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I'm thinking of certain places (Subway, McDonalds, etc.) that do not require a signature on a receipt after swiping your card. Why do these places not require a signature on the receipt, while others do?

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Don't they ask a PIN-code if there is no signature? –  gerrit Feb 20 '13 at 20:39
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@gerrit, no, that's only for debit cards (at least in the US) –  John Feb 20 '13 at 21:35
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@gerrit That is an European phenomena. Doesn't happen in many places outside Europe. –  DumbCoder Feb 21 '13 at 11:45
    
Sounds quite unsafe to not have this... –  gerrit Feb 21 '13 at 15:10
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@MarkFreedman, right, the transactions are usually stored, but the only data available with the transaction is the credit card information (and maybe a signature). For online purchases, you get account information (although that can be faked), and more importantly, a shipping address, and usually an email address as well. These are what can help prove that the purchase was fraudulent. You also usually have to know certain information about the card in order to use it, like the billing address. –  John Mar 1 '13 at 20:01
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3 Answers

up vote 12 down vote accepted

This is basically done to reduce costs and overhead, with agreement of the credit card issuers. When the card is physically present and the charge is low, the burden of keeping the signed receipts and of additional delays at the cash register is not worth the potential risk of fraud.

Depending on the location and the specific charge-back history of the business, the limit above which signature is required differs. In one supermarket in the area I live they require signatures only on charges above $50. In another, 10 miles away from the first one, they require signatures on charges above $25.

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So perhaps Subway and McDonalds agree to be responsible for fraud claims under a certain amount? They would rather return a fraudulently charged $7.88 than slow down their lines during a lunch rush. The logic being, how much damage could a fraudster cause at McDonalds? –  MrChrister Feb 20 '13 at 19:29
    
This weekend, I went to pick up a takeout order. My cousin hands me his card, and say, "please, I insist." I leave with his card, and no issue at the register. They didn't even look at the card, which I noticed had no signature on it. I imagine if the card issuers wanted real security, they'd find a way. –  JoeTaxpayer Feb 20 '13 at 19:48
    
@Joe and MrChrister - it is much harder to dispute a charge when the card is physically present. Claiming that the charge was not authorized when it in fact was is a fraud and may be a Federal felony. Usually it leads to immediate cancellation of the card. Multiple claims from the same person may lead to the issuer refusing to issue a new card as a replacement, I've seen that happen when I worked in that industry. –  littleadv Feb 20 '13 at 20:09
    
So does this mean that the business that accepts the card is liable for any fraud that occurs? For some reason I thought requiring signatures on credit card receipts was a law. –  John Feb 20 '13 at 21:41
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@john law? No. Contractual obligation. Generally if you claim that your transaction wasn't authorized and the business doesn't have your signature - your claim may stand. But if after that the business comes up with a surveillance footage showing you making the payment, or witnesses identifying you - you go to jail. Most fraudsters won't take their chances just to gain $7 bucks. Credit card frauds are mostly done without the physical card - over the phone or Internet. With physical card (either stolen or duplicated) the amounts are usually much higher. –  littleadv Feb 20 '13 at 21:45
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My understanding it that the signature requirement is at the retailer's discretion. If the merchant decides to require a signature it protects them against fraudulent charge-back claims, but increases their administrative costs.

In some situations it just isn't practical for a retailer to require a signature. Consider for example mail-order or online purchases, which I've never had to sign a credit card slip for.

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What's your source? –  Christopher James Calo Feb 26 '13 at 20:12
    
My source is the fact that I use my credit card all the time for online purchases and never sign a credit card slip. Also, I was told this by a retail clerk once (who owned the store) –  JohnFx Feb 26 '13 at 23:43
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Merchants apply in advance for the program, and the amount is limited to less than $25.

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