Pumping From The Pocket
Date Added: May 13, 2004
The online consumer has more power than ever. If we experience something we feel to be unfair or a scam, we now have the ability to 'warn' many people quickly and easily about it. But what happens when these would-be consumer advocates don't have the whole story before they hit the 'send' button? We get inflammatory and misinformed chain letters like this one.
subject: FW: ANYONE WHO BUYS GAS WITH A CARD
I just want to inform you of something my husband and I found out this weekend. We stopped at the BP(old Amoco) gas station last week and we used our bank card as usual to buy gas and a car wash. This weekend we noticed a $10 charge from a Timothy Schlangen on our on line bank statement and called the bank thinking someone had used our card without authorization. Low and behold the bank informed us that gas stations are starting to charge you $10 to use your card at the pump. The bank said that the authorization flashes very quick on the little screen (we didn't see it). It does not show on your receipt either. It only shows up on your bank statement. So if you only want $5.00 worth of gas it will cost you $15.00. How many people are bouncing checks because they don't know this?
Here is the address of the station that we know does this
I checked with the web site for low gas prices in the area and they were listed at $1.69 but with a $10 charge if you use your card to buy it.
What a rip off!!!!!!!!!!!!!!!!!!!!!!!!
PLEASE INFORM AS MANY PEOPLE AS YOU CAN ABOUT THIS.
What the author of the chain above likely experienced was a case of e-commerce getting too fast for its own good. Each time you use your credit or debit card at a point-of-purchase, it must be authorized. This process usually involves sending your card number, expiration date, any other authorization code (including your PIN code) and the amount of the purchase to an acquirer, which verifies all the information and checks that funds are available to cover the purchase. If sufficient funds are present, the card is authorized and the transaction can proceed.
However, in the case of pay-at-pump transactions, your card is authorized at the beginning of the transaction, before the total purchase price is known. Since the acquirer requires a purchase amount to process the authorization, the station's system sends a "hold" - a nominal charge (anywhere from $1-100) - that allows the acquirer to process the authorization until the exact value of the transaction is known. Once the total is transmitted, the transaction is completed and the hold is removed and the hold amount is refunded to your account.
These types of holds are not new, but what is new is that online banking now allows us to check our credit and debit card balances at any time - often in real time.
In the past, hold charges appeared and disappeared long before we actually saw our monthly statement. That is likely what happened in the case above: The station placed a $10 hold on the card while the transaction was taking place and the bewildered cardholders checked their online statement before this hold could be removed (the name on their statement was likely the name of the acquirer). By the time the hold charge likely came off their statement, this chain letter was already circulating far and wide.
One of my favorite new commercials is one for a bank in which a man pays for something at a coffee shop with a debit card then eagerly turns to his buddy at a laptop computer across the dining room to see if the transaction has shown up on his online statement yet. This is a good example of technology being too fast. Break this chain.
References: HowStuffWorks.com, About.com