July 11, 2003

Credit Card Signatures

Category: Wildcard

Your Local Shop: In the UK, merchants actually take time to examine your signature when you pay by credit card. This is fairly reassuring, as they never so much as glance in the United States.

But even so, signatures are not that hard to forge. My question is: Why in the world is it not standard practice to ask for ID? Why don't credit cards have your photo on them? Since the credit card companies end up footing the bill when fraud is committed, it obviously doesn't affect me personally, but if baffles me that the card companies don't make any serious effort to assure legal use of their cards.

For a hilarious depiction of just how lax signature checking is in the US, read this story.

Posted by Nick at July 11, 2003 10:54 AM | TrackBack


Credit card companies recommend that retailers check signatures against cards, and vendors are authorized to reject an unverifiable transaction and even confiscate the card, but it is common practice for stores to only match signatures on purchases over $50, which is why if your card has ever been stolen you'll see many store purchases under that threshold. Of course, on-line shopping has provided a highly effective method of circumventing the validation process, although the methodology applied here in Australia, wherein the PIN is issued separately from the card, can make things a little more difficult for thieves. Citibank, by the way, does offer cards that include a photo, and may even now require it for new card issues. Because the customer's liability is so small, if card theft is reported within a certain period of time, there doesn't appear to be much consumer advocacy for increased protection. The "secret" security code on the back of the card isn't much help, but it might make you feel better buying on the internet.

Posted by: Greg on July 21, 2003 11:59 PM

Bank of America also has a photo and a signature on the front of the card. The signature is actually part of the card, not something you sign when you get the card, which means someone can't just filch the card out of the mail and sign it. Very nice.

The security code on the back of the card is there to allow merchants to prove to their bank that they sold to someone actually in possession of the card. This way someone can't just use a statement they dug out of the trash to make mail-order purchases with it. There are additional secret digits found only on the magnetic strip which let merchants prove to the bank that they actually saw the card and swiped it through the reader. Neither proves that the card wasn't stolen, of course, but the secret digits do put the merchant into a lower-risk category for which the per-transaction fees are lower.

I would imagine the vast majority of credit card fraud is perpetrated by mail-order, so these measures are reasonable.

Posted by: Jerry Kindall on July 30, 2003 07:52 PM

In France we have not such problems from 10 years. The card microprocessor is abble to dialog with a card reader where we type our 4 numbers secret pin code. The lack of security is due to the magnetic tape use for transactions outside of France. Banking informations are easy to read on the magnetic tape. The other lack of security is for paiement on line on Internet because there is no card reader on the computers. The card with processor will be extended to all Europe in 2005.

Posted by: Laurent Dane on August 1, 2003 09:11 AM

Why not doing like in France for instance, using the 4-digit code instead of the signature, you're the only one to know it, you don't have to proove who you are, it is quicker than the British out-of-date system (believe me !). Most of all, you put your card yourself in the machine (no security problem like the shop keeper making a copy of the magnetic stripe of your card).

Posted by: Lhermitte on August 1, 2003 10:16 AM

PINs are very nice, and it's of some help here in Australia that they are issued by the bank, thereby eliminating the problem of customers using a meaningful combination of digits that might be guessed by someone with sufficient information - birthdays, for example. However, a nice little scam that occurred last year had someone attaching a device to the front of ATMs, just below the slot for the card, which read the magnetic strip and provided the details necessary to code a copy, then used to extract cash. Although you'd think this would be noticed pretty quick, it wasn't, and a fair number of people got hit. I've also experienced ATM fraud from a source inside the issuing bank, but that would be pretty rare.

Posted by: Greg on August 5, 2003 07:29 AM

After being hit on a few occassions myself, I quite frankly beleive that the banks, the insurers and the crooks, are all in on it. If the credit banksnever have any fraud no need for the insurers to be in business with them. It's like better policing, if the cops arrest all the criminals, the next day they will be out of a job.

Posted by: shawn on August 14, 2003 04:30 PM

People are always concerned that their credit info will be stolen on the internet.. the real crime happens when you give your card to a 17 year old in a restaurant or ad radio shack and they quickly run your card over a piece of c arbon paper!

Posted by: Auburn Real Estate on June 7, 2004 07:57 AM


Posted by: link- on August 3, 2004 06:55 AM

what happens when you type in the correct security code and is still is showing it is not correct?

Posted by: tony on September 16, 2004 05:54 AM

A friend of mine in Atlanta tried to get around all this by writing "Ask me for I.D." rather than signing it.

He has been asked for I.D. perhaps a quarter of the times that he has used this card, and has even had a clerk, laugh, tell him what a great idea that is, and then run the card through without requesting further identification.

Posted by: Kraeg on September 24, 2004 05:34 AM
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