Bankruptcy

Not Valid Unless Signed

By Adam Levitin

All my credit and debit cards state on the back above the signature specimen block "Not Valid Unless Signed". I'm curious as to what exactly that means. If I make a purchase with an unsigned card, could it possibly absolve me of liability for the purchase price? Or, at the very least, does it mean that I am not subject to the terms and conditions of the cardholder agreement, including binding mandatory arbitration? Would my only liability be quantam meruit to the issuer (or to the merchant if the issuer refused to pay and the merchant didn't meet PCI standards)? There's no published case law on this.

What work is the "not valid unless signed" language really doing? Surely my signature isn't necessary for me to be contractually bound. Card usage alone should be sufficient, but the signature language might raise the consent bar. Signature specimens are checked so rarely and so perfunctorily at that that one has to wonder whether they serve any serious security function other than for maybe providing a comparison specimen for contested transactions. I wonder if this is an example of contractual form language that has outgrown its purpose, but that no one is bold enough to delete.

Full post as published by Credit Slips on May 10, 2008 (boomark / email).