This is actually sensible, since it shifts the responsibility for verifying the customer's identity onto the merchant, and lets merchants figure out exactly how much trouble they want to go to in order to do this. Some places will demand a photo ID to go along with your credit card transaction. On the other hand, some places like Starbucks don't even make you sign the receipt -- they figure the small number of coffees which get charged to stolen credit cards are well worth the ability to keep the line moving.

Per the merchant agreements, they cannot deny you the sale if you don't want to show your ID. Also, the credit card companies no longer require signatures for purchases under $20 (possibly $25?) which is why Starbucks doesn't require you to sign any more.

This is sensible, until you realize it sucks for internet sites. Listen, the banks don't care. You can have the card holder call up, and tell the bank to cancel the chargeback, and they won't do it. I know, I've heard the conference call with my support staff try and do it. The customer was really apologetic, too.

In the USA, by law, they are not allowed to stick it to the customer for more than $50.

If they ate the charges, they are afraid that a lot of merchants would deliberately ring up fraudulent purchases for the guaranteed profit.

Those two facts force them to the current system. And the fact that merchants are not allowed to charge customers different rates for different cards gets rid of incentives for merchants to charge customers for the poor security practice that the credit cards have.

There clearly are merchants who do that today. Last time we have a card stolen, we got tons of random bullshit merchandise in the mail (weird cosmetics and such), presumably for the affiliate money.

You are clearly arguing from the perspective of a 'good' consumer.

But think about it for a second, those charges were inflicted on good merchants, the affiliates are not the merchants, they're in the same boat that you are in, except they lost their goods, the affiliate pay-out and a chargeback fine on top of that.

Fraudulent and colluding merchants are a huge part of the fraud problem. You mean to suggest that in a perfect world, Amex wouldn't stick it to good-faith merchants. But for the most part, there are only good-faith customers, so they clearly aren't eating charges, and having Amex eat charges raises price for everyone.

The only party that has access to the information required to do proper scrubbing are the issuers and the banks.

The bona-fide merchants have to make decisions about charges being fraudulent or not in the absence of this information.

If they guess wrong they end up paying or lose a sale.

Malafide merchants don't care one bit, they'll be up and running under a new identity next week, so they never get stuck with these charges, the simply fold and play it again, and in that case the card issuers do eat the chargebacks.

A bona-fide merchant is a sitting duck, and trust me, this comes to a lot of money on an annual basis. Consumer fraud exists and it is a serious problem.