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'Planet Money' Explains Why We Sign For Things

Sep 4, 2015
Originally published on September 4, 2015 6:19 am
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STEVE INSKEEP, HOST:

You know, signatures aren't what they used to be. They used to be powerful indicators of identity when making a credit card purchase. These days you don't even have to put down your mark for some of the cheaper items, which got our Planet Money team wondering - why use signatures at all? We have an encore of this story from NPR's David Kestenbaum.

(SOUNDBITE OF ARCHIVED BROADCAST)

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. 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. (Foreign language spoken), which means that a scribble is prohibited.

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

ALLOUCHE: (Foreign language spoken). And then (foreign language spoken) means prohibited.

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

Do you 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 the 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's an amazing thing to see.

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

MANN: Look at the signature. Look at the one on the check. And people do 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. 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: 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 access because someone wants to look at one of them?

BALFANY: It is a fraction...

KESTENBAUM: (Laughter).

BALFANY: ...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.

Should I feel bad if 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: In much of the world these days, credit cards come with chips in them along with a pin code. That's a number that you punch in instead of a signature. In America, though, we are still attached to writing out our names, tradition. David Kestenbaum, NPR News. Transcript provided by NPR, Copyright NPR.