The USA Patriot Act requires financial institutions to “know your customers,” and each issuer has its own policies about required documentation for new accounts.
With card issuers trying to attract prospective customers with all sorts of rewards, you might think it’s a slam dunk when you apply for a credit card. That’s not always the case, as reader Mica found out.
Mica was approved for a AAA Dollars Mastercard online. U.S. Bank, which issues the card, then wanted to verify the applicant’s information, and asked Mica to provide copies of all the following documentation:
- Driver’s license
- Mortgage statement
- Social Security card
- Social Security form 4506-T
- Pay stub
- Federal income tax return for the last two years
Given that this is a substantial amount of information the issuer is asking for, Mica wonders if this is customary or legal.
See related: Do you need current income to get a credit card?
Documentation requirements vary
Mica, upon following up with this issuer, a spokesman said in general most AAA Dollars Mastercard applicants don’t need to provide any documentation. He added that “we may request certain documentation to help validate an applicant’s identity or to qualify them for a certain credit limit.”
Other card issuers have similar policies. A Chase spokesperson clarified that requirements for documents vary, depending on each individual’s case.
“While not always required, additional documentation can vary depending on the product type (consumer or business) as well as other information that may be necessary for fraud prevention,” the spokesperson said.
Over at American Express, a spokesperson noted that card applicants need to furnish their U.S address, U.S. phone number, taxpayer identification number or a valid government-issued identification, and information about their income, employment and financial assets.
Amex will then ask its applicants for documentation to back this information “on a case-by-case basis,” with card approval being subject to Amex’s “standard credit and fraud checks.”
Know your customer requirements
Card issuers have put in all these input requirements since federal law requires them to get information from their prospective customers and verify and record this input. That’s why they ask for all your personal details when you apply.
That’s pretty standard. It’s the requirement for documentation to back up this information that is more subjective, and this is based on each issuer’s particular policies, and the judgment of the person processing the application.
The requirement to get customer input is based on the so-called “know your customers” provision of the USA Patriot Act. This regulation aims to stop terrorists before they act, and punish acts of terrorism.
Considering that money is a vital fuel for terrorism, the government’s aim is to make it difficult for terrorists to obtain financing or launder their money through financial institutions.
To this end, the law establishes the basic standards that financial institutions have to go by when a customer opens an account with it. Considering that the law only sets the baseline for verification, it’s then up to each institution how much more stringent it will be. That’s why card issuers’ policies for applicant documentation run the gamut.
Decide whether it’s worth it
Mica, it seems you tripped up U.S. Bank’s screening process in some way, based on whatever you stated in your application process. It’s up to you whether you want to jump through this issuer’s underwriting hoops and provide this documentation in order to enjoy the benefits of the AAA Dollars Mastercard.
This card enables you to earn 1 percent in AAA dollars on your day-to-day shopping, without any dollar limit. You could then redeem these dollars for rewards, which include AAA gift cards, merchandise or a statement credit. You could also use the rewards to get cash back, gift cards or make donations to a charity.
You may decide that it’s not worth your time and effort to continue with this particular card application process. Certainly, there are multiple card issuers out there vying for your dollars. In any event, the underwriting follow-up asking for these documents, while not always customary, is certainly not out of place.