Why Do We Still Have To Sign Credit Card Receipts?

Why do we still have to sign credit card receipts? That's our one-question interview today, and Bob Sullivan of MSNBC.com's Red Tape Chronicles blog has the answer.

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MIKE PESCA, host:

I'm just going to keep Rambling here with a question. Can you buy anything online these days and have to sign the receipt? Because you know, you go online. You go to, let's say, eBay, or you go to your Amazon, they don't ask for a credit card. And when you go to the gas station, your Exxons, your Mobils, your ExxonMobils, they don't ask for you to sign the receipt. And a lot of the time, when you buy something at Chipotle or Starbucks, they don't ask you to sign the receipt.

But whenever you go to a restaurant, you have to sign the receipt. And sometimes, you go to a play like the Gap or the Rite Aid, and they have those electronic receipt signers that never seem to actually be a real reflection on your signature, with that weirdo stylus pen. So, this is time for another BPP One Question Interview. I, of course, reserve the right to ask follow-up questions. Mr. Bob Sullivan writes the msnbc.com blog, Red Tape Chronicles. He knows the answer. Hi, Bob.

Mr. BOB SULLIVAN (Blogger, Red Tape Chronicles): Hi, good morning.

PESCA: Good morning, good morning to you. I understand you have the answer to our question, so it's a very good morning for me. Why do you still have to sign some credit-card receipts?

Mr. SULLIVAN: Well, the signing might seem like it's for your benefit, like somehow it's a security device that's going to protect you, but it's not. It has nothing to do with you. It has everything to do with who's liable if there is ultimately fraud, if someone else is using your card. It goes like this. If the store can produce a signed receipt, and when the bank says, this is a fraudulent charge, then the bank will have to turn around and eat the cost. But if there is no signed receipt, then the store has to eat the cost.

Now, this dates back to the very beginnings of being able to use credit cards on the phone, and obviously, there was no signature for doing things like buying concert tickets. And those transactions are called card-not-present transactions. And in a card-not-present transaction, the merchant is responsible and will have to pay the cost. Now, what happened a few years ago is companies like Starbucks decided it was not worth keeping track of all these little pieces of paper so that they wouldn't have to pay for a five-dollar fraudulent charge for a latte. So, little by little, companies have backed off requiring those signatures for smaller items, but you're always going to have to sign for big items.

PESCA: Well, what about the gas stations? Now that gas is at 100 bucks or so, are they rethinking that?

Mr. SULLIVAN: Those are big items. You know, it's just so efficient for the gas stations to not have to have somebody run out there with a little clipboard and have you sign the receipt. They're willing to eat the fraud because it's all a matter of percentages.

PESCA: Yeah. Then again, if you ever had your credit card stolen, pretty much the first place they use it is a gas station.

Mr. SULLIVAN: That's the best place, if you're a criminal, to test, to make sure that the card works and you won't have to actually show who you are.

PESCA: It's like the perfectly calculated service for criminals. You get to test your card and get a free tank of gas. And so, what about the fact that so often in a lot of the retail establishments, they have a little electronic counter - and it seems, like, never to accurately record your signature, or cut off in between - does the fact that sometimes the signature doesn't even actually look like your signature, does that matter at all?

Mr. SULLIVAN: It doesn't. Remember, this is really just an accounting game. And as long as they can produce something that shows they have a signature, that they made an effort to verify the authenticity of the cardholder, they can push the expense back at the bank. So, those electronic-signature readers, which, as you point out, do virtually nothing to prove that that's really you with the card, all they're doing is saying, bank, this is your problem.

PESCA: All right. So, I'll be signing all my receipts "Bob Sullivan." Thank you.

(Soundbite of laughter)

PESCA: Bob Sullivan writes the msnbc.com blog, Red Tape Chronicles. He knows our answers. Thank you, Bob.

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