Limit for No Signature Purchases Increases Again

You may have noticed recently merchants are allowing credit card or debit card purchases under $50 to be approved without a signature and in some cases without providing a receipt. I previously used my check card for most purchases but recently started using cash more often.

I went to the grocery store today and was shocked to learn that my debit card purchase which was under $50 did not require my signature. I looked puzzled and the cashier told me that I didn’t need to sign for purchases under $50. This left me feeling uncomfortable.

Merchants should post a sign in the stores informing consumers that purchases under $50 do not require a signature, include this in the consumer disclosure agreement and post it in an easily accessible section on their website.

Credit card and debit card companies feel that no-signature transactions speed up checkout and encourage consumers to make more purchases. However, this only put consumers at a higher risk for identity theft which could go undetected and cost a consumer from $50 up to thousands of dollars.

American Express has a No Signature program that allows certain merchants to process credit card transactions without a signature for purchases of $25 or less. HSBC has a Premier MasterCard with PayPass that uses Tap and Go technology with no signature required for purchase under $50. PayPass will work with Google Wallet and the Android application that makes your phone a wallet. Subway will begin accepting the MasterCard contactless payments at some of its locations by the end of the March 2012. For purchases under $50 no signature will be required. I discussed the contactless feature in my March 3, 2007 blog post, “Why You Shouldn’t Get a Contact Less Credit Card.

Merchants claims it meets customer needs but I disagree. My need is to use my credit card or debit card and feel safe knowing that my transaction is secure and I have proof that I made the transaction if the need arises in the future. Without a signature the process to investigate will take longer and the consumer suffers the most. Without a signature the cashier cannot verify the signature on the back of the card with the receipt signature. If a consumer loses their wallet or leaves their credit card or debit card at a store, transactions will add up quickly. Merchants claim that there has been no increase in fraud since using the no signature programs but I find that hard to believe. The FTC received over 1.3 million complaints regarding identity theft.

Chargebacks (money paid back to a consumer for a fraudulent charge) can cost a merchant up to $25 per transaction and for a $25 purchase a merchant barely breaks even. So to ensure merchants continue to make money the limit has been increased to $50. Here are 6 ways to protect yourself against No Signature programs:

1. Use cash more often.
2. Ask for a receipt.
3. Use a credit card or debit card for purchases over $50.
4. Verify your monthly statements and verify your account balances at least once a week.
5. Contact companies where you shop and express your opinion about their No Signature program.
6. Ask for a signature comparison if you are a victim of fraud.