You only have to do it if there's a possibility of fraud. Most people do not have to do it.
In this case, you ARE using a credit card that isn't yours. Are you really surprised? If your friend is letting you buy stuff with his credit card, then he shouldn't mind letting you fax a copy of it do Dreamhost. Nice story, though.
Scanning and faxing a credit card is no harder than searching a forum and seeing that there are already several open threads on the subject.
This is why I say the fax thing is GREAT. If this is the type of customer it keeps away, that's an even bigger plus than preventing fraud.
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