Credit cards and their rules

July 11, 2008

There is a post at The Consumerist today talking about 10 things you might not know about your credit cards.  The number one thing on the post is that a card is not valid unless it’s signed.  Even if you write SEE ID or CHECK ID on the back of the card, it’s not valid until it’s actually signed.  They say that merchants can and will refuse the transaction until the card is signed and the signature is checked against a government-issued ID.

Now, I have SEE ID written on the backs of all my cards in big black Sharpie letters.  Quite a few people say that this is no protection against fraud and will actually create more problems when a merchant refuses the transaction without a signature.  I, however, disagree.

First off, I have never in my life had a transaction refused because of a lack of a signature on the card.  I would say 1 out of 3 merchants actually check my ID after seeing the note on the back of the card, and after they check the ID, they don’t refuse the transaction.  So the whole argument that writing SEE ID on the back will result in headaches when a merchant refuses the transaction is bogus.

Second, criminals don’t want to hold on to your credit card after they steal it.  Most criminals will steal the card, go in to a store, charge as much as they can, then dump the card within 24 hours.  This is how they operate.  They know that the card will be useless as soon as it’s reported stolen.  They also know that if they are caught with the card in their possession, it’s much worse than if they don’t have it, just like it’s worse being caught with the smoking gun in your hand than it would be if you were caught after you threw the gun in the river.  So credit card thieves rely on speed to pull off their crimes.  They want to get in to a store as quickly as possible, charge up the card, and get out.  They may hit a few stores charging a smaller amount at each store so as not to raise much suspicion.  Now, if a card has a signature on the back, the criminals have an easier time.  They can sign the receipt with whatever they want.  Very few merchants actually compare the signatures and even if they do, are they handwriting experts who are going to subject the signature to close scrutiny?  No.  Most merchants, if they do check the signatures, take a quick 1-second look and then put the receipt into their drawer and say “Have a nice day!”

However, if the card says SEE ID on the back instead of having a signature, criminals have to be much more careful.  The criminal might get lucky and get a merchant that doesn’t check.  As I said, 2 out 3 merchants (in my experience) don’t check.  But how does the criminal know that he’s going to get one of those guys?  He or she could be unlucky and get one of the clerks who checks.  And now that the clerk checks, the criminal has to either show ID or risk getting a Code 10 call (see number 9 in the Consumerist list), which could result in police being called.  Also, according to Visa’s own merchant agreement rules, if a card is not signed or has a SEE ID on the back, the merchant must get a government-issued ID and get the card signed in their presence, then compare the signatures on the government ID and the card.  This is more scrutiny than criminals want.  All of this means that criminals are probably less likely to want to use my cards in the store as it could mean more scrutiny than if the card was simply signed.

Now, you might be saying that criminals could use the card online, and I agree.  No signatures or face-to-face interaction is required.  However, as I stated above, card thieves rely on speed to get away with their crimes.  Ordering stuff online takes time and requires a shipping address.  Even if the shipping address is some bogus empty house, chances are good that the empty house will be located near the criminal’s home, which narrows down any searches police might do.  Plus, there are fewer chances of the criminal getting their ill-gotten wares, because as soon as the card is reported as stolen, it’s blocked.  If a card thief has ordered stuff online, chances are the transaction will be caught in time.

So, card thieves would prefer to do their business in the store because it means they can turn their stolen card into merchandise in a very short time and they can then ditch the card quickly.  They would prefer not to use it online and they would prefer to avoid any scrutiny of the card.  If a card is signed, it’s an easy in-and-out situation where all the criminal has to do is sign the receipt with something that even remotely matches your signature and they get their TV or whatever they’re buying.  If the card says SEE ID, there is a greater chance of a merchant requesting to see ID.  If ID is refused, there is a greater suspicion aroused and it could result in the transaction being refused, the credit card company being called, and/or police being called.

So will writing SEE ID on the back of my card prevent fraud?  Absolutely not.  I don’t, for an instant, delude myself into thinking it will.  However, do I think it will make it more difficult for a card thief to do anything with my card?  Yes, I honestly do.

Now, if anyone out there has any information that refutes what I’ve said here, I’d love to hear it.  If you don’t think SEE ID is going to stop anything, let me know why.  I honestly want to know if I’m in the wrong here.



  1. If you want full liability for all fraud if your cards are stolen, continue to not sign your card.

    Your cardholder agreement with the credit card issuer requires you to sign your card. If your card is even stolen and turned into the credit card company (store clerks receive a $50 reward for recovering and turning in a stolen card), they will examine your card. When they see that you did not sign your card, they will be informing you that you are responsible for all fraud. There is also the possibility that merchants will not be paid for the transactions and your bank will let you off. The merchant is not supposed to accept an unsigned card. You, as a cardholder, have been instructed by your bank to sign the card. A bank teller or customer service rep who is not trained may tell you differently, but I promise you that when the fraud happens, you will be told everything I just said above.

  2. @thelowpriceleader –

    That’s interesting. I honestly didn’t know about the fraud liability. If that is true, then I guess I’ll start signing my cards (and I’ll also put the SEE ID on there as well, just in case). Thanks for the info!

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