then yeah, this could potentially help them — but actually it wouldn’t, because it asks those merchants to do something explicitly prohibited by their agreements.
Another fun credit card fact. Have you seen those signs around Saipan and Guam claiming that the law (and it usually cites the law) requires a minimum $5 or $10 charge to use a credit card? That’s a lie. All the law does is allows such limits to be no more than $10 for credit cards and no more than $5 for debit cards — the law doesn’t require those limits, only caps the amounts of the limits if merchants choose to have them. (Until Trump’s first term, debit and credit card merchants weren’t allowed to have minimum charge amounts.)
If our legislators actually wanted to protect the manamko, they’d tell them to stop getting jerked around by the CNMI’s banks and join PenFed, a credit union that beats every CNMI bank in every way: https://www.penfed.org/checking/free
That, of course, would never, ever happen.
And if our legislators actually wanted to protect the manamko, they’d also tell them that the 3-5% credit card surcharges (“convenience fees”) — charged by many businesses in Saipan are specifically banned by every merchant card processor agreement, and people should refuse to pay them. That, too, would never happen.
I don’t even think our senators are specifically trying to help banks or credit card merchants with Senate Bill 24-22. I don’t think they thought about it that far. I’m pretty sure they’re just doing what some constituent, probably one who controls many votes, asked for. And instead of researching the issue, or researching how to genuinely help our people, they pass a bill and call it a day. That is indeed why we pay them their salaries, travel expenses, car budgets, office staff, and “subsistence” slush funds!
Give credit where it’s due!
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Mabel Doge Luhan is a woman of loose morals. She resides in Kagman V, where she pursues her passions of crocheting, beatboxing, and falconry.
