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To Sign or Not to Sign...your credit card that is...

It’s likely you’ve already received the email from a friend or colleague warning you about identity theft and how dangerous it is to sign the back of your credit card. Instead of signing, one should write in “Ask for ID”. Why wouldn’t the credit card companies ask me to sign the card if I’m opening myself up to identify theft. What is the safe thing to do? I did some research and I’ve found what I believe to be an acceptable answer. Of course, if you want to know what is best for you, it is best to consult your bank or credit card company and make your own decision based on the information you gather.

Why can’t I just leave the space blank and wait for the clerk to ask me for ID? If your credit cards are ever stolen, the thief can simply put their own signature in on the back, and then the signatures will match perfectly.

What if I write “Ask for ID” on the back instead of signing my name? If a store clerk actually checks the signature panel on your credit cards, they will ask you for your ID. This could possibly help prevent identity theft.

Ok, so what’s wrong with just writing “Ask for ID”?  Per the terms and conditions of every major credit card company, if you do not sign the back of your credit card, then the card is not valid. If merchants accept a credit card that is not signed, then they could be liable for the charges if your credit card is used fraudulently. If a clerk notices that the back of your card is unsigned, they are supposed to make you sign it in front of them, and then ask for your id.

Visa, MasterCard, American Express and Discover recommend that you sign the back of your credit card correctly. All companies have safeguards in place in the event your credit card or identity is stolen. If you have lost your credit card or believe they may have been stolen, call the credit card company right away.

Signing the back of your credit card and writing “See ID” This is probably the best option, since anyone who bothers to look at it might take the time to request your ID, or at least to check and see if the signatures match.

Why it doesn’t really matter one way or the other:

Have you detected the weak link here? It’s the store clerks. Nine out of ten clerks do not ever flip that card over to look at the signature panel. If they do, it’s very likely that they are new, not working during a busy time of day, or they’ve been ripped off before.

No use thinking those in-store digital signature panels actually compare your signature either – they don’t. The truth is, no one is out there checking the signature panel of our credit cards.

Chris Monteiro, spokesman for MasterCard, says, "Technically, a MasterCard is not valid unless signed by the authorized cardholder. If a person has not signed his card, the merchant technically should not complete the transaction." The merchant can only complete the transaction on an unsigned card if the cardholder signs the card in front of the employee and then produces valid identification proving their identity, Monteiro says. The cardholder then has nothing to gain by refusing to write anything but his signature on the signature panel.

Visa's policy is nearly identical to MasterCard's. Visa covers this topic in its "Rules for Merchants" handbook. There is a section entitled "See ID," which says: "See ID or Check for ID is not a valid substitute for a signature. The customer must sign the card, in your presence." And if the customer refuses? "A refusal to sign means the card is still invalid and cannot be accepted." The handbook then reminds merchants that if they ignore this mandate and accept an unsigned card anyway, they risk financial liability should the cardholder later dispute the charge.

In another section, the Visa handbook also prohibits merchants from demanding identification as a condition of the sale -- so if the merchant does accept your unsigned card, they technically cannot force you to show identification. The converse is true for signed cards as well: A merchant cannot refuse a transaction if you choose not to produce identification, and a merchant does not have to ask for additional identification when presented a signed credit card

What that signature really means

The card companies remind customers that the signature panel isn't just for verifying the signature. It's also used to validate the contract you have with the credit card company. By signing, you confirm that you agree to their terms. And even though you may choose not to sign the card but use it anyway, you still are bound to the terms and agreements set forth by the issuer.

For customers who still want to stick to their "See ID" ways, Nessa Feddis, vice president and senior counsel at the American Bankers Association, cites several downsides to this tactic. If you want to charge something and don't happen to have your identification with you, for example, you'll be out of luck. Forcing a merchant to check your identification will also slow down your transaction. Plus, there's the possibility that crooks who get their hands on your signature-free card could just sign it in front of a clerk, thereby making the card appear valid -- while also ensuring that the signature on the card will now match their own signature on the receipt. A solution offered to the extra-cautious: Sign the card AND write "See ID" on the signature panel. It won't guarantee your credit card won't ever be used by thieves, but if it makes you feel better, there's no harm in it.

Dan Clements, vice president of Affinion Group Inc., which specializes in helping companies secure personal data, agrees with the dual protection method. "It's a good practice to put 'Check ID' after your signature on the back of the credit card. This makes it harder for an in-store identity thief to run up charges on your credit or debit card. Even though you have limited liability on credit cards, maybe a bit more on debit, you can possibly avoid the hassle of filling out bank affidavit's to dispute fraudulent charges. These charges have been known to affect credit scores, so avoiding them is key."

What do I do if I become a victim of identity theft?