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Now Back to Our Regularly Scheduled Programming (i.e., Interchange!)

By Adam Levitin

It's been a while since I've blogged about interchange.  But I've been meaning to share a personal story about how weak signature debit fraud protection is.  Recently Mallory Duncan, the General Counsel at the National Retail Federation was kind enough to speak to my Consumer Finance class about interchange regulation. I took Mallory out for coffee at Starbuck's afterward. I treated. But I asked Mallory if he would do the transaction, with my Visa signature debit card. I stood off to the side while Mallory purchased the coffee with my card.  

It turned out to be a signatureless transaction, so Mallory didn't sign anything. And my card has my photograph on the front. You be the judge of whether anyone is likely to confuse me and Mallory based on physical appearance. Pictures after the break. 

Mallory's on the left, I'm on the right. 

Not apparent from the headshots is that Mallory also has several inches on me, and I've got several pounds on him.  

Transaction went through, no questions asked. But don't take my word for it. Try out this parlor trick yourself. And then think what would happen if you lost your signature debit card. Is this technology that we should be encouraging? Because that's what the current debit interchange fee system does. It encourages identity theft and fraud.  

Full post as published by Credit Slips on March 09, 2011 (boomark / email).