|Authorizing twice as much as the actual price|
Is this kosher?
I bought two items from an online shop. They immediately got an authorization for $50, the cost of the items including shipping and tax. I received one of the items yesterday. Today I see on my bank account that the $50 is still pending, but now an additional $25 has been authorized from the shop. I called the shop, and they said yes, that was for the first item they sent, and when they ship the other, they will authorize yet another additional $25. So in all, $100 authorized for a $50 sale. They anticipate the authorization to fall off in about a week.
I have never done this myself. If I have to break up an order, I charge the whole thing and don't get any extra authorizations. Is this allowed by the processors? It seems bogus to me.
Sounds like your using a *debit* card, not a credit card? The original $50 hold was placed on your money by your bank at the time you placed the order.
Even though the $50 authorization has the online shops' name next to it, they didn't immediately receive the money. You bank aggregates all of the money "held" by pending transactions, and earns interest on it, and its in their best interest to hold on to it as long as they can.
The company playing you is your bank, not the online shop. To prove it, call them as ask for a chargeback on the $50, for "non-receipt of merchandise".
As a Visa cardholder, you have rights. They should immediately credit you that money and open an investigation (standard chargeback procedure). In all likelyhood, they will remove the $50 hold they've maintained on your money, and somehow blame it on the online shop.
To be fair, the $50 authorization should read, "Held by ABC Bank (earning us interest), on behalf of Online Shop". That description would at least make it clear who holds your money.
I don't know if it is allowed in the US or other countries but in the UK, both Tesco and Asda do this. Tesco are the largest supermarket here and Asda is owned by Walmart.
As long as they don't authorise AND charge the card, this is fairly normal when the authorised amount differs from what they need to remove from the card. Most smaller businesses would just charge the full $50 and refund the $25 if you choose to cancel the second item.
So just keep an eye on the account to ensure you are only charged once!
This is a debit card with a Mastercard imprint, but I am also a merchant and I know for a fact that a merchant has to ask for an authorization in order for it to appear on someone's account. A bank can't just create one out of the air. I have not dealt with any other merchant in all the 12 years I've had this account who has done this except for Paypal, back in the bad old days, when they used to make double-dipping a regular practice. My bank told me then they thought this practice might be illegal. That was many years ago. If this merchant was just testing to see if the card was real, they could have authorized a dollar, like the gas stations do. But no, they are authorizing twice as much as the charge.
This outfit is in Oregon, not Europe, so as far as I know, they don't have that excuse.
I questioned the merchant about it, and all I got was some boilerplate about how someone will contact me. No one has.
What I suspect is they want to make sure they have the money for items shipped. I suspect the company has been burned from an order is placed lets say for 100.00. They ship out 50.00 of it but have to wait till the other 50.00 has been shipped to charge the whole order. Lets say 3 working days pass well the 100.00 is no longer authorized/held in reserve to cover the charge so now the card owner can spend the 100.00 on somthing else. They have the other 50.00 shipped out and then go authorize the 100.00 charge. It can fail because the 100.00 in funds is not there now.
So what they do is charge then ship get the other item in and charge then ship. The 100.00 falls off and they get their money and you get your itmes.
Also lets say forget the 2nd item. The merchant doesn't have to pay for 1st the charge then the refund. Being a merchant yourself the cost can add up over time. This way the company avoids the decline and refund.
It is a little off but in todays world what isn't.
Seems like false economy to me. This way they have to pay for three authorizations and they drive away honest people. Imagine if the charge were for $500. Would they authorize a thousand? According to them, yes, but nowhere on their site does it say that. That is penny wise and pound foolish. They are so keen to make sure they get their $45 that they drive away any future purchases. I can hardly believe that stuff like forks and a little carpet attract massive fraud.
I have not received any further contact from them, although I told them yesterday if the duplicate pending charges did not fall off, I would do a chargeback, and this morning the duplicate authorizations were gone and the regular charges went through. But no apology, no explanation, nothing. I did ask my bank if what they did is okay. The clerk told me they do see it. I think this is the first time it has happened to me in years, like I said, since Paypal's bad old days (they double authorized a $300 charge and I got overdrawn--I will not ever forget that). And I do a lot of buying online--most of my buying, in fact. Like I buy from used book sites where it's a similar setup--bunch of different vendors using the same site. The total amount could be $50, but what actually turns up pending are the separate amounts for each vendor, not also a total amount.
Well, live and learn. Won't be buying from them anymore--or from any site like them. I have to say that after my experience a few months ago with the large site that completely ripped me off and then this, I will not be buying from any large sites at all unless they are corporate, like Amazon, or I can use Paypal.
HRouth I understand what you saying and don't blame ya one bit for moving on to another provider. This is something I have never done and it would bother me if I had it happen to me. I do know it is done and why but that still doen't make it right. :)
|This is a debit card with a Mastercard imprint, but I am also a merchant and I know for a fact that a merchant has to ask for an authorization in order for it to appear on someone's account. |
Yes, it's legal.
Yes, your bank earns interest on the money by reducing your available balance.
No, Visa and MC don't have a problem with multiple auths, because they're not real charges. The fact that your bank locks up your available (cash) balance is between you and your card issuer (your bank), not Visa and MC, who are just a processing network, and not the merchant, who half of them don't understand what's going on anyway because their web designer read the poorly worded implementation document and skipped the whole section on settling auths.
Gas stations, hotels, car rental companies, restaurants, and poorly implemented shopping carts are all notorious for doing this. Essentially any business that may have to charge your card more than once or for a different amount than anticipated. Haven't you seen the signs at hotels that say "we WILL authorize $100/day for incidentals to your card regardless of actual charges, and we recommend you do not use a debit card because it could take from 3-30 days to fall off"?
This (plus lots of other reasons) is why you should use a credit card for ALL online transactions.
|That description would at least make it clear who holds your money. |
I saw some stats from a friend recently - he was talking about how debit MC/Visa users have a 45% lower average order size (!) than regular credit card users, and the support costs are something like 50% higher on his store.
I've seen some merchants start to block Debit Visa/MC from their websites because they don't want to deal with the hassle of "YOU CAUSED ME TO BOUNCE A CHECK" type emails from angry customers that don't understand the intricacies of auths vs. charges.
Food for thought.
|I told them yesterday if the duplicate pending charges did not fall off, I would do a chargeback, and this morning the duplicate authorizations were gone |
You can't chargeback an auth. Try it. Your issuing bank will say "that's an auth, not a charge, no we can't remove it, the merchant has to do that or it will fall off in (3-30) days".
If you would have disputed the actual charge, I would have called the police with proof of shipping and signature. Auths are not charges, and as a merchant, I don't see any money in my account from auths.
Then again, I settle my auths properly, so this never would happen at my store. ;-) I do understand your frustration, and agree it probably shouldn't happen, but it is so common that I basically advise never to use a debit card anywhere.
|If I have to break up an order, I charge the whole thing and don't get any extra authorizations. |
Offtopic, but food for thought: Unless you're shipping within the specified amount of time in your merchant agreement, this is a no-no. You can't charge the whole order and ship half of it two weeks later, for example, because you were back ordered.
[edited by: bakedjake at 11:25 pm (utc) on Apr 3, 2012]
Story on our local news tonight. Rent a bicycle for as little as $6.00, the rental outfit submits an authorization for $250.00.
News story advises not using a debit card because this might lead to an overdraft and overdraft fees.
bakedjake, I think you are confusing debit cards with gift cards. With those, because they are not tied to a bank account that's one gets in the habit of checking every day, it is very easy for the customer to allow multiple authorizations that subsequently fall off and that later reappear and get rejected because the money is gone. This has happened to me as a merchant maybe 2-3 times over 12 years, less often than I have had to deal with a credit card that was used fraudulently. I guess merchants should go ahead and ban credit card users, because they are thieves.
I have always used a debit card because I am the kind of eccentric who refuses to pay one cent of interest or fees of any kind for spending my own money. I do not use credit, period. I use planning. Yes, I am that old-fashioned. Precisely because I have been using only debit cards since 1985, I know that this double authorizing is in fact NOT a common practice, especially in the past ten years. I buy the majority of what I buy online, even food in bulk. Re gas stations, I use a debit card and press credit so I don't get a $75 authorization for a $20 tank of gas. To hell with them and their bloated authorizations. I am not going to float them any extra money. When other businesses want to authorize a large amount, like $300 to rent a car, they tell me. They don't just do it, like the fools at this online shop. I've used debit cards to travel all over the US with no problem.
If merchants would like to cut off their nose to spite their face about debit cards and ban them because they absolutely cannot deal with all the very many debit-card customers who are so dizzy and foolish and get all in a dither about getting overdrawn and send a mean email, they can go ahead and block us. Merchants with an attitude about debit cards are making very poor business decisions. They don't need my money.
We're mostly in agreement HRoth - I was trying to explain the process more than anything. I don't like poorly configured auth systems either.
|I have always used a debit card because I am the kind of eccentric who refuses to pay one cent of interest or fees of any kind for spending my own money. I do not use credit, period. |
I don't disagree; I use an AMEX charge card. Gives you the benefits of a credit card and the discipline of a debit card.
|Merchants with an attitude about debit cards are making very poor business decisions. |
I would never not accept debit cards, I was just sharing an interesting conversation I had recently about this exact topic with a friend.
|double authorizing is in fact NOT a common practice |
We'll have to agree to disagree. I see it all of the time as a consumer.
Where are you at? Are you in the US?