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.

Credit Card Purchases Under $25 and Risks

You may have noticed the increasing trend for merchants to allow credit card purchases under $25 to be approved without a signature and in some cases without providing a receipt. When this first happened to me I asked to sign the receipt and was told that my signature was not required which bothered me greatly. I feel merchants should post a sign informing consumers that purchases under $25 do not require a signature and include this in the consumer disclosure agreement.

In July 2010 Visa will increase usage of its No Signature Required program which began in 2003 to 98% of merchants because they feel it will offer merchants more payment options. Some of the retailers included are: department stores, book stores, hair salons, drug stores, electronic stores, car washes, sporting goods stores, parking lots and garages, fast food restaurants, movie theaters, restaurants, dry cleaners, gas stations, taxicabs and more.

MasterCard has a similar program where no signature is required and a receipt is optional for transactions between $15 to $50 depending on the merchant. MasterCard also has a PayPass and Go Card which is a contactless that can be used at merchants where their symbol is displayed and can also be used at regular checkouts. Your signature is not required for purchases of $50 or less.

Credit card companies feel that no-signature transactions will speed up checkout and encourage consumers to make more everyday purchases with credit cards. I feel this increases the chances of identity theft since a thief could make several small purchases which could go undetected.

Visa offers zero liability if you report the fraudulent charge within 5 business days. MasterCard offers zero liability based on certain conditions.
Merchants feel that consumers will not bother to dispute transactions under $25 but is that fair to consumers. Visa's website states that "Underpinning digital currency is one of the world's most advanced processing networks VisaNet that is capable of handling more than 10,000 transactions a second, with fraud protection for consumers and guaranteed payment for merchants. Really, so how exactly does Visa plan to protect consumers for fraudulent transactions under $25?

For purchases over $25 if a person is a victim of identity theft many banks use signature comparison as a method to prove the transaction with a theft. For purchases under $25, how can a consumer prove that the transaction was fraudulent?

Banks can use other forms of identification to verify the consumer, like your SSN or Date of Birth but if the thief has your SSN and date of birth that doesn't work. If you have a very smart thief who also has your mailing address how will Visa prove your identity? I suppose they could verify by your account number but the thief has that too, or maybe by the last transaction made. One would have to dig through their receipts to find the last transaction made. If a dispute is found exactly how will it be handled?

If you have been a victim of identity theft like I have and want to decrease your chances of identity theft, consider making purchases under $25 with cash instead of with a credit card or Visa check card.

Fair Isaac Moves to Protect Lenders from Fradulent Manipulation of Authorized User Credit Cards

Fair Isaac Moves to Protect Lenders from Fraudulent Manipulation of Authorized User Credit Card Accounts

Company’s Newest FICO Scoring Model Will Ignore Authorized User Accounts When Calculating Classic FICO Credit Risk Scores

MINNEAPOLIS--(BUSINESS WIRE)--Fair Isaac Corporation (NYSE:FIC) today announced that it will adjust its FICO® scoring formula to ensure the continued reliability and predictive power of FICO scores. This action is intended to protect lenders and FICO scores from abuse of authorized user credit card accounts by a new kind of credit repair service that sells consumer credit card histories to credit applicants in order to purposefully misrepresent the applicants’ own credit history to lenders and other businesses. The adjustment removes authorized user accounts from consideration by the scoring model in FICO 08, the newest version of the Classic FICO credit score which Fair Isaac expects to become available to lenders starting in September.

“We will do whatever it takes to protect the reliability and accuracy of FICO credit scores for lenders, and to ensure lenders can continue to use FICO scores with confidence when making their most important customer decisions,” said Dr. Mark Greene, CEO of Fair Isaac. “We will continue working with lenders, regulators and others in the credit reporting industry to end deceptive practices that fraudulently misrepresent consumer credit histories for profit.”

An authorized user is a person permitted by a credit account holder to use an account, typically a family member who is managing credit for the first time. Used legitimately, authorized user account information has helped both lenders and consumers by enabling lenders to use FICO scores when making credit decisions for consumers who are starting a credit history. Fair Isaac’s research indicates that the next version of its FICO scoring formula will deliver increased predictive power without considering authorized user accounts.

Fair Isaac will work closely with lenders to help them implement and benefit from the FICO 08 score as it becomes available. As the company announced previously, lenders will be able to use the new version of FICO scores with minimal changes to their own operating systems. To make lender adoption easier and faster, the new scoring model will retain the same scoring range, score reason codes, minimum scoring criteria, inquiry treatment, and related model parameters as previous versions of the FICO formula.

About Fair Isaac
Fair Isaac Corporation (NYSE:FIC) combines trusted advice, world-class analytics and innovative applications to help businesses make smarter decisions. Fair Isaac’s solutions and technologies for Enterprise Decision Management turn strategy into action and elevate business performance by giving organizations the power to automate more decisions, improve the quality of their decisions, and connect decisions across their business. Clients in 80 countries work with Fair Isaac to increase customer loyalty and profitability, cut fraud losses, manage credit risk, meet regulatory and competitive demands, and rapidly build market share. Fair Isaac also helps millions of individuals manage their credit health through the fair Isaac website.

Fair Isaac Statement Concerning Forward-Looking Information
Except for historical information contained herein, the statements contained in this press release that relate to Fair Isaac, including statements regarding its FICO® score, and the relationship described herein, and the benefits to be derived from the offering, are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including any unforeseen technical difficulties related to the implementation, use and functionality of the offering, the risks that customers will not perceive material benefits from the offering, failure of the product to deliver the expected results, the possibility of errors or defects in the offering, regulatory changes applicable to the use of consumer credit and other data, and other risks described from time to time in Fair Isaac’s SEC reports, including its Annual Report for the year ended September 30, 2006, and quarterly report on Form 10-Q for the period ended March 31, 2007. Forward-looking statements should be considered with caution. If any of these risks or uncertainties materializes or any of these assumptions proves incorrect, Fair Isaac’s results could differ materially from Fair Isaac’s expectations in these statements. Fair Isaac disclaims any intent or obligation to update these forward-looking statements.

Fair Isaac and FICO are trademarks or registered trademarks of Fair Isaac Corporation, in the United States and/or in other countries. Other product and company names herein may be trademarks or registered trademarks of their respective owners.

Fair Isaac CorporationInvestors/Analysts:John D. Emerick, Jr., 800-213-5542
investor@fairiasac.com

Why You Shouldn't Get a ContactLess Credit Card

There is a new type of credit card that is available developed last year called a contact less credit cards that allows consumers to charge items using their credit card but without actually signing a credit card receipt. The technology called RFID or Radio Frequency Identification allows scanners to use radio signals at various distances to read personal information regarding your credit card on a computer chip. The new credit cards can transmit your name, credit card number and expiration date to anyone that is located relatively close to you with a scanner.

The RFID technology has been used for years for tracking shipments and storing inventory. The contactless credit cards can be scanned without having to remove them from your wallet or pocket. The Visa contactless credit cards use an encrypted security code to verify a transaction that is supposed to protect against certain types of fraud but doesn't protect against someone getting your name and credit card number.

New versions of the Visa contactless credit cards do not transmit the consumers name during the transaction. Contactless credit cards either have a visible microchip or vertical wave bands on the front or the back of the card.

I won't be signing up for a contactless credit card. I still pay for everything with cash. I only use my credit card to make travel arrangements. Do you research before signing up for any new type of technology.

Good luck!