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Credit card games
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 have wondered why it ever makes sense for cards to be signed. If you sign a card and it is stolen, can they not forge your signature more rather than less easily? (Imagine signing into one of those signature-reading machines.) And if merchants were more rational, maybe the signature would carry no positive value in the first place.
Posted by Tyler Cowen on June 22, 2007 at 09:45 PM in Economics | Permalink
Comments
I was always under the impression that the signature is there to make the card a legal instrument rather than to deter theft.
Posted by: djg at Jun 22, 2007 9:58:12 PM
I have the opposite experience of you, Tyler. When I've forgotten to sign a credit card or passport, it usually goes unnoticed, but when someone has made a fuss they've only ever asked me to sign it. One time they also asked for an extra form of ID.
Posted by: Alex F at Jun 22, 2007 10:40:30 PM
As for those signature-reading machines, I'm not sure what their exact purpose is. For the last year or so I have never signed my "real" name on them... I've signed "PLEASE HELP ME", "THIS HAS BEEN STOLEN", "JIMI HENDRIX", and as many other creative things as I can come up with, and of course nothing has ever happened. So why do they make users sign them at all? I suppose it only matters in the event that a dispute arises.
Posted by: Brian at Jun 22, 2007 10:52:01 PM
Someone needs to read through this: http://www.zug.com/pranks/credit/
somewhat related, but mostly hilarious.
Posted by: Dan at Jun 22, 2007 10:57:21 PM
One other thing: can anyone actually write a signature in the tiny space provided? My usual signature is at least 4 or 5x bigger than the silly little strip.
Posted by: Foobarista at Jun 23, 2007 12:33:10 AM
I ALWAYS scribble one letter for my signature, thereby saving myself as well as the people behind me on line at least a few seconds of some of the most painful time known to consumers. I have never been "caught."
Posted by: Timothy at Jun 23, 2007 12:47:48 AM
This is one of many theatrics we endure when dealing with security. The people implementing these policies are, at best, good at taking instructions. When that works -- less frequent than we would hope -- they are left to make a decision. Heaven help us all.
You are a victim of "Security Theater" -- or, as Homeland Security would refer to to it, "Security Theatre".
Posted by: SheetWise at Jun 23, 2007 1:14:17 AM
I know a few people who write "PLEASE ASK FOR PHOTO ID" in the signature space. Not sure how often that works, i.e. how often the clerk asks the user of the card for ID. But if you're paranoid about your card being lost and used improperly, not a bad idea.
I don't understand why we have to sign credit card receipts. You already have a contract with the credit card company. I've been told it's used as a "reminder" to pay your bill, but that's too stupid to be the real reason a billion trees have to die every year to make all those signed credit card receipts.
Posted by: brucem at Jun 23, 2007 1:41:45 AM
I see where you’re coming from re: the signature. Generally speaking however, I’m appreciative of the very few cashiers that actually bother to request identification, verify my signature, etc. As somebody that a) possesses several credit cards, and b) does not commit credit card fraud, I presumably stand to benefit from these small actions.
Posted by: whit stevens at Jun 23, 2007 1:55:22 AM
-- Wouldn't a thief take more care to sign than would a lazy, careless card holder?
No, because most criminals are dumb. Your argument about not signing is silly. obviously the unsigned card is then signed by the thief, and then he doesn't have to forge your signature at all, since it's his signature. The argument, though, on the value of the signature, is correct: there's practically none.
No one forges signatures by actually worrying about matching signatures. First, signature machines don't capture anything that reports back on a fraudulent signature in real time. They serve as a deterrent for the one-off criminal who is afraid of signing, and they serve as evidence for a criminal case later in time when a suspect is caught. But nearly all credit card fraud is done at a different level--sets of stolen numbers are printed onto false cards.
Posted by: anonymous at Jun 23, 2007 2:17:09 AM
When I worked retail I always compared signatures and got thanked for one of those ask for ID cases by the card holder. For us them signing the recite made return fraud easier to control.
Posted by: T.W at Jun 23, 2007 2:33:37 AM
When I lived in Guatemala I had a checking account in a local bank. This was before ATMs, so when I wanted some quetzals I would write a check out to "al portador", walk it over to the bank and sign it in front of the teller. To determine whether the check was good or not, the teller would pull up the microfilm of my signature they had on file and compare it with the signature on the check. More than once, they refused to cash my check because the signatures didn't match! I even had one returned that I wrote to someone else.
I later learned that Guatemalans are taught to make their signature exactly the same way each time, for this very reason. I have no idea if this is still the case, but I thought it was completely stupid that every bank teller in the country was supposed to be a handwriting expert.
Posted by: Jan S. at Jun 23, 2007 5:17:36 AM
"I don't understand why we have to sign credit card receipts": Good Lord, are you fellows still doing it that way?
Posted by: dearieme at Jun 23, 2007 5:44:08 AM
Don't you have "Chip and Pin" in the States?
Posted by: tadhgin at Jun 23, 2007 8:14:32 AM
On the back of my credit card, I wrote "Ask for ID." I am only asked for ID about a 1/3 of the times I use it.
Posted by: David Culbertson at Jun 23, 2007 8:23:09 AM
dearime and tadhgin, in the US you are generally charged an extra fee for using a PIN w/ a credit or debit card. it's treated as an ATM transaction, which curiously never checks ID.
Posted by: DK at Jun 23, 2007 8:52:55 AM
The rules from Visa state that merchants *may not* ask for ID. The signature panel on the back is the signature agreeing to the terms of the issuers contract.
From the Card acceptance guidelines (PDF), page 29:
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.“See ID” Some customers write “See ID” or “Ask for ID” in the signature panel, thinking that this is a deterrent against fraud or forgery; that is, if their signature is not on the card, a fraudster will not be able to forge it. In reality, criminals don’t take the time to practice signatures: they use cards as quickly as possible after a theft and prior to the accounts being blocked. They are actually counting on you not to look at the back of the card and compare signatures—they may even have access to counterfeit identification with a signature in their own handwriting.
“See ID” or “Ask for ID” is not a valid substitute for a signature. The customer must sign the card in your presence, as stated above.
Traditionally, asking for ID was one form of discrimination used to make life miserable for minorities, usually rationalised as "how could this negro have a credit card, they must have stolen it"
I am pretty certain that there have been a number of lawsuits/attempted collections where the defendant successfully claimed that they didn't agree to anything.
Dearime and Tadhgin, in the US, very few places take "chip and pin." Since phone connectivity was cheap and readily available, our merchant system chose the route of online verification/authorization. Not all of Europe's phone companies had been privatized by the time the corresponding decision to turn to on-card authorization was made for the European markets.
Posted by: Tangurena at Jun 23, 2007 9:24:29 AM
Tanqurena,
Thanks for the quote. My cards have see i.d. on them. I can't see the point in having me sign the damn card too, although I would if someone was insipid enough to make me. But they never do. In fact I virtually never get anyone who bothers to compare signatures, nor even ask for i.d.
The lack of asking for i.d. bothers me. Signatures are usualyl scribbles that can be practiced at home and one would think are easy enough for the practiced thief to copy. But getting a picture i.d. that matches my credit card with its embedded picture (and name of course) seems near insurmountable to me.
However, as I mentioned and as no doubt most people have realized, most clerks don't even bother checking signatures nor asking for i.d. Maybe I simply don't make enough big purchases, and they check more often on big ticket items?
Posted by: happyjuggler0 at Jun 23, 2007 9:36:16 AM
Walmart now asks me for my zip code when I use my AMEX, which is an interesting, if minimal, check on my identity. Is it less likely for some kinds of thieves to know that bit of information?
One of the two Costco's I shop at--the inner city location--makes a point of checking my ID when I use my AMEX. This despite the fact that I use a membership card at the same time.
At the same time, I can use the same card without signature at most fast food restaurants.
Posted by: Thomas at Jun 23, 2007 10:21:15 AM
I always assumed the signature was in case of a dispute over the bill.
The card company could say, see you signed so it is a valid charge.
What I'm seeing at many stores is that they no longer ask for a signature for a purchase under $50 -- I guess they figured that is where the break even point on the clerks time was or that a thief would not bother with smaller purchases.
Posted by: spencer at Jun 23, 2007 10:31:35 AM
The credit card company imposes a penalty on the merchant in case of a dispute, but a dispute over whether the card was actually proffered by the account holder at the time of the purchase arises so seldom that so many millions of signatures would have to be checked carefully to avoid not getting paid on one purchase that the merchants rationally decide to violate the rules.
This is not to be confused with chargebacks for other reasons, when say the quality of the goods is at issue, not whether the purchase was legitimate at the time it was made.
-dk
Posted by: dick king at Jun 23, 2007 11:02:18 AM
It makes most sense to me that the signature would have a formal "performative" aspect -- a veneer of a legal contract. By signing, you say, "I hereby agree to the contract of this card." They could perform the same function by having you literally sign a contract and mail it back to them, and in fact, that would probably make more sense -- you agree to the terms before they give you the financial instrument. But since the whole business model of credit cards is to entrap people by encouraging them to make snap decisions without fully thinking out the long-term consequences, just signing the back makes more sense from their perspective.
Posted by: Adam Kotsko at Jun 23, 2007 12:40:35 PM
Anyone who has ever worked as a cashier knows that exactly half your customers will freak out if you ask them for ID (me a crook?), and half will blow their tops if you don't (you're not protecting me).
Posted by: jonjon at Jun 23, 2007 1:25:24 PM
I know that you can have your picture placed on the front of your credit or debit card, so presumably the issuer could put your signature on as well.
Posted by: Tim at Jun 23, 2007 1:41:16 PM
The other reason for asking for a signature on the charge slip (not the card itself), is so the merchant gets a better rate from the company that processes their electronic transactions.
This processor has multiple rates based on all sorts of criteria, but there are two major categories which are "Card Present" and "Card Not Present". Swiping a card shows that the card was physically in the store at the time of the sale and, if the majority of cards are swiped, the merchant qualifies for the the lower rate. The reason being that in case of a dispute the credit card company can say "This card was swiped through a terminal at XXXX address at 12:15 PM on May 4th".
If the customer continues to dispute the charge, then the merchant can present the signed sales slip as evidence to avoid the chargeback.
If card numbers are punched in manually or entered through an ecommerce site, these steps are missing, and it is much easier for the customer to successfully dispute the charge. To make up for this, the merchant is charged a higher rate to offset the expected disputes.
The reason that a fast food place doesn't make you sign your slip is because the effort to find a signed slip for a $5-$10 transaction costs more than just eating the chargeback.
Posted by: MM at Jun 23, 2007 2:21:58 PM
My Citibank card has my photo, and a digitized version of my signature, right on the front of the card. It was once refused when my haircut changed dramatically from the photo version.
Posted by: o at Jun 23, 2007 3:44:02 PM
...the gazillions of valid internet & telephone credit-card purchases testify strongly that NO signatures of any kind are NECESSARY to successfully use that convenient method of market exchange on a routine basis.
Posted by: Lekios at Jun 23, 2007 6:21:50 PM
---I know that you can have your picture placed on the front of your credit or debit card, so presumably the issuer could put your signature on as well.
Citibank tried to make everyone have both their picture and signature on the front of the card. The customers rebelled, screaming that it made them more likely victims of fraud, since now people would know their picture and signature.
I kid you not.
Posted by: anonymous at Jun 23, 2007 11:15:13 PM
I'm with Lekios and Tyler on this one. The signature, both on the card and on the receipt, is useless. PINs are the way to go.
Posted by: Vincent Clement at Jun 24, 2007 2:51:24 AM
I've always felt the same way, that a card thief would make sure to sign the card, to have an identical signature.
Posted by: indebt at Jun 24, 2007 3:04:00 AM
a pretty good way is to sign "Check ID", similar to what happyjuggler does. About 1 in 6 or 7 seem to actually check another ID of mine. Its better than 0 in 6 or 7.
Posted by: mickslam at Jun 24, 2007 9:22:57 AM
If you don't sign your credit card and it gets stolen, since the thief's signature is not going to be the same as yours, you are not responsible for the payments. If yo u sign your card, then it becomes all about how good the thief is going to be in matching your signature.
Not signing the credit card is better in terms of security but it is more hassle because vendors are supposed to check for ID.
Posted by: Mehdi Y at Jun 24, 2007 11:24:40 AM
A couple of posters asked about "chip and pin" security (users enter a PIN after the card is swiped). Sadly, this isn't used in the US for anything but debit card transactions, whereas in the UK this method is used for credit card transactions as well. There are substantial security benefits to using chip and pin. In the IT security world, there are typically three domains for successfully identifying someone: "who you are," "what you have," and "what you know." An average US credit card transaction verifies only one of these: "what you have," which is obviously the card itself. Asking for and ID--or better yet--putting the card holder's photo on the card takes care of "who you are." Finally, using a PIN code would take care of the "what you know" question. I wonder how much doing these 2 simple things would cut down on US credit card fraud? That said, chip and pin isn't a magic bullet: Chip & PIN relay attacks The war on credit card fraud is one of constant escalation by parties on both sides.
Posted by: james stevenson at Jun 24, 2007 11:31:24 AM
I put "* please see ID *" on the back of my credit cards. I'd estimate that my ID gets checked approximately 10% of the time, excluding those stores which make it a policy to ask for everybody's ID.
I would estimate that of the times when my ID is checked, approximately 5% of the time is there an even cursory attempt to match my face to the photo on the ID (the vast majority of clerks don't so much as glance at me while holding the ID). I mean, I guess they might be checking race and gender, but honestly I doubt it.
I think that any white male who stole my wallet (and hence got both my credit card and my driver's license) would have no problem using my card.
But, eh. I'd just cancel the card, and the company probably wouldn't even charge me if the guy got a few purchases in. No harm, no foul.
Posted by: Michael B Sullivan at Jun 25, 2007 1:54:49 PM
I don't see the point of writing "check ID" on the back. These days, many places don't even ever physically handle the card. All the grocery stores around here, as well as stores like Target, have the scanners mounted on the counters so that the customers swipe the card.
Posted by: Xellos at Jun 25, 2007 2:59:29 PM
Take a peek from the thief's perspective - if they are forced to sign the card, the street value of the card just went down, because anyone they try to sell the card to for cash won't have a matching signature (yes, there is a black market for stolen credit cards - mostly card stolen from the mail, because the victim doesn't know it's been stolen for quite some time.
If you put "See ID" on the back, you should ALSO put your signature. Use a fine tip Sharpie - they last longer before wearing off. ALWAYS say "thank you for checking the signature" (or) "thank you for asking for ID" to the clerk, waiter, etc... Some businesses take this very seriously, with employees fired on the spot at some locations if their management catch them not checking (or if the customer informs management). IF YOU CLAIM FRAUDULENT CHARGES to your credit card company and the slip has no signature, the merchant is stuck paying for it. If the signature is DIFFERENT from yours, the CARD COMPANY is stuck paying for it. If a stolen card is recovered by the police after being used fraudulently, YOU will probably be stuck paying for the stolen charges. If it was originally resolved with the bank paying, and then your old card floats up a year or two later with no signature on it, you are likely to receive a bill (enforced with threats to your credit report).
Regardless of what you think of the practice, JUST SIGN YOUR CARD. It does prevent some theft and covers your but. Putting "See ID" in addition to a signature is a pretty good idea. Although it just seems to kill some folks, it really is a polite and helpful thing to actually communicate with the person accepting the card, giving thanks or critique as occasion dictates.
Most of the places that don't require a signature (fast-food etc...) have a limit, such as "no signature required on purchases totaling less than $25 dollars. Merchants who have stolen charges being made frequently can have their merchant accounts (their credit card machine) revoked, or end up with really high rates (like 10% instead of 4%).
A much more interesting discussion would be how much Credit Card companies indirectly PROFIT from fraud and theft committed with their cards or perpetrated on their cardholders by thieves- THAT could make some decent news stories. When you buy something with a card, the bank accrues interest on those charges (through debt investments like CDs and bonds) and on the 3% or so they charge the merchant until disputes are resolved. When the charges are finally resolved, those amounts are written off. Plus, a fairly large amount of theft is never actually reported by cardholders, either because they don't notice the other charges on their statement, or because, for whatever reason, they are unwilling to file a report with their local police department. When somebody steals your card number online, or if someone steals your wallet, the card companies come out ahead.
Does that make you think twice about identity theft and whether your personal security is really being guarded by your bank?
Posted by: CBH at Jun 27, 2007 5:04:11 PM
Take a peek from the thief's perspective - if they are forced to sign the card, the street value of the card just went down, because anyone they try to sell the card to for cash won't have a matching signature (yes, there is a black market for stolen credit cards - mostly card stolen from the mail, because the victim doesn't know it's been stolen for quite some time.
If you put "See ID" on the back, you should ALSO put your signature. Use a fine tip Sharpie - they last longer before wearing off. ALWAYS say "thank you for checking the signature" (or) "thank you for asking for ID" to the clerk, waiter, etc... Some businesses take this very seriously, with employees fired on the spot at some locations if their management catch them not checking (or if the customer informs management). IF YOU CLAIM FRAUDULENT CHARGES to your credit card company and the slip has no signature, the merchant is stuck paying for it. If the signature is DIFFERENT from yours, the CARD COMPANY is stuck paying for it. If a stolen card is recovered by the police after being used fraudulently, YOU will probably be stuck paying for the stolen charges. If it was originally resolved with the bank paying, and then your old card floats up a year or two later with no signature on it, you are likely to receive a bill (enforced with threats to your credit report).
Regardless of what you think of the practice, JUST SIGN YOUR CARD. It does prevent some theft and covers your but. Putting "See ID" in addition to a signature is a pretty good idea. Although it just seems to kill some folks, it really is a polite and helpful thing to actually communicate with the person accepting the card, giving thanks or critique as occasion dictates.
Most of the places that don't require a signature (fast-food etc...) have a limit, such as "no signature required on purchases totaling less than $25 dollars. Merchants who have stolen charges being made frequently can have their merchant accounts (their credit card machine) revoked, or end up with really high rates (like 10% instead of 4%).
A much more interesting discussion would be how much Credit Card companies indirectly PROFIT from fraud and theft committed with their cards or perpetrated on their cardholders by thieves- THAT could make some decent news stories. When you buy something with a card, the bank accrues interest on those charges (through debt investments like CDs and bonds) and on the 3% or so they charge the merchant until disputes are resolved. When the charges are finally resolved, those amounts are written off. Plus, a fairly large amount of theft is never actually reported by cardholders, either because they don't notice the other charges on their statement, or because, for whatever reason, they are unwilling to file a report with their local police department. When somebody steals your card number online, or if someone steals your wallet, the card companies come out ahead.
Does that make you think twice about identity theft and whether your personal security is really being guarded by your bank?
Posted by: CBH at Jun 27, 2007 5:04:31 PM
