I want to buy [something] from [a DSM vendor], but they won't accept my credit card! Why not? What can I do?

Important: With the advent of Paypal, most of the issues below are no longer an issue. 

Note: the information discussed below defines a 'DSM vendor' as an established legal business that sells parts or services for DSM cars, and not private individuals selling parts or services.]

DSM enthusiasts will frequently run across this restriction when ordering parts from DSM vendors. This is usually not a problem when you walk into a store and purchase an item, even for non-USA credit cards, but call or email your order in and you suddenly run into problems. Moreover, few vendors take the time or trouble to properly explain the reasons to their customers - a short "We can't do that" or a brief note on the website saying they can't do it is usually all the explanation one gets.

International customers get even more hassle. These customers are often told that a vendor cannot 'verify' their credit card unless it is issued by a U.S.A. bank. Canadians, in particular, get irked by this (after all, we are on the same continent), but most customers abroad quite rightly point out they can go virtually anywhere in the world and purchase items with the same card. Therefore, the card can obviously be 'verified', and no problem should exist.

The root cause of all this frustration and hassle is usually poor communication between the customer and the vendor*. Mail-order vendors are put at significant risk when accepting credit cards via phone or internet. This is because the rules are different for in-person purchases and mail-order purchases, and there is only one reason for that - fraud.

When you purchase an item in person, the vendor is able to get a copy of your signature on the form. You also require the physical credit card, with the correct account number, name and signature on it. In this manner the vendor can be reasonably certain that the card is, in fact, your own.

Mail-order purchases are entirely different. In this situation, you do not need the physical card, and the vendor cannot obtain your signature. There is, therefore, no way for the vendor to verify that you are you, and that the card is yours. This leaves mail-order vendors completely at risk for fraud by criminals using stolen credit card numbers.

Few people immediately realize the problems this creates for vendors. Unlike cardholders (customers), credit card companies do not protect vendors against fraud. If someone was to use your credit card to purchase an item, you would generally be protected against the lost amount by your credit card company. (In some cases there might be a small deductible, but that's not relevant here.) For example, if someone used your card number to buy $1300 worth of parts, you would have to pay nothing (or almost nothing) because you didn't buy the parts.

However, no such protection exists for the vendor. That vendor is out of pocket for the item sold. They will generally not receive any compensation from the credit card company for the loss. So, if someone presenting themselves as you were to buy $1300 worth of parts from (for example) your favorite DSM vendor, that DSM vendor would be out $1300 worth of parts. Police departments usually don't have the manpower, budget, or time to investigate such 'minor' amounts, and the vendor is left with nothing. It wouldn't take long for a vendor to be forced out of business if they were an easy target.

To combat this problem, mail-order vendors are forced to use alternative means to verify the credit card. These procedures, unfortunately, place additional restrictions on the cardholder as well.

The most sophisticated method available to date is for mail-order vendors to use a supplementary credit card verification system called AVS (Address Verification Service). The AVS service allows vendors to match user-supplied billing address information with information on file for the credit card number. If the card information, billing address, and shipping address all match, the vendor is unlikely to be taking a big risk by sending out the goods.

Unfortunately, the AVS system is limited. Firstly, it only works for cards issued through United States institutions. This is where international buyers run into problems: their cards are not registered with the AVS system. Thus, when a vendor says "We cannot verify your credit card" what they really mean is "We cannot verify that the billing/shipping address you provided is the one on file at your bank, because your card is not registered in the AVS system." They often don't say so because the person on the other end of the phone doesn't understand the system either.

Also, the AVS system can be foiled by outdated information at your bank. If you've just moved, or there is an error in your card records, the AVS system will incorrectly fail the card billing address.

Finally, the AVS system deals only with the billing address and is therefore a fairly weak system. If a criminal knows your credit card and home address, his or her purchase will pass AVS verification. The thief could simply specify a different shipping address, and get the goods anyways.

To get around this problem, some vendors only ship to the cardholder's billing address. This almost guarantees that the actual card holder will receive the goods, and not an impersonator. If he (or she) didn't order them, they will send them back to the vendor.

Unfortunately, many legitimate buyers also want items shipped to an alternate address, such as their workplace, a relatives house, or perhaps a hotel where they are staying. These requests cannot be fulfilled under this restriction; a particularly troublesome point for temporary visitors to the U.S.A. or anybody that works away from home.

Fortunately, there are some solutions to these problems:

• Pay by money order or personal cheque. The basic fundamental reason for all these problems is that the vendor is afraid they won't get paid. Pay them, and everything works out just fine. Money orders are not hard to get. Talk to the post office or a courier to find a mailing method that includes letter tracking and delivery verification, so it doesn't get lost before or after delivery, and allow additional time for cheques to be processed through the banking system.
• Call your credit card company, and get them to attach a temporary, validated alternate shipping address to your credit card. This allows the vendor to AVS-verify the card and ship to an alternate address. You may need to provide the vendor with your credit card's customer service number - see below for why.
• Many international customers can provide the customer service number for their credit card company or bank to the vendor. This allows the vendor to call up the card issuer/bank and manually verify that the billing information on the card is legitimate. They can sometimes also verify that an alternate shipping address is on file, provided you remembered to set it up before placing the order - see above for details.
• If you live in another country and make lots of USA purchases, consider getting a USA credit card from a USA bank. The whole AVS-verification problem then goes away. The requirements for getting such a card will vary from bank to bank and country to country. You will probably want to shop around for a card company that can provide a permanent verified alternate shipping address, if necessary - see above for details.

Some of these options may not be available for some vendors. For example, if a vendor is unwilling to take the time to call your credit company, then they won't be able to verify foreign cards. Fortunately, most DSM vendors are more than willing to take the extra step if you make it possible for them to do so. They really are trying to be nice people, they just don't want to get screwed by the dishonest 1% of their clientele. You wouldn't either, if you were in their position.

For more information , visit this explanation of a fraud ring on John Faughnan's Home Page, this explanation of the AVS system fromQuality Merchandise Brokers and this backgrounder on credit card fraud by Paul Lang, hosted by Internet Scambusters.