So you think youve been overcharged... you just got home, looked at your account online, and that that darn restaurant or gas station or rental company has taken money from your account that is over and above what the bill was, even including tip!  Screw em... time to fire up the trust Davis Wiki and chew them out about it...

Wait a second... you might want to learn a bit about how banking works first...

You see, there are different kinds of charges to accounts, and usually your online banking service doesnt show you the difference between a normal charge (the kind that actually takes money out), and an authorization hold, which (and this is the really important part) does not actually take money out of your account.  Yes, it is showing up on your bank statement right now, and yes, they did do a transaction in excess... but that is because they didnt know how much to charge you.  The extra charge will disappear in a day or two.  Really.  Thats how it is supposed to work.

Why do they do this?  Well, its pretty simple:  you just sat down at a Restaurants restaurant, ate a nice $40 meal, and the waiter hands you the bill.  You hand them your credit card, and they whisk it away.  When they run your card, you havent yet added a Tipping tip.  They run it, the transaction adds a small excess floating amount, and they return your card and the bill.  You then write in your tip, and sometime in the next day they do their paperwork and tell the credit card company the exact amount.  Thats why you dont have two charges on your account every time you tip somebody at a restaurant.

Even more obvious is why gas stations do this:  When you swipe your card at a pump, it is authorized.  At the time, they have no idea how much gas you are getting... are you putting a couple gallons into a scooter, or filling a recreation vehicle up with $250 worth of gas?  They toss an authorization hold on there, and you pump the gas.  Its usually not noticed in this case because the pump is fairly regularly updating the amounts, but you can catch it if you check your account right after pumping gas.  In this case, since they dont have any idea of the amount, they often show up as an undercharge.

Please note that when you pay by debit card without using a PIN, some gas stations put a hold of up to $75 on your card. That means that up to $75 of your checking account can be off limits (in addition to the price you paid for gas). The time of the hold can vary and depends on your bank. (i.e. 72 hours, 5 days, etc.) This could cause overdrafts fees, bounced checks, or insufficient funds on your account.

How can you protect yourself at the filling station?

    If you must use a debit card, pay inside where you can use your PIN number; PINbased transactions are registered immediately.

    If you pay at the pump, use a credit card.

    Oil companies proprietary charge cards often dont have any kind of block feature on them, but not always. Chevron, for example, briefly blocks out $18.

    Cash is still good  many gas stations, tired of paying high creditcard fees, now give a discount for cash. Look for such deals.

ARCO: $75 hold
Chevron: $1$18
Shell: $1



Rental places will sometimes put a hefty hold on there, reserving the right to charge you for expected room service (yeah, statistically, youre likely to use it) or repair or replacement of an item or room.  Hotels, car rentals and other places usually do this.  You also see extra dollar charges sometimes appear to verify accounts.

The cool thing is that the charge automatically goes away if the merchantFootnote(Merchant is banking speak for the restaurant or business) doesnt file within a certain time period.  It also often (depending on your card) doesnt affect your actual available balance.  That means you can have $100 available, go to two restaurants, have $45 meals at both and they charge you $55 each, but you wont have gone over $100 if you tipped less than $5 each time.  Oh, youre going to the fourth level of hell when you dieFootnote(4th Level of Hell: Being forced to work food service in perpetuity.) for skimping on the tip, but your account was never overdrawn.  Like most things involving finance and banking, it depends on your details of your account: debit/charge cards may well get overdrawn, but real credit cards wont.  By the way, ever wonder why rental places sometimes insist on a real credit card?

Authorization holds exist because a merchant can not check to see how much money you have available.  This would be a blatant violation of your privacy, and could be used by unscrupulous individuals to steal from you.  An authorization hold simply asks the credit card company if you have X amount available, and to hold that money for a short period of time.

In short, before writing a scathing review about how you were overcharged, you might want to wait 48 hours and see if that overcharge makes like a baker meeting a Boojum and softly and suddenly vanishes away.

Links for more info

  http://wiki.answers.com/Q/Why_would_a_restaurant_put_a_temporary_charge_on_your_credit_card Wiki Answers Why would a restaurant put a temporary charge on your credit card?
  wiki:wikipedia:Authorization hold Authorization Hold on Wikipedia


Well Yes and No

First off an Authorization hold or PreAuthorization is done to check to ensure the card is active or good. A $1 dollar charge is normally done and is considered one of the Best Practice for merchants accepting credit cards. There are of course different transaction types for different vertical markets (restaurants, hotels, car rental, gas station, etc) each having a little bit of a tweak on transaction types that best fit the needs of these different businesses.

As for the businesses there are merchants who prefer live transactions versus batch transactions. Having a system that charges against your card in real time is expensive and normally reserved for high end stores, boutiques and jewelers. Everyone else uses batch processing. A batch is a file of transactions kept on the POS (point of sale) terminal or the store/company server. At some regular interval, midnight of the business day, 2 days, 3 days, a week. The business transmits the information to THEIR bank and the money is applied against your account. You may have noticed at times that you bought something at a store it showed up as a preauth and then disappeared and the money went back into your account until a couple days later SURPRISE!! money is gone. This is the reason why.

And while the first commenter makes some good points Im in disagreement. Tonight on the way home from SFO I stopped in Vacaville at a Chevron. When I got home I decided to review my accounts since I had been on vacation for a week. I was shocked when I saw the amount of gas I pumped 11.86 and then a second transaction for $126.00 dollars. Yes your reading that correctly one hundred twenty six dollars. I called my credit card company straight away and challenged the transaction. While I understand this is a business, other business like hotels, car rental agencies explain in advance that they will make a preauth for the total amount that will linger for 23 days. Im not sure if this is required for them or just part of their best practices. Im outraged about this preauth and dont have the attitude that is ok or that we should just take it. You can fight city hall and win. Here are some of my suggestions:

                  Shop / Get your gas elsewhere, if dont like the service go to their competition
                  Write your congressman / congresswoman asking for preauth amounts to be stated before you make a purchase
                  Write a letter to parent company of the merchant in my case Chevron Oil
                  Start a web site featuring gas stations that employ this exploitive practice and drum up public outcry

Getting screwed by a merchant is not ok or right. If you feel you have been treated unfairly use your money and your voice to make your message heard. If a merchant losses enough business they will change or go out of business. Remember they have the products, but you have the money and the power. Use them both wisely. XG
