Lately I haven't been asked for my signature on all my credit card purchases- why?

March 2, 2006 8:48 PM

Why do some merchants tell me I don't need to sign my credit card slip?

About a year ago I noticed at my (national chain) pharmacy that when making a purchase by credit card, I wasn't given a slip to sign. Upon asking, the cashier noted something like, "It's under $50, you don't need to sign." I didn't think much of it, but lately I've experienced this more frequently with smaller transactions at places like convenience stores and eateries.

I was under the impression that signing a credit card slip is verification that the cardholder accepts the charge and will pay the credit card company the stated amount.

When are merchants required to get signatures on credit card slips and when may they forgo the signature? What if there was a dispute in the case of a charge and no signature was given?

Also, did something change policy wise with credit card companies in the last year that is making this practice more prevalent?

posted by vurtlux to work & money (37 comments total)

The way I understand it is that, yes, your signature is verification that you accept the charge and will pay. But, for transactions under $50 (and usually for things like fast food and convenience store purchases), how many people are going to contest those charges? It's a chance the business takes, and I'd bet it works out fine. (Especially since your CC company is only going to let you get away with so many similar chargebacks.)
posted by CrayDrygu at 8:52 PM on March 2, 2006

Banks now give the merchant the option. Most cafes and coffeehouses I go to don't ask for me to sign anymore. Fast food is another place where signing isn't needed anymore. After all, you've been able to pay at the pump for gasoline for years without signing anything.

Because the card was swiped, I think that is all the merchant needs to prove the charge was legit.

Starbucks has a $20 limit, Walgreens has a $50 limit for signature-less.
posted by birdherder at 8:55 PM on March 2, 2006

Also, think about it. If you do a chargeback, the company probably won't dig up the slip and send it in to contest anyway, so why bother having you sign it?
posted by delmoi at 8:57 PM on March 2, 2006

Signing credit card reciepts really doesn't mean much, as proven by John Hargrave of Zug.
posted by fvox13 at 9:07 PM on March 2, 2006

As mentioned here (by me) chargebacks can cost a merchant up to $25 or more. If you request a chargeback, and the value is under $50, the merchant won't even bother. It'll cost them that much anyway, and they'll barely break even. Enjoy your free lunch, but as CrayDrygu points out, they won't let you keep up the pattern. They're not that stupid.

I much prefer not having to bother with a stupid signature. It's a waste of time that adds on seconds and trying to fumble a pen while getting your item and all of this that really doesn't matter to me anyway.
posted by disillusioned at 9:27 PM on March 2, 2006

As a comment, If someone stole my card and made a whole bunch of $49 (or less) transactions without signing before I had a chance to report it, I'd sure as hell be contesting it.

But as far as I know, this dosen't tend to happen in Australia anyway, so it means little to me. Seems a silly policy.
posted by Effigy2000 at 9:33 PM on March 2, 2006

Visa and MasterCard do not require signatures for transactions less than $25. (This is why automated parking garages often charge $24.)

Otherwise, the merchant is required to obtain a signature. But those signatures are only ever used if the charge is disputed. There is no gigantic filing cabinet filled with your transaction receipts at Visa World Headquarters.
posted by cribcage at 9:44 PM on March 2, 2006

If someone stole my card and made a whole bunch of $49 (or less) transactions without signing before I had a chance to report it, I'd sure as hell be contesting it.

In the states, you're not going to be liable for more than $50-$100, anyhow.
posted by waldo at 9:46 PM on March 2, 2006

I've noticed more places not requiring me to sign credit card slips as well (at first I thought they were confusing it for an ATM card), and it has only been happening in the last 6 months or so for me.

Then again, I make a lot of purchases at places like Best Buy that use those terrible digital stylus signature things, don't know if they'll be discontinuing those anytime soon... at least not for the average purchase which usually totals more than $50.
posted by robbie01 at 10:20 PM on March 2, 2006

Visa and MasterCard do not require signatures for transactions less than $25. [...] Otherwise, the merchant is required to obtain a signature.

Do gas stations have an exemption? Filling up now regularly costs me upwards of $30 and I just use my credit card at the pump, so I don't sign anything.

There is no gigantic filing cabinet filled with your transaction receipts at Visa World Headquarters.

When I last did credit card processing (which was admittedly almost 6 years ago), we (the merchant) were supposed to keep the receipts for a certain period of time so we could provide copies if there was a chargeback. So there's no gigantic filing cabinet at Visa, but the receipts are available.
posted by blm at 10:20 PM on March 2, 2006

I wonder when North America is going to switch over to chip and pin? Pretty much EVERYWHERE has it here in Ireland now, so nobody has to sign credit card slips anymore.
posted by antifuse at 2:15 AM on March 3, 2006

antifuse: I bet never. We have a lot of evangelical christians here who think that most new payment technologies are precursors to the mark of the beast.
posted by muddylemon at 4:33 AM on March 3, 2006

Thanks all. So far it seems like bigger merchants are taking the chance that a small charge won't be disputed because it'd cost them at least as much much to research or process the claim.

This is interesting because I work for a large retail business myself where we absolutely do require signatures on slips - and on the rare times we've had customers try to question charges, our accounting office has actually been able to pull up the signed CC slip and present a copy to the customer. Evidently not every retailer is willing to go to these lengths.

If anyone has more details about whether the limit is $25 or $50, or if Visa/MC policy has changed lately to allow this more, I'd be interested in hearing. Thanks!
posted by vurtlux at 5:30 AM on March 3, 2006

Signing credit card reciepts really doesn't mean much, as proven by John Hargrave of Zug.
posted by fvox13 at 9:07 PM PST on March 2 [!]

Thanks, fvox 13 - that was hilarious!
posted by Snerd at 5:41 AM on March 3, 2006

I wonder when North America is going to switch over to chip and pin?

Debit cards work this way. I use my bank card like this all the time. In the late 90's, we had a brief foray into eCash (here in NYC, and a couple of other places), where your bank card had a separate chip you could "put" money into and spend from. Never caught on, because people freaked out about it (for no good reason) and it never caught on with merchants.

A quick tip, for those of you who have bank cards that double as "credit" cards (even though it's still deducted from your account immediately): When asked, "debit or credit?", choose debit. It's significantly cheaper for the merchant.
posted by mkultra at 7:17 AM on March 3, 2006

When asked, "debit or credit?", choose debit. It's significantly cheaper for the merchant.

It's cheaper because consumer protections for debit transactions are looser (whether you'll be responsible for false charges is up to your bank, not the law.) And I suppose it's a little more fraud resistant, as signatures are easier to forge than pin codes.
posted by muddylemon at 8:23 AM on March 3, 2006

When asked "debit or credit," choose credit, because then you will have the advantage of additional consumer protections, as muddylemon said, and the money is NOT deducted from your account immediately (although it might no longer be available to you).
posted by grouse at 8:53 AM on March 3, 2006

Somebody please define and/or explain the "chargeback" mentioned repeatedly in this thread.

Perhaps I'm lacking in experience as I only use plastic a few times each month.
posted by Rash at 9:16 AM on March 3, 2006

chargeback
posted by grouse at 9:22 AM on March 3, 2006

Absolutely choose the "credit" option if you can...not only does the consumer then get the full benefit of credit card-level protection, but the amount "charged" doesn't appear to count against the daily withdrawal limit placed on debit card users.
posted by lhauser at 9:32 AM on March 3, 2006

Your debit card may well offer the same protections as credit cards do. Bank of America does. Check with your bank first.

Due to the cost difference, I will sometimes run transactions as debit to reward merchants I like and run them as credit if a merchant has pissed me off, but not enough to keep me from buying something from them.
posted by kindall at 10:52 AM on March 3, 2006

Some bank check cards simply do not function as debit cards (although they do function as ATM cards, oddly enough). I know my TCF Bank card doesn't. My conspiracy theory is that the bank gets kickbacks from Visa/MC for forcing their customers to do this.

(If shopping at a smaller merchant that you wish to support, using cash or debit is definitely preferable to using credit...)
posted by neckro23 at 10:58 AM on March 3, 2006

The thing that bugs me about Walgreens not requiring a signature is that there is *zero* verification that I am who I say I am. I don't like that someone can steal my credit card then go buy my prescriptions!
posted by radioamy at 11:26 AM on March 3, 2006

I don't know everything about this issue, but I do read Cards & Payments Magazine which used to be called Credit Card Monthly or something like that...

Heres the deal: I've never heard anything about Visa or MS NOT requiring a signature for any specific dollar amount. Of course with online purchases you can't sign anything regardless of how much it costs. This supposed allowance by either Visa or MS doesn't make any sense to me, and I've never heard of it, so I'm calling it bogus (or at least a simplified version of something more complicated than that.)

A few years ago, merchants realized that they could run credit cards thru debit card processors to save money. You see, for the most part, debit cards are less prone to be used in fraud than credit cards as to use a debit card you need to know the PIN. The PIN acts as a signature and "verifies" the person's identity in a more sure way than a signature can. Debit cards are less prone to fraud = debit cards are less expensive to run for the merchant. This is why many merchants ask you if your card is a debit card. If you say "yes it is," then they can run it as a debit card and save a few cents. Likewise, this is why some merchants will actually ask you for a debit card rather than a credit card.

Now, a few years later the merchants realized they could process credit cards (not just debit cards) via the debit card network and save money. They didn't even NEED the PIN to be be entered. Sure it would be safer if they got the PIN but most credit card users don't know their PIN or don't have a PIN.

At this point Visa and MS realized that they were getting screwed by the merchents (not really, but that's how they saw it) and decided to try to disallow them from doing this. Merchants sued (as I recall, Walmart and/or Target were the big guys standing up to Visa/MS) to keep their ability to run cards thru the debit system. As I recall, late last year the courts came down on the side of Visa/MS and now they DON'T HAVE TO allow merchants to easily run credit cards thru the debit card network. You see, the lawsuit wasn't so much about, "can the merchants do this?" rather it was, "does having a Visa/MS logo on your store front mean that Visa/MS HAS TO PROVIDE the merchant inside with means to run cards thru both the debit and the credit networks?" Since Visa/MS won (as I recall...) that logo on the door means that the merchant may only be able to run credit cards whereas before the lawsuit it meant that they could run both credit and debit cards.

Now, we arrive somewhere around today were Visa/MS want you and want merchants to run debit cards thru the debit networks and credit cards thru the credit network, while the merchants want to run everything thru the debit networks, while the consumer doesn't really care at all, and all the while there are lots of little companies popping up to help the merchants save money by running credit cards thru the debit card network. These little companies allow merchants to save money, however it isn't quite as easy as it used to be. Merchants used to only have to deal with one company, Visa/MS, now they have to deal with all these little guys. It probably isn't too much to deal with though, and they're saving money.

So, to get back to your question: They do it to save money. However unfortunately, that isn't the whole story...

In addition to wanting to save money by running the cards thru the debit card network, there are other issues. Mainly, they simply DON'T HAVE TO VERIFY SIGNATURES, or collect signatures or check ID or any of that. Yeah, it's a good idea so merchants don't get screwed, and yeah if you get screwed enough Visa/MS will come down on you and cut your account, but it still stands: YOU DON'T HAVE TO GET SIGNATURES if you don't want to. That's that.

It's a brave new world of credit card processing we are in right now. The traditional rules have all been broken. Seriously. There used to be hard and fast rules ("signatures not required on purchases less than $25...") when there was only one company do deal with (Visa/MS) but now that there are thousands of different processors you can use, there just aren't any rules left.
posted by pwb503 at 11:42 AM on March 3, 2006

Thanks pwb503. Very interesting. So I guess in addition to what others have said above, the sprawling debit/ credit card industry has become to sprawling that some merchants are just making up their own rules.

As far as online transactions and not having signatures, I think entering your billing address is supposed to serve as verification that you are you - but again what constitues a signature and when it is required does seem to be getting increasingly fuzzy.
posted by vurtlux at 12:00 PM on March 3, 2006

Only recently have I noticed gas stations asking for credit card billing Zip Code when filling up and using credit for the purchase. Helps a little against stolen credit cards, but not so much if the thief has your whole wallet which most likely contains your billing zip code.
posted by camworld at 12:13 PM on March 3, 2006

Thanks, grouse -- from the context I had a feeling Chargeback was related to Disputes (which I've never had, personally, hence my ignorance of the term).

I was also wondering if signatures aren't being requested because when the merchant's got your card in-hand, they can also read that 3-digit security code on the back.
posted by Rash at 2:31 PM on March 3, 2006

I wonder when North America is going to switch over to chip and pin? Pretty much EVERYWHERE has it here in Ireland now, so nobody has to sign credit card slips anymore.

Most places let you use your ATM card, with a PIN. No chip though, just a mag strip.
posted by delmoi at 3:27 PM on March 3, 2006

I was also wondering if signatures aren't being requested because when the merchant's got your card in-hand, they can also read that 3-digit security code on the back.

It's my understanding, in fact, that beyond the security code, there are also digits on the magstrip that can be used to prove that the merchant physically saw the card. This gives you basically four levels of risk:

1) Credit card number only (with expiration date): The bare minimum needed to process the transaction.

2) Credit card number and expiration date, with full or partial address. Proves that the person using the card at least knows where the cardholder lives.

3) Credit card number and expiration date, with security code: useful online, proves that the person using the account has at least seen the card (rather than coming into the account number through some other way).

4) Credit card number and expiration date, plus the secret number on the magstrip: proves that the actual card was presented. (Well, it could have been cloned, but that's probably a lot rarer than just getting it swiped.)

5) Credit card number and expiration date, plus the secret number on the magstrip, plus a zip code: proves the card was presented and that the person who presented it knows where the cardholder lives.

6) Credit card number and expiration date, plus the secret number on the magstrip and a signature: proves that the actual cardholder was present, theoretically, assuming the signature was checked by the merchant.

Here's the kicker. Credit card processors can charge different businesses different transaction fees for each of these types of transactions based on the level of risk. Merchants get to choose the tradeoff of convenience to their customers vs. cost to them.

People who have stolen a credit card usually set their sights somewhat higher than buying groceries and gas, so the extra risk (and associated cost) for such merchants in validating at level 5 over level 6 isn't that high. They may pay an extra penny or two per transaction by skipping the signature, but the convenience to their customers, which keeps the customer coming back, is enough to offset this. Possibly scanned card + zip code costs about the same as scanned card + signature, which would be why a lot of merchants are using it.

On the other hand, Best Buy would never do this, because whoever processes their credit cards is going to know they're a popular target for fraud and charge them out the wazoo if they get anything less than a signature.

Now this brings us to the question of why the credit card processor would care. Since they get paid per transaction, wouldn't they want as many transactions to go through as possible, regardless of whether they were valid or not? The reason for that is that chargebacks are very expensive; the fees are part of the system and are borne partly by the merchant and partly by the credit card processor. The reason for the fees is to make sure that merchants do their utmost to prevent fraud and to satisfy customers. And the reason for that is so that customers will have confidence in credit cards and use them as much as possible, which benefits the credit card processors, the credit card associations (VISA/MC/etc), and of course the merchants, who are only in this to begin with because it's been proven that credit card shoppers spend more money.
posted by kindall at 5:34 PM on March 3, 2006

When asked, "debit or credit?", choose debit. It's significantly cheaper for the merchant.

Yeah, but choosing "credit" is significantly cheaper for me, and I care more about my money than the merchant's. I pay a service fee for debit transactions, and none for credit.
posted by RikiTikiTavi at 10:40 PM on March 3, 2006

Yeah, but choosing "credit" is significantly cheaper for me, and I care more about my money than the merchant's. I pay a service fee for debit transactions, and none for credit.

Actually, that isn't true. It doesn't cost the customer a dime more or less to pick one over the other. It cost the merchant, but not the customer. HOWEVER if you have the choice to choose USING a debit card over a credit card, I'd suggest always picking a credit card as that usually does save you money and/or cover your ass better than using a debit card.

Cards processed thru creidt card networks = don't save you any money. Credit cards used in general rather than debit cards = usually your butt is covered more than if you used debit cards if things go sour.
posted by pwb503 at 10:55 PM on March 3, 2006

RikiTikiTavi: I pay a service fee for debit transactions, and none for credit.

pwb503: Actually, that isn't true.

How do you know what RikiTikiTavi's fee schedule is? I myself have been at banks that had accounts where they charged for POS transactions.
posted by grouse at 12:14 AM on March 4, 2006

How do you know what RikiTikiTavi's fee schedule is? I myself have been at banks that had accounts where they charged for POS transactions.

He's a customer, not a merchant. He doesn't have a fee schedule. I might have misread his comment but it sounded to me he was claiming that customers can always save money by having their cards run thru the debit network and that just isn't true. Maybe sometimes depending on the merchants fee schedulde, but not all the time.
posted by pwb503 at 9:34 AM on March 4, 2006

He doesn't have a fee schedule.

Yes, customers do too... At most banks POS transactions are free, but not all.

it sounded to me he was claiming that customers can always save money by having their cards run thru the debit network and that just isn't true

That's not how I read the comment. I read it to say that he can save money by doing that. Perhaps others. Certainly I can't.
posted by grouse at 10:17 AM on March 4, 2006

delmoi: Most places let you use your ATM card, with a PIN. No chip though, just a mag strip.

I'm aware of that - chip and pin is a system that does basically the same thing, but with credit cards.
posted by antifuse at 7:26 AM on March 7, 2006

chip and pin

"Chip and pin" is marketing speak for EMV implementation, a version of which was first deployed widely in France in the 1980s. The technology replaces the easily copied magnetic strip with a DES (or similar) protected chip that stores personal data and some of the challenge/response semaphores needed for transaction processing that can only be output on input of valid data such as a PIN, biometric match, and so on.

There are pluses and minuses to this new system.

The main practical benefit is that a signature is no longer required (unless you code for a "PIN bypass") and the PIN terminals can be brought to the customer at any table or point of sale (using wireless).

One small drawback is that the PIN is now being used in the open and is more vulnerable to snarfing. There are also issues with the level of wireless security being used on some terminals. The main drawback for customers is that because the PINs are considered absolute, unauthorised use is much harder to claim.

The name given by the banking industry for the switchover to "chip and pin" in the UK and Ireland is telling: "liability shift deadline". Retailers are no longer liable for claimed unauthorised purchases - the burden of proof is now on customers to "prove" that they did not enter that PIN or deputise another person to use it.

There's more of this sort of thing at "Chip and Spin".
posted by meehawl at 7:31 PM on August 20, 2006

Since this has been linked from a new thread I will address this:

I read it to say that he can save money by doing that. Perhaps others. Certainly I can't.

Some banks - Chevy Chase here in the DC area, for one - charge a service fee ($0.25 at CC) to use a debit card at a merchant but not to use the same card as a credit card. I presume this is to encourage the use of the card as a CC where they get a better percentage - often merchants have different discount rates for debit vs credit.

So it may be more accurate to say that using the same card as a debit card rather than as a credit card COSTS some consumers money, not that they SAVE money using it as a CC.
posted by phearlez at 11:13 AM on August 21, 2006