Yes, we were told this too. As my husband travels abroad on business and has used a hire car, he was told a longtime ago he must have a plastic card driving licence or he would not be able to hire. This applies particularly to the States.
I see the issue being, if you have an photograph on the license there is no issue of you using someone else's licence to hire a car.
We were told this 9 years ago by our Turkish Estate Agent when we asked about hiring a car, that we must have a photo card licence, the car hire company they used was one of the bigger National agencies in Fethiye and they would only accept a plastic photo card licence.