8 Investigates: Swipe it, they won't check it

JONESBORO, AR (KAIT) - Cashiers at Sears and Kmart stores in Region 8 are being retrained after a Region 8 News investigation revealed they were not checking the identification of customers who use unsigned credit cards, despite a corporate policy to do so. According to a spokesperson with Sears Holdings, cashiers are required to follow policies set forth by credit issuers. In a Region 8 News hidden camera investigation, cashiers never checked our unsigned Visa credit card and allowed our transactions to go through.

A spokesperson for Sears Holdings released this statement regarding our investigation at Kmart, 2010 South Caraway Road, and Sears, 1901 South Caraway Road.

"Sears and Kmart follow credit card industry standards concerning the use of credit cards at our registers. Our policy states that cashiers should match the signature on the sales receipt with that on the back of the credit card. If the card is not signed, a picture ID is required. We are disappointed that these policies were not adhered to recently in the Jonesboro market. As a result all Sears and Kmart store associates in Jonesboro will begin a retraining of our credit card transaction policies immediately, in addition to a recent reminder sent to associates nationwide, to ensure each associate understands this policy."

According to the four major credit card issuers, credit cards are not valid if they are not signed on the back. Some even require picture IDs be shown if the card is not signed, but our investigation uncovered the signature really didn't matter.

"If the back of the credit card requires a signature, then one security thing they go through is requiring the merchant, that's the person who is accepting the credit card, to compare the signature to the back of the card. Now merchants often, for convenience sake, don't do that," said Jim DePriest, Arkansas Deputy Attorney General.

American Express Vice President of Public Affairs Molly Faust told Region 8 News that merchants are required to check the signature on the receipt against the card, unless a merchant is in a no-signature program, which is for purchases under $50.

"We work closely with merchants to ensure they are well informed on the signature comparison requirement. We provide this information to merchants through several processes, such as the welcome kit which is delivered to every merchant location, training materials and face-to-face training with AXP Client Managers," said Faust.

Faust said the signature check program is one way to reduce fraud. For those merchants not enrolled in the no-signature program, they could be liable for any fraudulent purchases.

"If we learn that a merchant is not doing signature check comparison, we will work with that merchant to help them understand why this requirement is important to helping reduce and combat fraud. We also educate them about how it can instill confidence with their customers and lead to customer loyalty," said Faust.

For Discover, merchants are required to request two forms of identification if a credit card is unsigned, according to Katie Henry with Discover's public relations department.

"The merchant is obligated to confirm that the person presenting the card is the cardholder and may request that the cardholder sign the back of the card. A card sale or cash advance conducted by a merchant involving an unsigned card is subject to dispute in which case the merchant may be obligated to repay the amount of the card transaction," said Henry.

MasterCard and Visa have similar policies. Both require the unsigned card be signed before allowing the transaction to be approved.

Visa's Card Acceptance Guidelines for Visa Merchants manual states cashiers should check the ID, ask the customer to sign the card and compare the signature with the ID. If a customer refuses to sign the card, it is still considered invalid and shouldn't be used.

Region 8 News went on a hidden camera shopping spree. We purchased a few everyday items from each merchant with an unsigned Visa credit card. At each business, the cashier never denied the transaction. Most didn't even look at the card.

"If a comparison of the signatures would have revealed that the signature did not match the signature of the cardholder, then it's possible that the merchant might not get reimbursed for the unauthorized charge," said DePriest. "That's an issue, a contractual issue, between the issuer and the merchant."

Our investigation also uncovered that some merchants don't know the credit issuer guidelines, or blatantly ignore them.

Region 8 News reached out to each of the businesses where we made purchases to get answers. We wanted to know why Hastings, 1315 South Caraway Road, allowed the card to purchase a CD with the unsigned card. The store manager told us to call corporate headquarters in Amarillo, Texas. A spokesperson told us they couldn't answer our questions due to the fact the company is publicly traded on the NASDAQ.

We also asked the same question at Kohl's located at 2117 Fair Park Blvd. We were told company policy doesn't require cashiers to check purchases made on most cards.

"The policy here is that you have to have an ID with a Kohl's card. As far as any other card, Visa or whatever, we do not. It doesn't make us check for ID or anything like that," said the store manager.

We reached out to the corporate public relations department for more details. They have not called back.

"The consumer is going to be responsible for any charges the consumer initiates, whether or not they've signed the back of the card. The consumer is not going to be responsible for unauthorized charges, again, whether or not they've signed the back of the card," said DePriest.

According to DePriest, consumers are protected from credit card fraud as long as the victim catches the fraud within 60 days, unless the card is misused beforehand. He said consumers should pay attention to their monthly statements and report suspicious activity immediately.

"If you report the loss to your credit card issuer prior to the time the thief uses the card, you have no liability whatsoever. If you report it after they use the card, your liability is limited to $50 and most credit card issuers waive that $50," said DePriest. "It is a good idea to go ahead and sign the back of the credit card. That's part of a security process for the credit card."

Dragon City Manager Chris Chu told us over the phone that his employees are not required to check because banks and credit card companies do not require it. He said his employees are urged to verify identities during large transactions.

We also reached out to Office Depot corporate offices. At this time, our questions have not been answered.

"Assuming everybody follows the rules and the thief gets away, and everybody else follows the rules, the credit card issuer suffers the loss. Now, sometimes the merchant can suffer the loss and it's between the credit card issuer and the merchant. That depends on whether the merchant has followed the rules that the credit card issuer has provided to the merchant in terms of security," said DePriest. "From that standpoint, each merchant is going to make their own decision on what level of security participation they engage in, but I would suspect they also have a concept of what's convenient and what's not convenient."

DePriest used the example of paying for gasoline at the pump. The convenience it offers is widely considered a benefit over the security of the card's signature.

"They never are going to check my signature. First of all, I'm not signing anything, so there's nothing to check against the back of the card. They may engage in other security measures, such as asking me to type in my zip code or something that can be compared to my account," said DePriest.

DePriest also said consumers should sign the back of their credit cards to fight any illegal activity, and consumers should use credit cards because the protections are greater than those in debit card transactions. Gift card transactions have no consumer protections and are treated like cash.

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