Reader WW is upset because a gas station froze $100 on a debit card transaction for $12 worth of gas. This caused his rent check to bounce. Now he’s got overdraft fees and he’s wondering why gas stations are doing this.
I’m trying to find out a little more information concerning an issue I ran in to today with an oil company. Here’s basically what happened…
I went to the BP gas station located on Barnett Shoals Rd on the East Side, to fill up my motorcycle a couple of days ago. I pulled up to the pump and swiped my debit card in to the card reader. It asked if it was a debit card, I clicked yes. It then prompted me to type my pin number in, etc. So, I did. I filled up the tank, a whopping 12 dollars. I went on my happy little way. I checked my bank account today and I saw an overdraft fee on my rent check, and my rent check had not gone through. Thing is, there was still money in my account. I called the bank to get to the bottom of it. They looked and saw where the BP station had put a $100.00 hold on my account. Apparently, these gas stations are holding 75-100.00 on debit transactions. They don’t list this anywhere in the store as a policy either, so that you have the option to opt out. The bank basically said that this is something that gas stations are starting to do. I was irate! How are they allowed to access my account and hold anything beyond the price I purchased for. That is stealing. Sort of like someone coming into your yard and taking your lawn mower without asking, but intended to give it back later. They took money out of my account that wasn’t theirs and without my permission! So, basically I now have about $100.00 in overdraft fees, both from my bank and the rental company. Now, typically this wouldn’t be too much of a financial issue, as I usually have plenty of money to cover things. Unfortunately, this month money’s a little tight, with extra things popping up.
So, after speaking to the bank, I called the oil company that was listed on the draft in my account. Acree Oil Co. I let them know that I was very unhappy about the situation and that I would no longer support the station where this happened, or any other station that takes money out of my account like that. The guy there checked with his people and they said that they have no control over it. It is the credit card company that does this. I said that I didn’t use a credit card, and that my bank had just said that the oil company was responsible. He said that wasn’t so. I also asked him why there wasn’t a sign in the store letting people know about this policy. He said they didn’t need to post a sign because they weren’t the one taking it out, the bank was responsible for doing that. I then called the bank back to see if what he had just said was a lie or not. They said it was, and that they (the bank) have no control over it. I let them know that they do have a responsibility to protect my money, and that they should figure out how to prevent this. They were doubtful that they would be able to control this. They also mentioned that a lot of their customers have experienced this and are also irate. They mentioned some recent story in the news about it. They said that if they could do something about it, they would have already done it, because they have so many customers who are upset. Unfortunately, I had no knowledge of this even being an issue. Now I do and I want to make sure that as few people as possible have to go through it as well. The bank lady was nice. She mentioned a story about a mother recently having the same issue on a weekend when the bank was closed. She had no money in her account the entire weekend and could not buy food or diapers for her children. I think that this is wrong and should not be allowed. Rather than accepting it, I’m going to try to find a station that doesn’t do this. So sorry for the long winded email, but it took me by surprise, and I would hate to see someone experience this. Also, does anyone have any knowledge of this kind of thing? Can they legally do this?
Thanks,
WW
Well, you may not like it (and we don’t blame you) but gas stations have been doing this for some time. The Charlotte Observer explains:
When a consumer swipes a card at a gas pump, most gas stations freeze $1 as a confirmation that a valid checking account exists. That hold usually lasts for a few hours, but can stretch for a couple of days. The station later debits the actual amount of the gas purchased from the account.
As gas prices rise, however, the stations are increasing the amount of money they freeze in order to lessen the risk that they’ll be ripped off.
The hold policies can cause financial headaches for consumers in several ways, said Nathan Tothrow, director of marketing for Charlotte Metro Credit Union:
A debit-card transaction might be rejected even though drivers have enough money in their accounts for the gas they want to purchase. “They have enough money for the gas, but not for the hold,” he said.
The holds can tie up cash that can’t be used for at least a few hours. Unsuspecting consumers might have other transactions declined because the holds are in place.
And there’s a danger that the holds can stay on for longer than a few hours, causing other transactions to cause an account to be overdrawn, triggering fees.
Tothrow said the credit union has received complaints about excessive holds. The bank investigated and found several gas stations were freezing $75 and $90. Most still froze only $1, he said.
“For a lot of folks, a $90 unexpected hold can cause a problem,” he said. “I really don’t like that they are doing it to our members.”
What can you do about it? Not much. The NC Attorney General’s office says to “use the debit card with a gas station attendant and enter your PIN number because there are no holds involved and the account is charged immediately for the exact amount.” Of course, some banks still charge a fee for using PINs instead of signatures, so keep that in mind.
The bottom line? If you’re in danger of a hold like this causing you to bounce your rent check– be safe and use cash.
Debit-card holds can take a nasty bite [Charlotte Observer]
(Photo: .schill )
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@Pithlit: I have an education and still run into times where there is just no money. Arts degrees are useless. Anyway, coder4life must be going through some sort of emotional turmoil to be so snarky and judgmental. If I weren’t an athiest, I’d pray for coder4life.
I worked at a gas station, and I know on credit card purchases in Canada,
we do a $100 pre-charge to ensure the card will swipe, however it is never
a bank hold (at least in the station I worked at). Shell Canada.
@khiltd: oh please no…
i’m working at a local YMCA this summer and have to fill the mini busses… put $120 into one last night, and it wasn’t even empty.
What actually bugs me the most about this is the bank charging an overdraft fee for money that wasn’t actually being removed from the account. Overdraft fees should only be charged for actual cleared charges, not for holds.
What happened to the second page of comments?
@Jinx: Maybe the NC attorney general is referring to NC laws. They probably vary state to state.
STILL haven’t figured out why morons use debit cards. Oh yea, they’re morons. Typical imbeciles who think banks suggest using them for THEIR benefit. Can’t THINK for themselves, like most of the REST of this country. That’s why we get the elected officials we do. MORONS
@raisitup: Because the holds didn’t used to be that high. They’ve changed thus making it a pretty big problem for people that aren’t expecting it. It’s not as if the gas stations have signs.
For a motorcycle, I would just alway keep a 20 in my pocket just in case I need to fill up.
anyway, I thought this has been going on since the beginning of all this debit/check card stuff.
I love how the gas station guy admits that a lot of people are irate about it, but says that the station “didn’t need to post a sign because they weren’t the one taking it out.”
Clearly they DO need to post a sign, whether or not they’re the ones doing it, as it’s impacting THEIR customers. It’s a little thing called ‘respect for the customer.’ The station should look into it.
use your card as credit
Okay, it might have been said earlier, but here’s a little Debit Card 101.
If you punch in a PIN, an authorization hold is placed by the vendor’s card processor through Visa or Mastercard (however your debit card is branded). Neither the bank nor the gas station has control over this.
If you wish to avoid this hold (and any fees that come from not having enough money in your account), always select “credit”.
Different gas stations have idfferent amounts that their processor holds. The gas station probably has no idea about how much is being held. (By the way, I write for Finance For Youth if someone wanted to read about this or other finance related subjects!)
@raisitup: @allstarecho:
i read the consumerist frequently and i didn’t know about this. it’s not really common sense either. if i bought $12 of gas, why would i think that the gas/bank company would hold $100 JUST IN CASE? why not just freeze $12 since that’s all they got charged? or hold at the very least, freeze $42 in case i didn’t have the money and might get charged overdraft fees? $100 is a little excessive
@Coder4Life: These are the kind of stupid comments that are turning me away from Consumerist.
when it asks if you’re using the card as a debit card, always say ‘no’
even if it is a debit card. i use my debit card (which is not a credit
card and doesn’t have any credit card affiliation) at the pump and
always tell the machine i’m using it as a credit card. so far, it
hasn’t rejected my card OR pulled $50 or $100 from my account along with
my gas amount, and i’ve done this several times with no ‘buffer’ amount
in my checking (e.g. got $30 worth of gas with $35 in my account).
JBi
There are a lot of misconceptions here in the comments about how debit and credit cards work. If you use your debit card as a credit transaction, the hold will have the same effect of holding actual cash rather than a credit line. So in this case, the consumer would not have been protected by selecting the “credit” option. Credit card machines do not differentiate between debit or credit cards when they authorize – it’s up to the consumer to be aware of the policies since they are legal (though unethical). Also, these hold policies are designed for credit cards – once the companies puts the actual charge through, the credit line is freed up immediately on a credit card. On a debit card, it may take up to 72 hours since we are dealing with actual cash and not a credit line. It is up to your bank as to how long the hold is on your account – but in most cases there is nothing they can do to remove it once it’s there. So if you’re out in the cold with a $100 “hold” there’s nothing you can do about it. In this case, the gas station legally put a hold on the account. (And though it’s unethical, it’s also legal not to tell you about it.) And the bank, since it’s a debit card, was unable to reverse the hold immediately. So both are claiming innocence, but in a way the situation is a result of both policies.
When using a debit card as a credit card, the main difference is that credit transactions don’t have to be put through for 30 days by law. Debit transactions must be put through within 3 or 5 days depending on the state. In my experience, it’s usually smaller mom and pop stores that don’t authorize the charges the same day.
I personally prefer debit cards because I know how much money I have when I check my balance – when I use credit I get a surprise charge a week late which then gets me an overdraft fee. I am fully aware of my financial situation and do not spend money on unnecessary items, however, my rent alone is half my paycheck so there is nothing i can do about living paycheck to paycheck. Thanks, recession!
also, i’ve started using cash all the time since my salary decreased while my rent went up. that way i don’t overdraft or pay stupid holds, fees, ect. with my bank account being so low all the time, this is the only way i can avoid bullshit like this.
I am a manager at a gasoline station and I often wonder who the hell in their right mind would approve many of my customers with a credit/debit card. If you possess a credit/debit card, then dear God, understand how the system works i.e. credit/debit hold/block.
On one occassion, a customer attempted to utilize their Bank of the West Mastercard debit card at the pump. Since the card reader couldn’t read the card, the customer approached me.
I asked them if they wanted to use the Mastercard feature of the card or the debit feature of the card. The customer said, “Debit.”
Since my cash register requires a fixed amount for debit transactions, I asked the customer, “How much would you like to set it for?” The customer said, “I want to fill it up.”
So I responded, “For a fill-up from the register, I can only do that using the credit feature of the card.” So the customer responded, “Okay. Do credit then.”
I swiped the card for credit. It pre-authorized her pump for $75. She dispenses $15 into her vehicle. She drives off and returns several hours later.
She yells at me, telling me that her debit card was declined at Winco. She had $100 in her account before she came to the gas station. When she went to Winco to purchase 50-some-odd dollars in grocery, to her embarrassment, her card was declined.
I went to where her pump was at and pointed to a little sticker with a “fine print” that stated Mastercards have a hold of $75 per transaction. Near the bottom of the sticker, it also states that there is no limit/hold when transactions are conducted with the station attendant.
Of course there is no limit/hold, in the sense that the customer would specify how much they would like to set the pump for. If they keep saying “I want to fill-up” or something along those lines, then the station attendant will swipe the card and it will pre-authorize, just like swiping the card from the card reader at the pump.
The customer then proceeds to threaten me with a lawsuit for emotional distress and fraud, which I later then provided her with a phone number to my parent company.
Who the hell gives out credit/debit cards to lunatics like this customer? Seriously. If you don’t understand the system, then don’t bother participating in the system.
To all of you out there complaining about the inconvenience of not being able to fill-up your vehicle in one transaction, take your head out of your ass, open your eyes, and learn how the system works. Credit/debit hold/blocks are there for a reason. If you don’t understand the reason, then throw away your card(s), shove your head back into your ass, and remain in that position ’til you die. The world doesn’t need more idiots like you wasting time and resources.
I have never seen such a thing, i have only ever seen 1$ being held, in fact i have a 1$ hold on my account now for gas i got 2 days ago. I cant understand why a hundred dollar hold would be necessary, so if you want 60 in gas, but have 65 in your account, u cant get gas at the pump because you cant cover the 75 to 100 dollar hold. I would be livid if my rent check bounced and i incurred fees. I feel as though some legal action could be taken to recoup the fee’s due to the lack of notice anywhere on the pump and the (most likely recorded) denial by the oil company that they responsible for the action
“You have lots of other problems besides the $30 fee.”
How about you share a bit so that we can judge you also.
This story makes no sense.
The story says the consumer used their pin code.
Consumerist says use your pin code to prevent what happened to this customer.
I don’t believe the consumer used a pin code. I believe they used the debit card as a “credit transaction.” If you use a pin code, the gas station cannot put a hold for anything beyond the amount you owe.
There are a few gas stations out there that don’t follow this practice. Maybe consumerist can make a list of these gas stations….sent in by us. So that we are aware of which ones to go to and which ones put a hold on our money.
I know it would be time consuming to do this but I think it would be worth it, with the way gas prices are now who wants a gas station to put a hold on their money? I for sure don’t.
@whatevernever: Why bother? Just get a “real” credit card and the problem goes away. And you get all the other benefits like building your credit rating and perks like 1-5% back on everything you are buying anyway, including this expensive gas. I am personally getting 5% on Shell and 3% at Costco. Sure, $3.80/gal sucks, but it’s better than $4.00.
@Bagels:
“All the gas stations by me have a notice right by the pump about the hold”
Same here (Seattle) on the pumps I use. It would suck if you were surprised by it, though. Sounds like OP is getting the big runaround.
Neither the Bank/Credit Card company or the gas station is at fault here. It is the debit/credit PROCESSING company used by the gas station. Something to consider: both Visa and Mastercard specifically disallow a participating business from obtaining authorizations for anything other than the actual purchase amount. $1 authorizations have been the norm for years, but they have technically never been allowed either.
Here is what I was told by my bank. Debit cards ran as pin transaction, the hold must be released as soon as the transaction is done. If not the merchant is violating the atm rules set by Nyce, Star, Pulse, etc. My advice is file a dispute with your bank. Holds can be any amount regardless if it is a pin or a signature transaction. My advice is if your going to use debit cards, only use one check a month. There is no law that requires businesses to tell you they are going hold more that your purchase amount.
I work for a company that owns and operates a gas station.
When customers pay at the pump, there’s a slight possibility that the merchant processor and/or the bank might process the card as a credit card even if the customer selected debit/atm. We have no control over this, most of the time it’s actually the customer’s fault.
This is a common practice. The reason is simple: if we do not reserve a specific amount of money in the customer’s account, how would the system know how much gas to dispense? Many customers have $20 in their account and think that the system is smart enough to allow them to pump that much money worth of gas. Wrong.
Additionally, the amount that is being reserved has increased across the board at all gas stations because with the current price of gas, allowing a customer to pump $50 or $75 dollars isn’t enough. I receive more complaints from customers complaining about not being able to pump enough than for the $100 lock on their money.
Finally, this is NOT at all like the station stole the customer’s money. That $100 hold is released after 24 hours.
Same bull happened to me at a QuikTrip a few months ago. They thought it would be really awesome to put a $75 hold on my account for a few hours. I called my credit union (Mazuma) and she said just to run it as credit next time and I wouldn’t have a problem.
As a former gas station worker, when I worked, the prices were relatively low ($1.75 at it highest point when I left the station) and as such the preauthorization hold was only one dollar. With the rise in prices, to protect from overdraft relating to those who have $1 in the account but perhaps not enough for the all to common $75 fill up, the hold amount increased. The best tactic is to prepay an amount: This does require you to go inside, but it will charge your card exactly the amount you wish to specify. For those of you who fill often enough, you can often times guess rather correctly how much a fill up will cost you.
What has begun to infuriate me about the tone of this discussion (and many contentious Consumerist postings) is this seeming indifference to the nature of business by the average consumer.
For the love of God man, the GAS STATION DIDN’T TAKE HIS MONEY. And for the record, the OP’s bank is the one responsible for determining the duration of the hold on the account. One my clients is a hotel that frequently has problems like this when guests will use their Dr card rather than a Cr card and end up with overdraft. They can only call the users bank and request that the hold be released (if the guest has checked out, if not, they can’t do anything).
Consumers need to understand that the $75-$100 hold policy is likely calculated based upon the high average for a fill up of premium gasoline and is only used to guarantee that the card in question has the funds to cover this hypothetical transaction at the time of purchase.
Hotels do the same thing if you use a debit card. Otherwise they have no recourse when you trash the room and leave early without paying. There’s no reason not to know this.