What merchants should do if customer presents unsigned card

Your Business Credit columnist Elaine Pofeldt
Elaine Pofeldt is a journalist whose articles on entrepreneurship and careers have appeared in Fortune, Working Mother, Money and many other publications. She is a former senior editor at Fortune Small Business magazine and an entrepreneur herself, as co-founder of 200kfreelancer.com, a website for independent professionals. She writes "Your Business Credit," a weekly column about small business and credit, for CreditCards.com.

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Question Dear Your Business Credit,
If a customer is paying with debit and I swipe the card but there is no signature on the card, do I need to ask for identification? Thank you for any info you can give me on this. -- Carrie

Answer Dear Carrie,
I wish more merchants listened to their instincts, as you are. A missing signature can be a warning sign of fraudulent card use.

While you asked about debit cards, the rules are the same for both debit and credit cards. Based on the guidelines Visa and MasterCard have issued, I'd advise you to avoid processing unsigned cards at a point-of-sale terminal. It puts you at risk of fraud-related losses.

Both card networks list specific procedures to follow when someone hands you a card with a missing signature. Visa, for example, says merchants should ask the cardholder to sign the card and to provide current, government-issued identification, such as a driver's license -- or passport, if local law permits. Sometimes, consumers write "See ID" on the signature line. In that case, Visa suggests that you ask them to sign the card anyway.

In either case, if cardholder refuses to sign the card, Visa says don't accept it.

If the customer signs the card, Visa says to process the transaction, then check the signature on the transaction receipt to make sure it matches the signature on the government identification card and the one on the payment card. If the signature matches, go ahead and complete the transaction.

For more details, check out Visa's guidelines. The relevant information is printed on the bottom of the page.

MasterCard has similar guidelines on page 66 of its Transaction Processing Rules.

In cases of an unsigned card, MasterCard recommends that you first obtain an authorization to process the transaction. Then ask the cardholder for identification. And finally, ask the cardholder to sign the card.

"The Merchant must not complete the transaction if the cardholder refuses to sign the card," MasterCard says in its guidelines.

Reasonable customers who try to use an unsigned card will not mind it if you ask them to sign it. They will respect the fact that you pay attention to the security of your customers' debit card or credit card transactions.

Still, it's important to train your staff to handle these situations graciously. If you explain politely that Visa and MasterCard's rules only allow you to process signed cards, that should suffice.

If a customer refuses to sign the card, all of the major card issuers have set up procedures to follow. None involves using mixed martial arts moves to confiscate the card.

It is called making a Code 10 authorization request. In a previous column, I explained how to make a Code 10 call. Check it out now so you don't have to figure out what to do on the fly. And make sure anyone who processes transactions at your store is familiar with the procedure, too. It is important to handle such situations safely.

See related: Protecting your business from credit card fraud, Are squiggly finger signatures legally binding?

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Updated: 03-23-2019