Michigan Gas Stations Introduce Drivers’ License Swipes for Cash Purchases

Published February 10, 2012

A Saginaw, Michigan business owner says requiring customers to swipe their drivers’ license when topping off their tanks could stop drive-offs—clients leaving gas stations without paying. Privacy advocates, however, say the new “Post-Pay” method subjects innocent customers to potential identity theft.

Bob Hohn, president of Paxson Oil Company, invented Post-Pay because he was fed up with costly drive-offs. Post-Pay makes it easier for police to catch people who pump-and-run without paying.

Drivers intending to pay cash use Post-Pay by swiping their driver’s license before pumping gas and paying the cashier afterwards. Hohn says the information from driver’s licenses is maintained temporarily on a device in the store but not kept long-term. The cashier doesn’t see the information unless a customer drives away without paying, Hohn says.

$10 Million Annually
Gasoline theft has long been a problem for service stations. In Michigan, gas theft is a misdemeanor, punishable by up to 93 days in jail and a $500 fine, or possible suspension of the offender’s driver’s license, according to Web site gastheft.com.azs

Before Post-Pay, Hohn says, drive-offs numbered three or four a week, accounting for a few hundred dollars in lost sales each week. In the two months since Post-Pay has been installed at the Saginaw station, there has been only one case of pump-and-run, according to Hohn. He says he has a patent pending for the Post-Pay system.

Mark Griffin, president of the Michigan Petroleum Association and Michigan Association of Convenience Stores, says he has spoken briefly with Paxson about Post-Pay and thinks it’s an interesting device that will help deter drive-offs.

“The last time we collected data on drive-offs was about five years ago when we conducted a survey of our membership,” Griffin said. “At that time, drive-offs were costing our members in the state of Michigan about $10 million annually. It’s not some Robin Hood type thing; drive-offs are a crime,” he said.

Griffin said drive-offs tend to increase whenever the price of gas spikes. “When it does, that tends to bring out the criminal element. Also, the police are not always going to respond to a $10 or $20 drive-off—they’ve got more important fish to fry. So a lot of service stations have gone to a pre-pay format, sometimes with the encouragement of the local police departments,” he said.

Too Much Information
“My opinion is that if it isn’t broke, then don’t fix it,” said Lee Tien, senior staff attorney at the Electronic Frontier Foundation in San Francisco. “We’ve been paying cash for gas forever. Most people pay cash for gas,” he said.

“From a privacy standpoint, Post-Pay seems unnecessary,” Tien continued. “Imagine having to swipe your driver’s license when you entered the grocery store and you were going to pay cash. Right now the process appears to be optional, but it’s not clear that the service station indicates that.”

Tien notes whenever a credit card or driver’s license is swiped, customers give up bits of identity that are valuable to cyber-criminals, identity thieves, and marketers.

“The inventor says that the information is stored temporarily, but I don’t know how you verify that,” said Tien. “It may be true; then again, the information may get sent to another company that sells the accumulated data to law enforcement. In every transaction, you always end up trusting the other party not to abuse your information. In this simple transaction, I think they are requiring way too much personal information,” he said.

“As a privacy advocate, I love cash. People who love privacy should love cash even though it’s already considered an old technology and sometimes in order to use it we have to sacrifice convenience. Part of it is a market-driven function—the convenience of electronic transactions; the other part is political—they want to attach an identity to every transaction. The politics of it isn’t very attractive,” he said.

Potential for Abuse
John Stephenson, director of the Telecommunications and Information Technology Task Force at the American Legislative Exchange Council, says although the system involves the possibility for abuse, it leaves the choice up to the individual.

“Post-pay is one of three options people have when they buy gas,” Stephenson said. “They can pay by credit card, prepay with cash, or use Post-Pay. The pump has your personal info to prevent theft. This is no different than when using a credit card,” he said.

“The system is now only in two stations,” Stephenson continued, “but time will tell if there are going to be abuses. Yes, there is always a concern that people’s personal information will be stolen, but people need to remain vigilant and protect their data. Although the data is supposed to be stored only temporarily, it’s possible the data could be compromised. But in a free market, we have choices in the economy,” he said.

In the future, use of credit cards, smart phones, and credit card scanners will become even more secure and convenient, but barring something revolutionary, Stephenson does not see businesses moving away from cash altogether.

“Collecting the data is not the problem. It’s how it’s used that could be problematic. In this case, it is being used to prevent gas theft rather than for marketing companies to try and sell me something or for governments to track our movements,” he said.

Kenneth Artz ([email protected]) writes from Dallas, Texas.