New law now mandates credit card truncation

A set of new laws addressing identity theft—including one that mandates that bankcard processing machines truncate credit card numbers on receipts—will go into effect March 1.

The truncation law mirrors the requirements already stated in the card acceptance agreement between retailers and Visa/Mastercard, including the deadline by which all electronic terminals must provide truncated receipts.

Credit card number truncation is intended to prevent lost or stolen receipts from being used for fraudulent transactions. Now, in addition to penalties that Visa or MasterCard may levy in accordance with their merchant agreements, the state will also levy fines for failure to comply.

All new machines (those placed in service on or after March 1, 2005) that issue customer receipts must leave off the card’s expiration date and may print no more than the last four digits of a credit card number.

The law does not apply to transactions in which the only receipt issued is one on which the account number or expiration date is handwritten, mechanically imprinted or photocopied.

The effective date of the new laws is March 1, 2005; however, the deadline for machines placed in service on or after March 1 is July 1, 2005. All machines—new and existing—must print truncated receipts by July 1, 2006.

Another of the new identity theft laws, which Governor Jennifer Granholm signed into law in late December, limits retailers’ use of consumers’ Social Security numbers. The law makes it illegal for businesses to require consumers to disclose their Social Security number “as a condition to selling goods or providing a service to the consumer, unless the transaction includes an extension of credit to the consumer or disclosure was required by state or federal law.”

John Mayleben, MRA’s vice president of sales and marketing, urges merchants who have not yet upgraded their terminals or their software to begin the process soon. Retailers who use MRA bankcard services are not charged for reprogramming. Contact your MRA account representative for assistance.

“In most cases, the process of upgrading terminals is fairly simple, a matter of activating the truncation capability. A few very old terminals may need to be replaced with newer ones that support truncation,” said Mayleben.

The truncation law arises from Senate Bill 220, sponsored by Valde Garcia (R-Howell). Garcia worked with MRA’s governmental affairs department to make the proposed legislation mirror the regulations already laid out in merchant agreements with Visa and MasterCard.