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Why Do We Sign For Things? A Rabbi, A Lawyer And A MasterCard Exec Explain

David Kestenbaum's signature (NPR)

Take a look at your signature the next time you buy something with a credit card. Maybe you spell out every letter. Maybe you just put a squiggly line. The other day, I drew a tree.

Signing is a very old ritual, according to Rabbi Pinchas Allouche. He's a scholar of the Talmud, a collection of Jewish texts that's over 1,000 years old.

The Talmud not only mentions signatures; it has rules for them. "A scribble is prohibited," Allouche says. The name has to be legible. "Just yesterday, when signing a Toys R Us receipt, I thought of the Talmud," he says.

In ancient times, a signature was required for all kinds of economic transactions. If you wanted to buy a goat, you had to sign a document. And just like with credit cards today, sometimes you had to sign even for smaller purchases.

According to the Talmud, Allouche says, "the law that applies to one cent is the same law that applies to a thousand gold coins. In other words, we consider every purchase as a big one."

When the personal check came along, it came with a line at the bottom to sign on — and banks needed to verify all those signatures. They had rooms of people devoted to looking at signatures and comparing them with the ones on file, says Ronald Mann, a law professor at Columbia University.

Mann visited one of those signature verification rooms. "It was an amazing thing to see," Mann says. "Look at the signature; look at the one on the check. People would do it very quickly, obviously, because they would look at more than a hundred signatures an hour."

Another problem: It could be hard to spot a forgery. Mann says he's seen court cases where experts looked at the impression the pen left on the page to try to tell if a signature is genuine. "But that's obviously not a useful way to run regular commercial transactions," he says.

Today, as far as we can tell, no one regularly looks at what you sign on the bottom of a check. That's true for credit cards, too. Companies electronically store their credit card signatures, but accessing them is not a regular occurrence, according to Carolyn Balfany of MasterCard.

She says signatures are retrieved mainly when a customer calls and says, "I don't remember buying that." The bank can show the person the signatures, and it can help jog the customer's memory.

But there are lots of better ways to spot fraud than eyeballing a signature, says Balfany. The banks can use data about a customer's habits to pick out transactions that look suspicious.

Lots of stores have stopped requiring signatures for small purchases. And some new credit cards that are coming out have replaced the signature with something less romantic: a personal identification number, or PIN.

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Transcript

ROBERT SIEGEL, HOST:

Next year some banks in the U.S. are planning to issue a new kind of credit card. They'll have computer chips in them and some will no longer require signatures.

That got our Planet Money team wondering - why do we still sign for so many things, anyway? Here's David Kestenbaum.

DAVID KESTENBAUM, BYLINE: Take a look at your signature the next time you charge something. Maybe you spell out every letter. Maybe you just put a squiggly line. I've drawn a smiley face sometimes. This act of pen to paper? Turns out it is a very, very old ritual. Rabbi, can you hear us?

PINCHAS ALLOUCHE: Hello? Yes, yes. Hi. Good morning.

KESTENBAUM: This is Rabbi Pinchas Allouche. He's a Talmud scholar. A Talmud is a collection of very old rabbinical writings on Jewish law, over a thousand years old. It turns out, the Talmud mentions signatures. The Jews didn't invent the signature, but they had lots of rules for them. Back then, there were standards. It couldn't just be any old squiggle.

ALLOUCHE: Here it is. All right. (Reading in Hebrew). Which means that scribble is prohibited.

KESTENBAUM: (Laughter). What's the word for scribble?

ALLOUCHE: Mahak (ph). And then, Prosul (ph) means prohibited.

KESTENBAUM: A signature was required for all manner of economic transactions. You want to buy a goat? You've got to sign a document.

And just like with credit cards today, sometimes you had to sign even for smaller purchases.

ALLOUCHE: There's a rule in the Talmud which is an interesting rule - the law that applies to one cent is the same law that applies to a thousand gold coins. In other words, we consider every purchase as a big one.

KESTENBAUM: Do ever think about the Talmud when you're signing your name, buying a cup of coffee?

ALLOUCHE: Sometimes it occurs to me, yeah. Just yesterday on a Toys "R" Us receipt I thought of the Talmud. Yeah.

KESTENBAUM: You can understand why signatures made sense back then. A signature is the simplest form of ID, something that's supposed to prove you are you. There weren't a lot of other options.

But it's been over a thousand years now. Why do we still have them?

The answer seems to be that signatures basically worked - for trade, for all kinds of stuff. And like a lot of things that work, the signature became part of law. It became tradition. So when the personal check came along, it came with a line at the bottom to sign on. This though, is when the ancient tradition of people writing their name out ran into problems. Was someone really going to verify all those signatures? The banks tried. They had rooms of people devoted to looking at signatures on personal checks and comparing them to ones on file.

RONALD MANN: It was an amazing thing to see.

KESTENBAUM: This is Ronald Mann, a law professor at Columbia University.

MANN: Look at the signature, look at the one on the check - and people did it very quickly, obviously because they would look at more than a hundred signatures an hour.

KESTENBAUM: There was this other problem - a bigger problem, really. It could be hard to spot a forgery. Copying a signature isn't that difficult. When a signature dispute makes it into a court of law, things can get very CSI. Mann says he has seen cases where it's come down to looking at the impression the pen left on the page to try to tell if the signature's genuine.

MANN: The places in the signature which the pen wrote more and less rapidly and the places where it pressed harder and less hard - because the paper would be slightly more bent. But that's obviously not a useful way to run regular commercial transactions.

KESTENBAUM: Today, as far as we can tell, no one regularly looks at what you sign on the bottom of a check. And credit cards - what happens to all those millions of signatures we write at the checkout?

Carolyn Balfany at MasterCard told me each signature does get recorded.

CAROLYN BALFANY: It is electronically stored and it can be retrieved.

KESTENBAUM: How often do those signatures actually get accessed because someone wants to look at one of them?

BALFANY: It is a fraction of a percent of time. Right? It's not a regular occurrence.

KESTENBAUM: She says one reason signatures are stored is just so that when a customer calls and says, I don't remember buying anything on that day - the bank can show the person the signature - and often they'll go, oh yeah, I did buy that.

KESTENBAUM: Should I feel bad if I just write a little squiggle there instead of signing my name?

BALFANY: (Laughter). Yeah - I mean, clearly, it's not ideal. But I've heard of people doing it, for sure.

KESTENBAUM: I'm not breaking any rules by doing that?

BALFANY: No.

KESTENBAUM: There are lots of better ways to spot fraud than checking a signature, she says. The credit card companies and banks have lots of data. They can pick out transactions that look suspicious. As you've probably noticed, lots of stores don't require signatures for small purchases anymore.

The new credit cards coming out have replaced the signature with something less romantic, but a lot more practical.

Something that also says, yes this is me? A PIN - a secret number that you punch in. David Kestenbaum, NPR News.

SIEGEL: You're listening to ALL THINGS CONSIDERED from NPR News. Transcript provided by NPR, Copyright NPR.

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