Is It Safe to Swipe Your Credit Card in a Taxi?

Feb. 24, 2012 -- Here's a warning that caught our eye: A sticker in the window of a taxi warning riders in Dallas that if they try to pay by credit card, their identities may be stolen. The sticker was captured by Cory Doctorow, an editor for Boingboing.net. "WARNING," the sticker read. "The method used to authenticate credit card transactions for approval is not secure and personal information is subject to being intercepted by unauthorized personnel."

[Related article: Obama Unveils Privacy Bill of Rights]

Wow. That sounds really bad. But is it? That's hard to say, according to Ondrej Krehel, information security officer at Identity Theft 911. The real answer may be the simplest, Krehel says: many taxi drivers simply prefer their fares to pay with cash instead of credit. "My first thought is whether this is just the driver trying to get people to use cash," Krehel says.

Doctorow didn't speak to the driver about the sticker, but the UK-based author, activist, journalist and blogger did have an interesting conversation with another cabbie during his trip to Dallas. "I noticed on the way from the airport that the driver of a different cab was really reluctant to take a card," Doctorow said.He recounted the conversation thusly:

Doctorow: "Can I pay by Visa?"

Cabbie: "You don't have cash?"

Doctorow: "It's easier for me to get reimbursed with a card."

Cabbie: "I'll give you a receipt."

Doctorow: "Do you take Visa?"

Cabbie: "OK, I'll take Visa."

[Related article: Identity Theft: Are We Doomed?]

There's a long history of taxi drivers fighting credit card interchange fees deducted from their profits, to which any frequent traveler is likely to attest. However, it's hard to know whether the sticker is just a ploy without knowing more about the credit card terminal inside the taxi. The security rules regarding such terminals are written by the Payment Card Industry Security Standards Council, an organization governed by Visa, American Express, MasterCard and other major credit card networks. The council develops the data security standards that govern all types of credit card readers and networks.

Maybe the taxi company uses old terminals that aren't covered by the latest standards, Krehel says. Maybe the terminals are new, but weren't installed properly. Either way, it's possible that data sent by the terminals might not be properly encrypted, Krehel says. The PCI Security Standards Council did not return phone calls and emails seeking comment.

But why would any company prominently advertise the fact that its credit card network is untrustworthy? Whatever the answer, people riding in this particular cab may want to avoid using their debit cards, which provide direct access to the funds in consumers' checking accounts, and which can provide lesser protections against fraud than credit cards can.

"Certainly that could be a reason to use a credit card rather than a debit card," says Gerri Detweiler, Credit.com's debt expert. "But still, that doesn't make you feel very safe, does it?"

Doctorow was sufficiently put off. He ultimately declined to use plastic in the cab with the sticker.

Christopher Maag, contributing writer for Credit.com, graduated with honors from the Columbia University Graduate School of Journalism, and has reported for a number of publications including The New York Times, TIME magazine and Popular Mechanics.