By Kathryn Skelton,Staff Writer

AUGUSTA – More people are using plastic to pay at the pump.

And more people are missing money right afterwards.

Walter Ash said he hears horror stories every day from people caught in a phenomenon called “holding” – when extra money’s temporarily frozen in their checking account after a purchase, entirely beyond their control.

It happens mostly at gas stations, as a test to see if money’s really there before the customer starts pumping, but holds don’t have to be in the ballpark – as much as $100 can be frozen for an $8 purchase – and effects can linger for days without customers realizing it.

They bounce checks. They get nasty surprises at the checkout counter.

“It can be for any amount they choose, without your knowledge,” Rep. Ash, D-Belfast, said Wednesday in support of his bill that would penalize merchants who don’t give back the extra funds in one hour. “Someone is tying up (money) that belongs to you. Do it a couple times, and they could easily be taking hundreds of dollars you no longer have access to.”

But in hours of testimony before the Business, Research and Economic Development Committee, hashing out the “someone” was tricky.

Jinger Duryea from CN Brown, owner of the Big Apple chain of convenience stores: “You need to understand the merchant never places a hold on a customer’s bank account.”

Minutes later, from Vicki LaChance, assistant vice president of electronic banking at TD Banknorth: “The financial institutions do not initiate debit and credit card holds. They only respond to holds initiated by merchants.”

Patricia Aho of Pierce Atwood Consulting, speaking on behalf of the Maine Oil Dealers Association, said merchants control the amount of the hold, while financial institutions control the length of time it’s in place.

Nearly everyone agreed that high gas prices have made the practice more prominent.

Where merchants used to ask for $1 just to see if an account was good, LaChance said they’re now asking for $75 to $100.

It’s also become more of an issue because more consumers are paying by plastic at the pump – from 54 percent in 2004 to 80 percent in 2005, Aho said.

To avoid holds at gas stations, pay inside or use a PIN number, she suggested.

Ash said people have complained to him about holds at restaurants, hotels, rental car agencies and even insurance companies.

Co-sponsor Rep. Hannah Pingree, D-North Haven, said she was shocked after she rented a car for three days at $30 a day and discovered they’d held $500.

“That was a significant amount of money. There was no disclosure,” she said.

Greg Dugal from the Maine Innkeepers’ Association said if inns and hotels didn’t put a hold on customers’ accounts to cover the stay, they’d face higher processing costs with entities like Visa and MasterCard and also would risk someone walking out on the bill.

Under Ash’s proposal, hotels would have to unhappily bear those costs or stop accepting cards. As a result, Maine would become the first place in the country to require full payment at check-in, Dugal said.

Legislators discussed retooling the bill in a workshop next week. Enough citizens have voiced concern so that “we will do something,” co-chair Sen. Lynn Bromley, D-South Portland, said.

Several people expressed skepticism about taking on an issue that touches so many industries.

“I don’t think anybody is trying to screw anybody around or whatever. This is the system you have and it is a national system,” Duryea said. “Good luck in making a state rule. I’m sure you can make it, but it’s a national system.”