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To sign or not to sign?
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The issuers reply
What does the credit card industry have to say about it? Jay Hopkins, who represents Visa, says that merchants are supposed to verify signatures when accepting Visa's cards and that failing to do so could possibly make the merchant liable for fraudulent purchases.

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As for the idea that not signing your card makes you less vulnerable to ID theft, Hopkins says simply that the practice is "urban folklore. If you write 'See ID' in your signature panel, the card is not considered valid and merchants are not supposed to accept it. If cardholders want to write that with a marker on the back of the card, that's all fine and dandy, but they should still sign the card."

MasterCard's Web site instructs merchants that "the back of the card must be signed, and the signature should reasonably compare to the cardholder signature on the sales receipt. Check to be sure that it has not been taped over, mutilated, erased or altered in any suspicious manner. The word 'Void' on the signature panel indicates that the signature panel has been tampered with."

Fight that fraud
Despite increased credit card commerce, fraud rates have actually declined in the past 15 years. According to The Nilson Report, a credit card industry publication, losses from credit card fraud in 2004 amounted to about five cents for each $100 in transactions, versus a peak of 16 cents per $100 in 1992, a decline that happened against a backdrop of huge increases in transaction volumes.

Obviously, given the billions of dollars in credit card transactions conducted each day, six cents for every $100 in sales still adds up to a lot of fraud, which explains why the card companies focus on combating it through more technologically sophisticated techniques than old-fashioned signature verification.  

A common means of stealing credit card numbers is "skimming." In a skimming scheme, a crooked waiter or clerk swipes the card through an inexpensive device that records the information encoded on the magnetic strip. It can be stored for later use for purchases or sold to organized theft rings. Customers generally won't know their card number was stolen until they start seeing unusual charges on their bills.

Of greater concern, says Mason, is that "skimming can lead to identity theft. I'm much more concerned about that than credit card fraud."

To combat such schemes, the card companies use what they describe as a "layered" approach to combating fraud. The techniques include analyzing spending patterns to detect odd purchases that might indicate fraud, requiring holders to first enter their ZIP code as a top-level address-verification tool at point-of-purchase terminals, or asking online purchasers to input the unique three- or four-digit codes imprinted on cards that are separate from embossed account numbers.

These days you can check out by yourself in large retail stores and grocery chains. Self-service gas pumps with built-in card readers make it unnecessary for the purchasers to interact with the merchants in completing the transaction. And if the card never leaves the cardholder's hand, it should be more secure.

Credit card signature poll

James Ambrosio writes about business from Trenton, N.J.

Bankrate.com's corrections policy -- Posted: Sept. 4, 2006
 
 
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