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Good Question: Why Do We Sign When We Charge?

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MINNEAPOLIS (WCCO) — We use plastic so often, retailers are trying to speed up the process of swiping, approving and signing.

So why is it that sometimes you have to sign and other times you don’t? And who is looking at those signatures?

“Why do we have to sign after we swipe?” asked Madeline Koch, a Minneapolis credit card-user.

“Every time I go to the store and they ask for my signature, I feel like it’s always different,” she said.

On Valentine’s Day at Kowalski’s in Woodbury, the credit card swipe machines were quite busy as men were getting last minute chocolates and flowers. If someone charged $25 or more to their credit card, they had to sign. Under $25 and there was no signature required.

“A lot of times it’s up to the merchant,” said Dan Amesbury, vice president and credit card product manager at St. Paul-based Bremer Bank.

“We will have a large volume of small dollar transactions that won’t ask for a signature just to keep the line moving,” he said.

Since 2003, Visa and Mastercard have allowed merchants to skip the signature for charges under $25 without being liable for chargebacks. According to their agreements with the banks and the credit networks, merchants do have to get signatures for other charges if they want to avoid liability for claims of fraud.

If you claim that you didn’t actually make a purchase that was charged to your card and you win your claim, the bank that issued the credit card is liable for paying for that fraud.

Some worried that skipping signatures for small charges would lead to an increase in fraud, but according to Amesbury, that hasn’t happened.

In fact, some retailers are now choosing to let you skip signing if it’s less than a $50 charge. They may be deciding that on an individual consumer basis, according to Amesbury.

“They keep records of you as a transactor. The more you spend there, the more comfortable they are that you don’t have to sign,” he said.

And when we do have to sign, “I’m wondering who’s paying attention, if anyone,” asked Koch.

“The merchant should always be checking on it. Signing the back of the card and signing the receipt was the first fraud protection in the industry,” said Amesbury.

The signature only comes into play if you challenge a charge and say you didn’t make the purchase. That’s when a retailer will go into the records and pull the signature. There’s no one at the banks or Visa or Discover checking the normal charges, or looking for signature patterns.

“With the billions of transactions going on, we don’t have enough people to manage that,” he said.

The United States is the only major nation using credit cards with magnetic stripes and requiring signatures. In Europe, cards have chips in them, and consumers have to enter a PIN number with each purchase.

Visa has announced that cards with chips will become standard by 2015, which will cut down on counterfeit credit cards, however there are no plans to require PIN use in the United States.

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