Maybe it’s because of high gas prices, maybe it’s the learning curve for a little-known business practice more than a decade old.
Either way, complaints have surfaced in Maine about merchants temporarily taking more from credit or debit cards than was actually spent, confusing and sometimes angering consumers.
Jon Paradise got his credit card statement in the mail, saw a $150 charge at a restaurant where he’d dined for $35 and assumed his card had been stolen.
It wasn’t.
Paradise, of Portland, is spokesman for the Maine Credit Union League, yet even he hadn’t heard of a “block” until this experience a few weeks ago.
Credit and debit card holds or blocks happen most often when a temporary charge is made in advance of a sale, say right before you’re about to pump gas. Money can be tied up for hours or days until the actual charge goes through, and it’s all perfectly legal.
Was it stolen?
“I called and asked the company, What’s going on? Did someone steal it?'” Paradise said. Their response: “We do that all the time.’ It came off (his bill) in a few days.”
The practice has gotten recent attention, perhaps a result of the higher gas prices.
Will Lund at the Office of Consumer Credit Regulation said he heard from someone who swiped a card at a gas station, found that pump didn’t work and moved onto the next. The person was shocked to learn $150 had been held from his account – $75 from each pump.
“There is a lot of finger-pointing that goes on when a customer tries to figure out who placed the hold,” Lund said. Financial institutions say it’s the merchant. The merchant says it’s the financial institution.
Rebekah Higgins, the Maine Credit Union League’s card services manager, said blocks are the reason some gas pumps these days stop at $50. It takes another swipe – and another hold – to get the gas flowing again.
Covering expenses
The practice protects merchants, according to Colette Mooney, deputy superintendent at Maine’s Bureau of Financial Regulation, to make sure money to pay for that gas, hotel or car rental really exists.
Merchants are not obligated to tell customers it’s being done, Mooney said, nor is there any limit on how much can be blocked. And no amount of pleading speeds up the money’s virtual release.
“Some people operate their accounts very tightly,” said Mooney. For them, blocking can be trouble. Other withdrawals can bounce while a block’s in place. For those reasons, she said, it’s important customers know it can happen.
The money is held until the transaction is posted in an account, Higgins said. In her work with Visa, she said she’s noticed that when a debit card PIN number is used, the transaction is posted immediately and extra money is not blocked.
“The time frame (for when) the holds are dropped is not scientific,” Lund said.
The Federal Trade Commission suggests asking merchants in advance whether they plan to place a block, how much it will be and for how long.
Comments are no longer available on this story