Skip to comments.Debit/Credit card question
Posted on 08/31/2013 6:21:15 PM PDT by Maine Mariner
I am getting ready to write a letter to the Attorney General of Maine asking his office to investigate how companies put hold on debit/credit cards.
During a recent trip we used a prepaid AAA debit card; we purchased gasoline for $29.00 and paid at the pump. After our purchase we checked our statement and the company put a hold of $75.00 on the card. We have a receipt for $29.00. A couple of days later the $75.00 dropped off and our card was debited for the actual amount of the purchase. I understand a company can put a hold on a card, but the story gets worse, much worse.
On August 28, my wife went to purchase gasoline using that same AAA card and swiped the card at the pump. She saw that it was to be a credit purchase and not wanting a $75.00 hold CANCELLED THE TRANSACTION. She purchased no gasoline with that AAA debit card. Well, you guessed it-a mere swipe of the card automatically has put a $75.00 hold on our card. As of 8 pm on August 31 the hold is still there. Here is my question to anyone that can help. What right does a company have to put a hold on my money when NO purchase was made?
I was eyeing up my point balance... saw I could swing a round trip to Japan in first class for a song. Like $5...
My Australian bank just puts a dollar on it which shows the card is valid, then when the full amount of the purchase comes through they remove the dollar put on the correct amount. When fueling a plane they put on a hundred dollars because they don’t know how much fuel you’ll be putting on. It comes off to the correct amount with three days. OTOH you’re out the hundred until it clears.
As others have pointed out, gas purchases are different. When you are at a supermarket, the credit card company knows exactly the purchase amount as you swipe your card. When you’re at the pump, they have no way of knowing and only go based on past spending habits. Do you intend to buy on $20.00? Will you fill up? If so, are you driving a 12- gallon car or a larger Uhaul truck? You know what you expect to buy at the pump, but the gas company does not know that, hence the bigger hold for the unexpected purchase. That $75.00 hold probably meant that if you were driving in an RV or a UHaul truck for the very first time, the pump would cut off at $75.00 - until you’ve established the fact that you’ve got a vehicle that requires more gas and they’d extend your limit next time.
But remember no purchase occurred. My wife swiped the card and then cancelled the transaction. The nozzle never came off the pump.
Yeah, if you book far enough in advance you can go almost anywhere on earth for a song. Too bad AMEX points no longer transfer to United. They are the best airline to have miles with, by far.
Yes, that is what I think too. And since my wife swiped the card and then cancelled the transaction, the $75.00 should have gone immediately to zero. Some posters do not seem to understand the nature of my post. NO PURCHASE OCCURRED.
She did not even remove the nozzle from the pump.
I will be contacting them on Tuesday!
The hold went on when the card was swiped, and most likely the hold was canceled as soon as the transaction was. Holds will take a few days to be removed by the bank after they are canceled, that’s just how it works.
Actually, the fact that “no purchase occurred” probably made things worse for you. There is a difference between canceled holds and settled holds. A settled hold is when the business places a hold for, say, $75 on your card and then completes the charge for $45. That’s immediate. But canceled holds ALWAYS take longer to drop off. If your wife had purchased $0.01 of gas the hold would have dropped off much faster, but since it was just a canceled hold you will need to wait.
WRONG - it is SOP for all debit cards at any gas pump. I never use a card at a pump - I always go inside.
I should point out that this is a prepaid debit card.
Dude... That’s crazy talk. Carrying large quantities of cash all the time, and storing all your worldly money in your house (or wherever) is really dangerously dumb. One fire and you’re wiped out. One mugger and you’re stuck with no money, no phone and no way home. Hopefully it’s walking distance.
Curiously enough I use exactly the reverse technique. I pay for absolutely everything on my MasterCard. Everything. I also use my online banking to pay the entire balance every -week-. I never carry a balance. I never pay interest. I never pay fees. But— If it is stolen it becomes useless. I don’t use it as a credit card I use it AS cash, but it is safer than cash.
I carry a small amount of cash, and I have some cash in a safe for emergencies, but that’s it.
Ok...the point is that you swiped the card. They put the hold on at the time of the swipe...before you’ve purchased anything. This happens every time you swipe.
When they cancel the transaction, another electronic communication goes to “release” the hold.
No one is getting your money. The gas station doesn’t make a nickel on it.
The issue is whether or not you have the funds. If the swipe goes through and tries to “grab” $75, and you don’t have the funds—the banks automated system may whack you for an overdraft. That too should come off with the release of the hold. If it doesn’t the bank would reverse it the next day..or if they don’t catch it, as soon as its obvious.
This is not new. And it has been litigated to death with the regulators and the banks and every consumer advocacy group known to man.
If this happens at a gas station you frequently use—tell them to get another card processor. That’s where the problem lies—not your bank and not the gas station.
This is a prepaid card. We put $400 on the card at the beginning of the trip. Before we swiped the card, there was about $80.00 left on the card.
Technical Reason: A gasoline purchase is what is known as a TWO message transaction. But like a hotel check in, the merchant does not know the actual $$ amount of the transaction.
Message One: Merchant wants to know that the card is good and that the merchant will get paid. Therefore they put a hold on the funds that can be used. The amount is a guess since you have not pumped the gas yet. BTW most pumps have a max $ amount per transaction. Used to be $50, may be $75 now. This message is called an authorization.
Message Two: Merchants actually has made the sale and posts the transaction to be paid. If the merchant uses the $1 hold, a new authorization is put through for the actual amount. If the merchant puts a larger hold through, no second authorization is posted and the transaction settles for the actual amount.
At a retail store, the purchase is made at the end of the transaction, so the merchant knows the actual amount. Both messages (authorization and settlement) are transmitted at the same time, but the settlement can take a few days to catch up.
ATM and PIN based debit transactions are one message transactions - authorization and settlement happen at the same time and the merchant is paid immediately (and the money is taken from your account immediately).
Excellent comments. However, in our case no purchase occurred.
Give me a break. How the Hell I'm going to pay for something I want online? I don't have a dollar bill input thingy on my computer.
Can’t say why, my guess its a pending transaction and when it’s not submitted will be gone
Remember the second the card was swiped all the information was given
I had the same thing happen to me last week, put gas in a rental car using my debit card, picked up my car from the dealer and went to get gas a few miles down the road (yet another Chevron) and my debit wouldn’t go through. So I whipped out my credit card and got my gas, got back on the road, and not 5 minutes later I got a call from my bank. The first station I stopped at (Chevron) put a $125 hold on my card. The bank (BofA) cleared the hold, and told me if it happens again, just give them a call. They just want to make sure that the cardholder was making the purchases.
I think that this happens more frequently if you’re using a station that is off a major highway. I was off the 15 in Ontario/Fontana area. Lesson
I’ve heard of this happening before, but never with my banks debit card.
Many hotels REQUIRE a credit/debit card to register. They will not take cash.
So if I’m traveling in my RV cross country I need to be carrying $5 to 10 thousand dollars on me?
I never understood why people would want to pay cash for everything. Once you pay in cash, you really have no proof of purchase other than a receipt (if even you get that) and you set yourself up for getting ripped off or robbed. As for the privacy issue, I don't get it. So what if there are electronic records of me staying at Marriotts, renting cars, buying groceries, eating at restaurants and whatever else I put on my charge card.
It's 2013, not 1932. There's no need to stuff your mattress with cash and pay for things with wads of filthy currency that you have no idea where it's been. If I never have to handle a crumpled up dollar bill again with feces and who knows what else smeared all over it, that's fine with me.
The nozzle was not even removed from the pump.
This is quite common, and they are within the rules of the debit card agreement.
I had a "friend" who tried to use a debit card to rent a car for a road trip. He gave them his card and they immediately put a hold on about $500, which seems reasonable to me for a week-long car rental. Mid-way through the transaction he decided that he could get a better deal on a car through a different company and cancelled the transaction.
Unknown to him the hold does not go away when the transaction is cancelled, a fact he only discovered when he tried to rent a car from a different company. Their hold put him over the limit for his card and he could not rent a car. Back to the first company and when he tried to re-instate the first transaction, they would only precess a new one. That's right, the new transaction required a hold which was greater than his limit. He was totally screwed.
The real answer to this is to either accept the hold, or get a credit card with a sufficiently high limit that the hold will not bother you.
And, cash is not nearly as good a solution as some think. Not every business accepts cash, and you are on you own for record keeping. With a card, I get an annual summary, which is a lifesaver at tax time...
Interesting. As an aside, the few times I ever used a prepaid card for gas, the gas station made me go inside and have them run the card.
My guess is that it got run as a credit card and the “swipe” knocked it into a “closed” status. I would call the card issuer. I think your problem is there.
As far as not removing the nozzle Im not sure how in the world they could do a pre-auth unless its just done automatically as soon as the card is swiped? Ive never had that experience and Im sorry it happened. I realize its a lot of money to have held.
You are correct. The authorization happens as soon as the card is swiped.
I’ve been reading some of the responses on this thread to Mr. Peet who works at a local energy company (gasoline, diesel, gas, C-stores, and so so and so on) doing their books. From an intimate knowledge of the process, she’s been laughing herself silly at some of the ignorant responses. (Not yours, though.) The greedy gas station owner guy got the biggest *guffaw* of all.
The clearinghouse that processes the transaction is who puts the lock on the card and process the transfer. This is NOT VISA, Mastercard, or the like nor is it the bank that issued the card; the clearinghouse processes different cards from all kinds of purchase points.
He said he knew his funds were low, but he just assumed that the card would not be authorized if there were insufficient funds ... or that the pump would stop when the funds ran out.
The bank told me that it is up to the "point of service" as to how much they authorize the card for. They said is was quite customary for a gas station to only authorize $1, and the settle up the next day.
They did refund my $16, though, because we were long-time customers.
Well, let’s never change “it’s just the way it is.”
Contact your bank and demand they change their “hold” policy, and then contact the owners of the gas stations and demand they change their “hold” policy.
As I said, its never been an issue for me because I have money in the bank
Great information! Thank you for sharing. I never knew it was a clearinghouse which explains a lot.
I once had a pre-authorization put on my debit card from a company that I never ended up doing business with. I called our credit union and asked to have it removed as it was for a fair bit of money and they said they could not remove it. I was surprised, but now reading you response, it’s clear why they couldn’t.
Thank you! I’m sure you and your hubby have educated a lot of people today :-)
Never use a debit card for gasoline, car rental, or hotel stays. The fine print in either the card, or merchant agreement allows the merchant to put a clamp on your funds, over and above the actual charge, and release the hold at their convenience - up to 10 days, some times. It stinks, but you enter into a voluntary agreement, whether you realize it, or not. I used to be in the industry. Thanks.
Not contacting anybody.
I don’t really care about this issue except to point out that the problem could be easily solved.
C'mon, as a libertarian (and formerly a Libertarian) I say contracts between consenting parties should not be in the purview of the goobermint unless they involve theft, force or fraud.
If you sign up with a bank that hoses you and admits it in writing, more fool you. If there's any question about what a seller's going to charge for using your debit card, ask.
It goes the other way too. I had a bank manager tell me that the bank processing my $93 paper check to the phone company for $930 was my problem - and that I should take it up with the phone company as they electronically processed their own payments.
My loud reply, in the middle of a busy lobby, was "Ma'am, I have a checking account with this bank. NOT with the phone company. YOU are responsible for improper processing of my clearly written check."
She folded. I got the money back immediately.
I'm hip to the hold thing. It rarely happens to me, as I frequent the same sellers and put large charges on my debit card.
A polite vendor will volunteer the amount of hold before it happens. Enterprise told me about, and immediately refunded, the $50 they put on for a two day rental.
I went into it with my eyes open.
So why is it then that I can have different holds at different gas stations with the same card? Circle K is 40, while at Quik Trip its one dollar while at Chevron its 75? Furthermore my bank always tells me its the store putting the hold and not them.
I didn’t make any mention of whether banks or stores do it. I do know that in the paperwork for my husband’s Western Union issued debit card it states there can be a up to a $75 hold for using it at the pump - which is why we don’t pay at the pump.
I didn’t say anything about government
I pointed out how the computer system would work better for client service.
Biz can take it or leave it.
Is that libertarian enough for you?
A couple years ago we were driving back to NM from Oregon and I stopped at a station near Tonopah NV and just as I was starting to fill up all of the station's pumps quit. I got just a squirt of fuel if any. So I went to the next station down the road and filled up there. Later on we stopped at a Subway in Las Vegas to get lunch and my card was declined.
Now, it is good to have a small local bank. I called and talked to a human person and they got it fixed up lickety split. The two gas station stops within a short time frame triggered a hold for a possible stolen card because as far as the bank knew my card had been used to purchase two tanks of fuel at two different stations within ten minutes and within a mile of each other. Confirming my identity and that I was indeed at those two stations cleared it up and in fact they canceled the hold on money from the first station on my word that I received only a small amount of fuel there and the rest of the trip was fine.
(But for stubborn fog completely spoiling our side trip to the Grand Canyon.)
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