Posted by Lending Club :: January 31, 2008 @ 5:00 am

High interest rates and fees are increasingly leading many people to consolidate their credit card debt with more affordable options such as person-to-person loans from Lending Club. There are more reasons than interest rates and fees to avoid using a credit card though, such as the ease with which a thief can use your card.

Most credit card merchant agreements require that no other form of identification is needed to make a purchase. That means that any store that required credit card users to show an ID would be in violation of their agreement and could lose the privilege of accepting credit cards. There are obvious exceptions to this rule when tobacco, alcohol, or other age-restricted purchases are made.

As card-scanning devices within the consumers’ reach are now the norm, most cashiers never even get to see your card. They should be asking for the card to verify the signature, but even stores where a “Hold Card for Cashier” message appears rarely do. Scanning devices further complicate the problem because the signature pad often makes it hard to sign or see what you’re doing. My signature on such a device is rarely consistent and certainly different from the signature on my card.

There was an old trick of writing, “Ask for ID” in the signature area of the credit card. The idea was that when checking your signature, the cashier would then request your license, so that only you could use the card. By requesting the verification yourself, you made it permissible for cashiers to do so without violating their merchant agreement. As most cards are not valid until signed, some people would write the request in addition to their signature, or place a sticker on the back of the card. I had a friend that used this method and he said that the frustrating part was how infrequently anyone would ask for ID. If you’re not asked for ID very often, then a thief would not be either. Again, this is even less effective now that signatures are rarely verified.

If validating the user of a credit card is not going to be done by merchants, then once again you are in control of protecting your card. It’s extremely important to report a missing or stolen card as soon as you are aware of it. Even though your liability is limited for unauthorized purchases, reporting quickly can save you the trouble of having to later dispute any claims.