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]