How did credit card companies stop transactions in the days before electronic verification?

[Quintas]

I remember in the late 80's there were still places that used the carbon machine to make a copy of your card and then the person would sign for the bill. The merchant didn't make every customer wait while they called the credit card company to verify the funds were there. And i'm guessing the credit card company would honor it if you went over your balance. (within reason.)

How did they go about cancelling cards or putting a freeze on it? Once they received a copy of your charges and saw you were over the limit, they perhaps sent a letter notifying you. But since merchants didn't call transactions in, so what? What kept a dishonest person from continuing to use the card?

[Duckster]

In days of yore, it was a phone call to the verification number for charges above a certain limit. Whether the limit was based on a person's credit history, or the merchant's policy, or both, I don't know. If you had to call in a CC number for a verification code sometimes you were told to confiscate the card (and earn a reward!). There was also a monthly-issued book of invalid numbers you were required to check if you did not call for verification. While credit card abuse/theft existed at the time, the lack of instantaneous communications and no organized credit card theft gangs kept the abuse to a small trickle.

That's how I remember accepting credit cards at jobs while going to school. Also, not everyone had the opportunity to obtain a card. I won't say it was an exclusive club, but it was nothing like the system today.

[rat avatar]

They sent out books filled with bad card numbers, you could call and verify but typically the merchant took the card and ate the loss if it was stolen etc...We had an RV park so it was $10 a night and not worth looking in the book to see if they were blocked.

So really how they stopped them was by not giving money to the merchant, similar to today as it is the merchant that loses out with fraud.

I found it interesting that the books weren't very thick, so I would say technology and the internet enabled a lot of the fraud we have today.

[aruvqan]

Originally Posted by Duckster

In days of yore, it was a phone call to the verification number for charges above a certain limit. Whether the limit was based on a person's credit history, or the merchant's policy, or both, I don't know. If you had to call in a CC number for a verification code sometimes you were told to confiscate the card (and earn a reward!). There was also a monthly-issued book of invalid numbers you were required to check if you did not call for verification. While credit card abuse/theft existed at the time, the lack of instantaneous communications and no organized credit card theft gangs kept the abuse to a small trickle.

That's how I remember accepting credit cards at jobs while going to school. Also, not everyone had the opportunity to obtain a card. I won't say it was an exclusive club, but it was nothing like the system today.

True that, bank cards were not visa/mastercard, they were <insert name of bank system like Cirrus here> cards that only worked in ATMs. I don't remember when it changed to visa/MC, but it had to be in about 1990 or so because I didn't have a bank card from 85 until 93, the before card was a bank card, the one after was a visa badged card.

back when I worked in college at a catalog showroom [there is a blast from the past!] for a christmas season, we had to check the cards against the booklet of bad card numbers, and if it was over $50 call the number to get the authorization, and write the authorization in the blank on the charge slip. I do know that back in 1987 I was working at a truck rental place, and you still had to do the lookup and call in part. I do remember confiscating the occasional card and getting the reward =)

[Wheelz]

Ah yes, I remember "The Book."
I worked at a movie theater box office in the 1980s, and every time somebody used a credit card we had to make sure it wasn't in the book before we accepted it. I think there was a phone number we had to call too... It was a long time ago.

What I do recall, though, is that hardly anybody ever used credit cards to buy movie tickets. Of course there were no debit cards then either. Cash was still king.

[Quasimodem]

Funny story about my Dad and the time a kid tried to take his Visa away.

"Sir", said he, after hanging up the phone. "Visa, wants me to take your card, due to a past due balance, *gulp*"

My Dad considered this for a moment, and then quietly said, "Son, you either have a death wish, or I'm hard of hearin'. Which is it?"

"THANK YOU SIR, AND Y'ALL HAVE A NICE DAY, NOW!!!"

Dad took the card, called Visa, and apparently a mistake had been made.

I know my Dad wouldn't have hurt that kid, but he had a way of staring which caused instant attention and obedience. I inherited it, but unfortunately I have lazy eye on the left, and all I get is laughs!

Q

[rat avatar]

Originally Posted by Quasimodem

Funny story about my Dad and the time a kid tried to take his Visa away.

"Sir", said he, after hanging up the phone. "Visa, wants me to take your card, due to a past due balance, *gulp*"

My Dad considered this for a moment, and then quietly said, "Son, you either have a death wish, or I'm hard of hearin'. Which is it?"

"THANK YOU SIR, AND Y'ALL HAVE A NICE DAY, NOW!!!"

Dad took the card, called Visa, and apparently a mistake had been made.

I know my Dad wouldn't have hurt that kid, but he had a way of staring which caused instant attention and obedience. I inherited it, but unfortunately I have lazy eye on the left, and all I get is laughs!

Q

My fauther was a loan officer in the early 70's, one time he had someone skip on a bill and keep running charges on a card of theirs in another state.

He called a private detective to have him go pick up the card, the PI asked him on the phone "Do you want me to break his legs"

My dad laughed it off, and said "No we just want the card" thinking it was a joke.

A few weeks later the guys entire wallet showed up in the mail.

[md2000]

Yeah, I remember being amazed when I saw a device that dialed the CC transaction automagically somewhere down in the USA. Typically, they had a booklet of about 30 or 40 photocopied pages of finely spaced number, in order.

Bank cards were used as ID so this proved to the merchant that the bank thought your cheques were good.

IIRC over a certain amount (say $50 or $100) it was big enough that the merchant was on the hook if they did not get an authroization. Below that, if the card was present (carbon swipe) the signatures matched (eyeball) and the card was not on the list - the merchant would not lose money.

[RealityChuck]

My father's store started accepting credit cards in the late 60s. There was a book of bad credit cards; you checked that before each CC sale (there weren't very many). If the purchase went over your floor limit, you called for verification.

If the CC was not in the book, and the purchase was under the floor limit, the merchant was not liable for the loss. If it was in the book, or if you did not call for an item over the floor limit, the merchant was liable. The book came out weekly and the CC company had to eat any charges for cards not in the book.

[Hari Seldon]

I well remember that a CC charge of more than $50 had to be authorized. And it took a phone call. And if the line was busy, you waited. And if there were other people behind you (not at the supermarket, since they rarely took cards, but at a department store), they waited too. Real pain. Then some merchants paid for a permanent telephone connection to the bank. That was quicker, but still a voice conversation. And, oh yeah, book lookup for smaller amounts. Then came the internet and it was all automated. And fast.

[Mama Zappa]

1978, I worked as a cashier for Murphy's (like Woolworth's) and we had the book of tiny-print bad credit card numbers. Back then, Visa / Mastercard weren't quite as ubiquitous as it is nowadays, more people paid by check (I can't remember the last time I purchased anything by check when shopping!). We did have to phone in larger purchases.

I assume the store would have had to "eat" any lower purchases that turned out to be bad.

Last time I saw the old carbon-copy non-phone-connected credit card technology was back in 2005 - we stopped at an overlook near Sedona, AZ and purchased some things from one of the Native Americans selling there, and several of them ran credit cards that way.

[Bricker]

What I always found hilarious was that if the credit card company declined the transaction, nine times out of ten the customer would then say, "Can i write a check?" And of course I had to say "Yes, with two forms of ID," and one of those forms was the credit card that was just declined.

[md2000]

The rule for the credit card companies for purchases, even today, is:
- the card must be present (proved by the swipe carbon)
- the signatures must match (the clerk should eyeball them- rarely do they.)
- the card is not in the book (back when they had books instead of electronics)
- over the limit, must be approved by phone.

If there was a problem and those conditions were met, the credit card company ate the loss. This was part of the service (for which the CC company took 3% or so). The merchant did not have to worry about about this; in a time when bounced cheques were a regular problem for many businesses, that guarantee was worth something.

Of course, the credit card companies handed out cards to anyone and everyone, and then found they were hit with massive fraud, to the point where even 28% interest on real customers was not enough to help...

[MikeS]

Originally Posted by Mama Zappa

Last time I saw the old carbon-copy non-phone-connected credit card technology was back in 2005 - we stopped at an overlook near Sedona, AZ and purchased some things from one of the Native Americans selling there, and several of them ran credit cards that way.

I saw one in action just a few months ago, at a used bookstore in rural Massachusetts. Before that, though, it had been at least a few years since I had seen one.

[campp]

I recall several transactions as a clerk where I would call the card companies to get an authorization. Twice I was told to TAKE THAT CARD FROM THAT CUSTOMER AND SEND IT TO US. They would pay a $50 reward for that. I was more than happy to piss off some customer, because I made 50 bones and the store did not get screwed.

[kunilou]

Way back in the '70s I worked in the credit department of a chain of hardware stores. We had thousands of accounts and customers who wanted to charge everything from a box of nails to material for a new roof. Here's how it worked.

There was a "store limit" for each credit card transaction. If the purchase was under that amount, the cashier didn't have to call it in. We'd sometimes raise the store limit on weekends and around holidays when we knew people would make larger purchases.

If the purchase exceeded the floor limit, the cashier would call the main office, where someone like me would go through a big book of printouts with every account. The books had the latest record of the account (and we actually wrote updates in the "notes" column by hand), and we checked to see if the purchase was under the account credit limit, if the customer's payments were up to date, etc. If we saw anything questionable, we called a supervisor, who made the final call.

Every day we sent an updated list of canceled or lost credit cards. If a card was reported stolen, we immediately called every store in the region so no one could go on a charge spree.

[Charley]

It was often, certainly in the UK anyway, not the bank but a clearing house who you phoned. As late as around 2000 my brother was a supervisor at one of the clearing houses, still responsible for authorising over-limit charges. They had computer details for all the banks in their scheme, and would generate an authorisation code which they'd give to the caller, after some balance checks and so on. Interestingly for one of he banks they managed there was no such technical link. All codes they gave for that particular bank were dummies, no checks took place and all purchases were just automatically waved through. Try as I might I could never get him to tell me which one though!