Contrarianism on credit card signatures

| Comments (6) | Misc
Matthew Yglesias and Tyler Cowen complain about stores which ask you for ID if you haven't signed your credit card:
I usually forget to sign the back of my credit cards. Or, with one of my cards -- the one I use most frequently -- the signature rubs off quickly. Every now and then the card will be rejected because it doesn't have my signature on it. Or they will require ID.

I then offer to sign the card, but they never accept this possibility. Hrrmph.

Could not a thief have signed a previously unsigned card before using it? In fact I would expect precisely that behavior from a thief. Wouldn't a thief take more care to sign than would a lazy, careless card holder? Upon seeing the unsigned credit card, their estimate of my honesty should go up not down (well, that's not quite a stable equilibrium...).

I've often complained about the same thing, though in my experience merchants do accept you signing the cards in front of them—though the clerk tends to look annoyed. However, let's consider for a moment the possibility that this isn't totally pointless and ask what the reason might be. First, we have to assume that the signature is of any use at all, that is that merchants do check signatures against the card and that the attackers aren't good at forging signatures. I'm not sure that either of these is true, but let's assume that they are. If so, Visa has an incentive to force you to sign your card immediately to avoid situations in which your unsigned card falls into the hands of criminals, who then sign it. Since they can't send a CSR out with your card to make you sign, having your card denied if it's not signed is probably the best they can do.

This sort of matches up with Visa's card acceptance policy, which actually requires the customer to sign the card in the merchant's presence (thanks to Tangurena on MR for pointing to this):

While checking card security features, you should also make sure that the card is signed. An unsigned card is considered invalid and should not be accepted. If a customer gives you an unsigned card, the following steps must be taken:
  • Check the cardholder's ID. Ask the cardholder for some form of official government identification, such as a driver's license or passport. Where permissible by law, the ID serial number and expiration date should be written on the sales receipt before you complete the transaction.
  • Ask the customer to sign the card. The card should be signed within your full view, and the signature checked against the customer's signature on the ID. A refusal to sign means the card is still invalid and cannot be accepted. Ask the customer for another signed Visa card.
  • Compare the signature on the card to the signature on the ID.
If the cardholder refuses to sign the card, and you accept it, you may end up with financial liability for the transaction should the cardholder later dispute the charge.

Of course, if this theory is true, then it just makes the question of why they don't make the strips so that the signature doesn't rub off even more puzzling.

6 Comments

I have an idea:

The credit card companies should require that the cardholder mail/fax in a copy of their signaure and then they can print it on the card.

This would solve many of the problems outlined above:
- The careless customer wouldn't have to remember to sign the card
- There would never be any unsigned cards to be signed by theives
- It could be printed so the signature wouldn't wear off

I never had anyone asked for my ID when using a credit card when I lived in Texas, but now that I am in Florida, they always ask for an ID. Also, at some gas pumps here you have to put in your ZIP code, before you can actually use a credit card at the pump.

The credit card company already has your signature on file. It comes from your application if there isn't a separate signature card at your bank.

Actually, the main reason for this policy is an old chargeback scam, where the person to whom the card was legitimately issues rips off the merchant. It worked like this:

  • There is a crook who usually signs his name with squiggles, not loops.
  • The crook gets a VISA card, but doesn't sign it.
  • He buys something expensive with his new unsigned VISA. He signs the merchant's slip with a loopy signature.
  • Later, at home, the crook signs his VISA card with his normal, squiggly signature.
  • When the VISA bill comes, the crook denies that he made the purchase. During the chargeback process, the cardholder's own squiggly signature on the card and in the VISA records is compared to the evidently forged loopy signature on the merchant's slip.
  • The merchant bears the cost of the item bought with the "forged" signature.

Wouldn't hurt if there was room on the sig line to actually put something even close to my signature. And those digi-pad machines are awful, esp for a lefty. I often just sign with a big X ...

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This being my specialty:

ekr--card strips usually last a long time under normal usage--2+ years, though for some heavy users it can be much shorter than this. Another issue with loss of the signature panel is the loss of the Card Verification Number (also called CVC2, CVV2, CID) which can hold you up on many internet stores if you don't have it.

Mike C--the cost of pre-signed cards would be prohibitive for most card issuers. Perhaps on the Amex Black?

Debt Free--Not all card types require this, and in some cases (in no means all) you can avoid the request by pressing the "clear" or "cancel" button (I do this at KMart regularly on my ATM card). However, in many areas with high drive off rates, they added the ZIP requirement to cut back on fraud use of cards. Actually, many banks use this as an additional check for "testers", who try obtained cards on gas pumps to verify that they are still active, so that they can use them elsewhere. I've filled up my car, then my wife's on the same day in different towns and had my account blocked for a fraud check until I called in.

Dom--Many cards today do not require signatures as part of the application process, including channels such as online and phone applications. There is no signature on file for these accounts.

Also, the scam you pointed out makes it unlikely that the merchant eats the charge; if they swipe the card and get a mag strip read, and a signature, that information is proof against most fraud claim chargebacks, so the bank would eat it. The cardholder would have to produce the card with the different signature in order for the charge to be posted to the merchant, which is extremely unusual. Depending on the amount, the merchant can also press charges against the cardholder for the scam in that case (so the fraudster's best bet would be to just rip off the bank instead of trying to set up the merchant).

General--If the back of the card is found unsigned, or different from the cardholder's signature, the cardholder can be found liable for the fraud/loss, not the merchant or the bank (read your TOC with your cards).

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