What happens if you don't sign a credit card payment slip

You might get away with not paying a tab, but don't plan on eating at that restaurant again

By Constance Sommer

What happens if you don't sign that credit card bill
What happens if you don't sign that credit card bill

When you pay with a credit card, how important is your signature on that slip?

Not too important, it turns out, unless you decide to dispute the charge. And then, it's critical.

"Let's say you're using your card and go to a jewelry store and buy a $5,000 Rolex, but you don't sign the slip," said Michael Kleinman, owner of Centurion Payment Services in Boca Raton, Florida.

The jeweler can put the charge through anyway, and the credit card company -- be it Visa, MasterCard, American Express -- will add the charge to your bill, Kleinman said. But if you later decide to dispute that charge, you're in a good position to fight it, he said. You could lie, claiming that someone stole your card and used it to purchase the watch. You could say that the watch was sold fraudulently because it came scratched.  The reason may not matter.

"You have a really good chance of winning that chargeback," Kleinman said. "If a customer doesn't sign the credit card slip, they are not agreeing to the terms and conditions of the credit card. It's the contract part of the transaction."

This is why retailers including Safeway and Target have customers sign their names at the checkout terminal, said Michael Moeser, director of payments, retail and small business at Javelin Strategy and Research. One category of merchants that can't do this are food and drink establishments, such as restaurant and bar owners, and they are the ones who can sometimes get burned by chargebacks, Moeser said.

If you eat a dinner at a restaurant and leave before filling out the receipt, then later dispute the charge, "The restaurant has no way of proving that you agreed to the amount that was charged, and will have to essentially write off your lunch or dinner," Moeser said in an emailed response. "Just don't plan on going back to that restaurant as they will undoubtedly have your name on the 'do not serve' list."

Well, maybe. Stephane Bombet is a partner in two upscale Los Angeles restaurants, Faith & Flower and Terrine.  A chargeback at one of his restaurants is "very rare," he said; no more than eight or so a year. When it does happen, it's often for one of two reasons. Some people dispute it because the charge shows up on their credit card as BHG, and they don't know what that is (BHG stands for Bombet Hospitality Group, the legal owner of the restaurants). Or they may forget they ate at a new restaurant. "So we contact them," Bombet said, "and people will say, 'Oh yes, I was there.'"

The restaurant has no way of proving that you agreed to the amount that was charged, and will have to essentially write off your lunch or dinner. Just don't plan on going back to that restaurant as they will undoubtedly have your name on the 'do not serve' list.

-- Michael Moeser
Javelin Strategy and Research

However, chargebacks are a more common occurrence for Chin-Chin, a casual chain of Chinese restaurants in Los Angeles and Las Vegas. "It doesn't happen very often, but it's always from the same people," said James Lee, a partner in the chain.

The restaurant staff pays attention to customers who leave without signing a credit card slip, and if they later dispute the charge, "We flag them," Lee said. "A manager will remember their faces."

Typically, such customers know this and will not come back, he said.

Where Lee used to really have a problem with chargebacks was at his other business, a food delivery service called LAbite. Customers order their meals over the Internet, and because their card isn't physically swiped, it's easier to successfully claim fraud.  Lee recalled that when he started the business about 10 years ago, one customer disputed the charge three times in a row. "But I knew where he lived because, you know, I delivered to him," Lee said. "So I went to his house and said, 'You're messing with the wrong dude.'"

The customer paid. Eventually, LAbite began contracting with a third-party company that does an instant background check on each new credit card coming through the system, Lee said. That ended the issue, he said.

Other businesses that struggle with chargebacks are bars and nightclubs, Kleinman said. One good example, he said, was at the high-end clubs in Miami's South Beach neighborhoods. "The college kids on spring break, they'll go to those nice poshy nightclubs, buy multiple bottles of that really expensive champagne, the Cristal stuff, and drink it all up," he said.

If a club is savvy -- or if it already got burned once -- the waiters will make copies of the patron's ID and credit card before the first drink is served, he said. Some establishments will take that information and "shoot it over to the credit card companies so they can say, 'Yeah, that's them,'" he said. As a backup, many are also running video cameras.

If they don't, here's what could happen: The next morning, a customer who wakes up and sees the bill might panic and try to dispute the charge, he said. If the customer managed to leave without signing her credit card slip, and if the establishment hasn't taken the necessary precautions, "About 50 percent of the time," he said, the customer "gets away with it."

See related: 6 steps to successfully seeking a chargeback

Published: February 8, 2016

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Updated: 10-22-2016

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