THE PLASTIC EFFECT: How Urban Legends Influence the Use and Misuse of Credit Cards

THE PLASTIC EFFECT: How Urban Legends Influence the Use and Misuse of Credit Cards

by Polly A. Bauer

ISBN: 9780983749912

Publisher Coconut Avenue, Inc

Published in Business & Investing/Economics, Business & Investing/Personal Finance, Business & Investing/Industries & Professions, Business & Money

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Book Description

Do you have a credit card? Roughly 70% of adults in the U.S. do. That's a lot of plastic! Even with all that buying power in their wallets, most consumers have no idea how the use (or misuse) of credit cards can affect their life. This lack of knowledge has created a new social phenomenon called "The Plastic Effect." Internationally recognized credit card expert, Polly A. Bauer, CPCS and attorney Stephen Lesavich, PhD, JD, have selected 25 of the most common urban legends influencing the use and misuse of credit cards explaining what is true and what is likely to cause you trouble.

Sample Chapter

Urban Legend Number 4: I have just received a new credit card in the mail. Instead of my signature, I always write “Ask for ID,” “Check ID,” “See ID,” or something similar. This prevents fraudulent use of my credit card, because a store clerk must verify my identity before allowing a purchase on my credit card.

The Reality: False.

A credit card signed with anything other than your signature is invalid by the terms of your agreement with the credit card company.

One of the purposes of signing your credit card is to accept the contract terms you have with the credit card company that provided you with the credit card.

If you have a signed your credit card with “Ask for ID,” “Check ID,” “See ID,” “Compare Signatures,” or something similar, the store clerk has the option to not accept the card for a transaction until it is properly signed. The merchant takes the liability for fraudulent transactions on an unsigned credit card.

A store clerk may actually require you sign the credit card with your full signature before the card can be used for a purchase. If you refuse to sign the credit card in front of the store clerk, your purchase may be refused because the credit card is invalid.

If a merchant accepts an unsigned credit card, the merchant risks financial liability if the purchaser later disputes the charges for that purchase.

Also, do not assume any merchant will ask you for additional identification when your credit card is used. A merchant is not obligated to ask for any identification at all before allowing use of a valid credit card that is signed. However, many merchants do have their own security policies regarding this issue.

In fact, the merchant handbooks provided by many major credit card companies clearly state that a credit card sale cannot be conditioned on a purchaser providing additional identification when a valid credit card (i.e., properly signed) is presented.

Polly’s Pearls of Wisdom: As a consumer, you are protected by law from any fraudulent use of your credit card. Because of this law, using anything other than your signature on your credit card really does nothing useful at all.

Many people do not sign their credit card because they are concerned that a thief will counterfeit the cardholder’s signature. Fraud liability falls on the issuing bank and ultimately on the merchant who initiated a fraudulent transaction.

Abide by cardholder guidelines: sign your card when you receive it, activate it in a timely manner, monitor your monthly statements, and notify your bank if suspicious activity takes place.

A request for identification may not always work to prevent credit card fraud. If your credit card has been lost or stolen, there is a good chance other pieces of your identification have been lost or stolen as well (e.g., your wallet or purse was also stolen).

If your credit card has “Ask For ID” on the back and the store clerk asks for a signature, the thief may simply sign it with his/her own fraudulent signature in front of the store clerk.

A thief may also present both your stolen credit card and other stolen pieces of identification (i.e., typically identification without pictures) to fraudulently use the credit card for purchases.

The credit reporting bureaus, credit card companies, and other business organizations offer credit monitoring services, identity theft monitoring, and identity theft insurance.

All three credit reporting bureaus and other companies can provide credit monitoring services for a monthly fee. The three major credit bureaus also offer additional services, such as access to your credit reports, credit scores, and identity theft protection.

Such credit monitoring services send you a paper letter, e-mail, or text message (depending on your preferences) if there are any new inquiries to your credit reports. However, many types of identity theft actions are not detected by such credit monitoring services.

The credit monitoring services typically cost $10-$25 per month, or $120-$300 per year. Many consumer advocates question whether the cost is worth the money paid for the type of actual protection received.

One of the problems with credit monitoring services is that you may not receive any notification until after a negative entry is actually added to your credit report. At the point a negative entry appears on your credit report, a nefarious act has already taken place. It is typically more difficult, time consuming, and expensive to try to fix an identity theft problem at that point than if you had been able to detect it before it was reported to the credit bureaus.

One advantage of identity theft monitoring services is that they alert you to identity theft at the point someone else is trying to use your information to apply for a new credit card, mortgage, or loan. It is typically much easier to prevent identity theft before it happens rather than remove it after it happens.


Excerpted from "THE PLASTIC EFFECT: How Urban Legends Influence the Use and Misuse of Credit Cards" by Polly A. Bauer. Copyright © 2012 by Polly A. Bauer. Excerpted by permission. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher. Excerpts are provided solely for the personal use of visitors to this web site.
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Author Profile

Polly A. Bauer

Polly A. Bauer

Polly A. Bauer, CPCS, CME, is an internationally recognized credit-card authority, business consultant and professional speaker. Polly is considered by many to be "the" preeminent expert on global credit card payment operations and one of the "go-to" credit card consultants. She has more than 30 years of credit card experience in both consumer credit and domestic and global payments.

View full Profile of Polly A. Bauer

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