Help! The Gas Station Froze $100 For $12 Of Gas And My Rent Check Bounced!
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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Comments:
So you had just enough money for $12 of gas, and to pay your rent?
You have lots of other problems besides the $30 fee.
If you are concerned about holds you need to pay inside! REcently I've been using up all of the typically $75 authorization and need to hang up the pump and re-swipe! It makes sense that the gas station wants to make sure you can cover the bill prior to pumping the gas as you can't really return it!
In Canada, or atleast here in Saskatoon, Saskatchewan when you use your debit card for a fill the pump tells you the will authorize $75 on your debit card. If you are not getting a fill just enter in how much gas you want and thats all you'll get.
All the gas stations by me have a notice right by the pump about the hold. I always use my debit card as a credit transaction at the pump and never had a problem or hold of any kind
I knew this when i was in high school..
Which further proves that the public school system needs to better educate children in the ways of finance.. sigh
The alternative is pumps that limit the amount of gas you can get out of a single swipe. This hit me ten years ago when I had to fill up a U-Haul in the Mojave desert and they made me put my card back in every $20.
I wonder why the bank said this is something gas stations are only "starting" to do... as far as I know they've been doing it for years.
This has ALWAYS been happening. What happens is the authorize am amount to make sure there are enough funds available. The credit card company then reserves those funds for you, but doesn't take them. Then when you complete the transaction you take that authorization and turn it into a sale with the correct amount charged. So the oil company (gas station) has told the bank "take the $75 authorization and turn it into a $12 charge". Then it's up tot he bank to expire the authorization (hold on your money). It's has been like this for years. HOWEVER, this has become a problem because people use Visa backed debit cards where the banks are holding their actual money instead of "potential credit". There is no way for a merchant to release an authorization because banks don't accept "reverse authorization" transaction.
In conclusion, it's the banks fault, not the gas station.
Get with the program people, debit cards are shit. You are not protected from fraud with the federal $50 limit, you are at the whim of you banking/financial institution with debit cards. They can change policies at any time and screw you 10 ways from sunday and make checks bounce, why do you think banks push people to use debits, they are betting that people will get overdraft fee's when petrol stations do holds. They get to point the finger at the station and say hey, it's them not us, you know what our fees are for overdraft, it's not our fault you agreed to our fees....sucker
The notice is almost always posted right next to the keypad. As the commentary states, this is something that has been done for years, however in the past it was just $1 to verify that the card was active and in good standing.
With the days of $1 gas long behind us, the gas stations need to make sure they'll get their money for that liquid gold.
Otherwise, someone could swipe a pre-paid visa gift card that had $5 on it and get $100 in gas.
@Coder4Life: Don't be an asshole. Millions of people live on tight budgets for any number of reasons, and they don't deserve to be insulted for it.
Either go inside and use your PIN, or better yet, use a credit card instead. This happens with gas transactions because they don't know in advance how much to authorize your card for (since they don't know how much gas you're going to buy at the time they authorize your card). $100 seems somewhat excessive, but the fact is that you should expect this sort of thing if you use a debit card all over the place. Debit cards are crappy that way.
This can happen with a credit card too, but it would just come out of your credit line instead of your actual money. So it most likely wouldn't affect you at all unless you were very near your credit limit. Also, there are plenty of credit cards where you can save 3-5% easily on gas. So I think it makes a lot of sense to use one for gas even if that's all you use it for.
@Coder4Life: Yeah, he should have got an education. Be like Coder4life, everyone. B cool. Stay in school You'll be flush with cash 4 ever. Just like Coder4life.
Seriously. He did say money was tight that month. Maybe you missed that part? Would it kill to cut people a little slack in times like these, especially with gas prices like they are? I know this is a comment section on the internet, so it's practically law to be a douchebag to anyone having money trouble, but still.
$1000 emergency fund baby!
Who uses gasoline anymore? You know it's bad for the environment. I bet you used that gasoline to eat at McDonalds after you shopped at WalMart.
Common sense: The pump doesn't know how much gas you're going to get or how much you want. So it's programmed to authorize at least a certain dollar amount, usually $50, $75 or $100. This pre-authorization can be held for up to 7 days. Then it is released and you're charged for the actual amount you purchased. If you don't want pre-authorizations, pump first then pay (ever seen those signs on the Murphy USA pumps?). Or pre-pay a set amount inside if the station requires pre-pay.
@full.tang.halo: Thanks for blaming the consumer for me... didn't log in until now.
I have been telling everybody for years about how debit card != credit card. It's finally starting to sink in on a few.
@Coder4Life: Get off your high horse, dude. Sometimes life happens, and us poor-folk find ourselves barely managing to scrape by to the next pay check. I speak as a 24 year old family-man with a career, not just some single dude working at a call center making $8/hr.
I could understand a 1-10 dollar hold on a debit transaction, but $100??? And with no warning? That's straight up ridiculous.
Quit blaming the victim here. I've known for a while that gas stations have been doing this, but I never would have expected a $100 hold.
This is why I like QuikTrip's pump activation card(they took my driver license info when I got the card so if I drive off they can find me). I start the pump with the card then pay inside with my debit card, and there's no hold over what I actually bought in gas.
I've had this same problem. The easiest solution for me is mentioned in the article above - go inside with your debit or credit card and pre-pay for your gas. Then you're charged an exact amount with no holds. If you're trying to fill your tank, you may have to intentionally underestimate.
@Coder4Life - What an incredibly ignorant statement. He wanted to pay for $12 worth of gas, and had a hold added for $100. It's the extra $100 that caused his rent check to bounce. Some of us unfortunately don't have tons of extra cash sitting in our bank accounts every week - I know that a $100 hold would put me in the red at certain times of the month. A -real- consumerist would have appreciated the information rather than making a stupid statement.
Yet another reason why debit cards are evil and credit cards are a better financial tool for the consumer.
i don't know if it would have registered differently but if you ever scan a debit card and the machine asks you whether it's credit or debit, pick credit ALL THE TIME! alot of places will pass the bank fee onto you and your account if you choose debit and put in your PIN. Choosing Credit will go through like any other credit card, still charge your account but eliminates the bank processing fee.
Consumer tries to be nice by paying with a debit card to save the station owner the credit card processing fee, gets hosed.
Lesson learned: put the gas on your credit card and let the owner eat the 2% fee.
Why any consumerist reader still uses a debit card that debits money from THEIR bank account is beyond me.
@Coder4Life: Is that even neccisary? Until about 4 years ago I was often in the same position. You are not the judge of someone's life, lifestyle and whether having rent + $12 dictates a problem. For all you know he was getting paid the a couple of days later or maybe he's a college student. Even if it's none of the above that was just abusive.
Can you dispute this with your bank/merchant? It looks like fraud if you make a purchase for $12 and it's accounted as $100. This process doesn't make sense. Why can't they just debit the amount of gas that you used?
@cmdrsass: Beyond problems like this, I also hate the fact that debit cards put the exact amount of money coming out of my account, even temporarily, out of my control. It makes it much harder to track your spending and available funds. It's just much better to have a credit card as a buffer between the merchants and your actual money. Then you only pay your bill once a month and you know exactly how much money comes out.
...and yes, I know I cant spell and I'm fine with that.
yes, no need to dump on a person who didn't know. Not everyone has thousands in the bank. Now this person does know, and unfortunately an expensive lesson learned.
@raisitup: What, were you born knowing this? You have to discover facts somewhere. I didn't know about this until I started reading the Consumerist a few months ago.
Pro-tip: Don't click "yes" when it asks if you are using a Debit card and your card has a Visa/Mastercard logo.
You will save yourself in fees, holds, and hassles. By clicking "no" with my debit card, I get no fees, and the money is withdrawn later.
@rbaldwin:
The way it works is that the merchant, in this case being the gas station, will put the hold to verify that the cardholder has enough funds in his/her account to pay the amount of the purchase. Debit card transactions don't always happen instantaneously, and can take up to a couple days for them to clear all the way, which can leave the merchant vulnerable to fraud/theft. A lot of bars do this, as well, whenever a patron opens a tab. Once the transaction finishes clearing the bank, the amount that was initially cleared will be unlocked, and only the amount of the purchase will be taken out.
@rbaldwin: The process makes perfect sense once you understand how debit/credit card processing works (sadly, most people don't). When you pull into a station, they want to authorize your credit/debit card to make sure that it's actually a valid card, etc before they dispense any gas to you. So the first step is the "authorization", where they basically check if your card is valid and then place a "dummy transaction" in place. They have to estimate some amount to place as the temporary hold because they don't know how much gas you will be pumping. Then, when they settle their books 1-7 days later, they remove the temporary hold and charge you for the actual amount you bought. It's just a quirk of how card transactions get processed. $100 seems slightly excessive, but I can understand why they've increased it as the average price of gas has increased.
Bottom line: either be able to absorb temporary authorization holds like this out of your debit card account, or don't pay at the pump with a debit card. Go inside or use a credit card.
They do something similar with credit cards (not a hold though). When you swipe your card the pump checks your card to see if you can cover a certain amount. It doesn't actually charge that amount, it just asks visa/mastercard if you can cover it. It used to be $50, I believe it's $100 today.
So even if you only want to put $5 of gas in your tank, unless you can cover $100 on your credit card, you're going to have to pay inside.
I've heard of this before, but I thought it could be avoided by using the PIN at the pump. Obviously not in this case because the customer did use his PIN.
I've never had a problem using my PIN at the gas station or had any problem with holds. I've got a buffer if it did happen though.
But some people don't. And they should be ridiculed for living within their means. If it wasn't posted, then it's not a fair practice. The letter says it was not posted.
I was the one who suggested he post his story here. Shame on some of you for dumping all over him and generally being rude. I told him to contact Consumerist because they would help spread awareness about this kind of thing, instead everyone just jumped all over his case.
People, CUT IT OUT WITH THE DEBIT CARDS.
Yeah, it's just my opinion, but too many people are using Debit cards without understanding how they work.
This happens at other places where approval is required before purchase: Hotels, car rentals. You shouldn't use your debit card for these.
@rbaldwin: No, it can't be prosecuted as fraud. It's normal procedure. It makes absolute sense. They need to approve the transaction. They can't approve after you've pumped because then you already have the gas. This is an automated machine. They need to approve the transaction before purchase.
@cmdrsass: You really think anyone would do this to save the merchant money? You do realize that credit card 'costs' are included in whatever prices you're paying, regardless of how you pay - cash or credit card. (In order to take credit cards, merchants must charge the same price for all forms of tender. This wasn't true in the past; if you remember cash/credit prices for gas.)
@ilikemoney: I don't care how poor you are, not having a $100 margin in your checking account is asking for trouble. Unless you're destitute and unemployed, you should be able to save that up over time, and have the discipline to not touch it - just for incidents such as this. "Stuff happens".
How is it always "blaming the victim" when people continue to do things that are well known and avoidable? Yelling "stop blaming the victim!" doesn't change the fact that people need to know what they're doing with financial instruments.
@MissPeacock: Well according to most people on here, we're not even supposed to point it out, because that's "blaming the victim", and feelings are more imporant than facts.
Needless to say I am now starting to just use cash because I hate the time it takes to TAKE OUT OF MY bank. I had got gas on a Friday and it didn't take out until the following wednesday- that right there sucks because I'm lazy and don't always balance my check book.... my fault there but still, I'm poor and don't want them taking 100.00 out of my account for 50.00 of gas either.
In his explanation above, the OP says several times that they "took the money out" of his account. This may be why the gas company isn't fessing up. While it's true that from the OP's perspective, the money is "out of his account", it's actually on hold, and that is a distinction that needs to be made clear when discussing the situation with the gas company. They will, of course, never fess up to taking more money out of an account than was charged; because it wasn't. It was put on hold, when he swiped his card, before he pumped any gas, to cover their estimate of how much gas he would pump. He can't access that $100, but it is still "in his account".
So my advice is, cool down a little, don't accuse the gas company of "stealing" it, call them back, and talk about removing the hold, not putting the money back.
That said, I think the gas company is purposely trying to confuse him by saying that "the bank" is responsible for the hold. This makes it sound like the OP's bank is responsible, which is why he keeps needlessly jumping back and forth between his bank and the gas company. In actuality, it is probably the gas company's bank that is responsible for the hold amount and the duration it's held. And only the gas company can hold their feet to the fire.
All those "dont use a debit card you moron" folks need to remember, not everyone can get a Credit card. Try getting one after a bankruptcy or with a bad credit history. It will cost you a couple $100 just to get a low balance card.
I agree, there is no need to be rude about how much money this guy has. For all we know, he may have a seperate savings account that could have covered the loss if he had known about it.
I personally keep 60% of my money in savings.
That sucks. I thought that was 1/2 the reason to select "debit" anyway, so that you don't have to go through the typical credit card BS, like ridiculous holds/authorizations. This is another reason I'm glad to use my rewards card for daily expenses and then pay it off monthly out of my checking account. I agree with some of the other commenters... pay inside with debit using the PIN, and tell them "I only want $12 on pump X".
@ilikemoney: With the price of gas the way it is, a $100 hold is reasonable.
@rbaldwin: They didn't charge him $100, they charged him $12. They put a "hold" on $100, which would be released when the $12 charge goes through.
@cmdrsass: Merchants pay fees for debit cards too. Sometimes more than credit cards. You're not doing them any favors by choosing a debit card over a credit card.
That being said, the station should have a sign posted that warns of the $100 hold, and advises that if you pre-pay, you will not have to deal with the $100 hold.
@humphrmi: Agreed with all of that. I do think they may be lying to him, but it may also be that based on the wording being used the gas company rep simply doesn't understand how it works.
@rbaldwin: The station doesn't know how much you will pump and don't want to be stuck when your debit/credit card gets declined AFTER you have filled up your tank. I am surprised that the hold is $100 and that it wasn't reversed the same day.. before the bank's nightly run.
By law, all fill ups must be prepaid in my county. Gas stations cannot accept payment after purchasing. This means prepaid by cash or pre-swipe of debit/credit card.
how can a consumerist reader NOT know this?