You
may have topped off with just $20 worth of unleaded, but the debit-card
transaction could freeze as much as $75 in your account, sometimes for
days.
By
Christopher Solomon
If
you ever use your debit card to pay at the pump, watch out: Did you know
that every time you top off the tank, a chunk of your checking
account can be blocked -- sometimes for days, with the potential to
cause you all sorts of financial headaches and bounced checks?
That’s what
happened to Jessica Hathaway, a state employee from Allentown, Pa.
Earlier this year Hathaway stopped during her commute to fill up her car
at Rauch’s Mini Mart, a Shell station. She bought $22.29 worth of gas
using her debit card.
The next day
Hathaway balanced her checkbook using her bank’s telephone service --
and something didn’t add up. The bank said that she’d made two
purchases the previous morning: one for the $22.29 and one for $75.
Trouble is,
she’d only bought the gas.
Finally Hathaway
called the service station, and an attendant explained to her what few
people know.
How your
money gets frozen -- If
you use your debit card at a pump that does not require a PIN, the
station regularly will block out an amount -- often $50 or $75 -- on
your card.
That amount
doesn't “un-block” as you drive away. Instead, the hold remains
until that evening, and sometimes for up to several days, until the
station does a “batch” transaction, according to the U.S.
Public Interest Research Group.
Each big oil
company has a different policy:
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Shell
places a $75 hold for gas purchases, and it can stay in place for as
long as three business days.
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British
Petroleum places a $75 hold on accounts when customers use debit or
credit cards, but the hold is usually lifted after about two hours,
said spokeswoman Sarah Howell. The same policy applies at its Amoco
and Arco stations, Howell said.
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Chevron
applies only a $1 hold to debit cards, to ensure that a card is
active, says a spokeswoman.
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The
reasoning behind this policy is that oil companies don’t know how much
gas you’re about to pump -- only PIN-based debit transactions are
processed immediately -- and so they earmark a certain amount of your
money. “We want to make sure that we’re protected, that we get
payment for the gasoline,” says BP’s Howell.
This general idea
isn’t new. Credit-card companies have done it for a long time. (Think
of when you rent a hotel room or a car, and the attendant runs your card
upon your arrival to ensure you can pay for it.) It’s less of an issue
with credit-card owners, however, because you’re usually told that
it’s happening and you’re probably not flirting with your credit
limits.
If a company puts
a chunk of dough in your checking account off-limits without your
knowledge, however, it can cause real migraines.
Consumer
advocates say beware.
Banks give
conflicting accounts about what this means to you, the consumer.
Bank of America
says that users of its debit cards won’t experience bounced checks if
debit-card blocks disappear on the same day as they’re put in place. A
spokeswoman for Wells Fargo agreed.
But the Wells
Fargo spokeswoman, Linadria Porter, conceded things can get a little
stickier if the block sticks for more than a day. “There is the
possibility that you could bounce a check,” she says. If a customer
calls and points out what happened, “most of the time we will give
them back those fees,” says Porter -- but not always, she adds.
Consumer
advocates say when in doubt, fear the worst.
“If there’s a
block on your account and you have checks come in against your block,
you could suffer bounced-check fees,” says Edmund Mierzwinski,
consumer program director for the U.S. Public Interest Research Group,
who says his and other consumer groups have received complaints.
It’s also
unclear how off-limits your money is in other ways.
“Is the money
technically unavailable? Yes,” says Chet Bridger, a spokesman for
Buffalo, N.Y.-based M&T Bank, Hathaway’s bank. In other words, if
Hathaway had gone to an ATM, she might not have been able to withdraw
the cash, Bridger says.
The problem
wouldn’t be so nettlesome if the blocks disappeared within even a few
hours. But the $75 hold that appeared on Hathaway’s account on a
Friday morning didn’t disappear until the following Tuesday -- five
days later.
“I was just
fortunate that I realized it, because if I had gone grocery shopping
that weekend I would have been in the negative on my account,” she
says. She thinks of the penalty fees she might have racked up. “And
who would have paid then?” she muses. “Shell?”
“What really
burned me up is not so much the financial aspect, but they didn’t ask
permission,” she adds. “I wasn’t informed.”
Changing
the policy?
Hathaway has
complained to the Pennsylvania Department of Banking and to the
Pennsylvania Attorney General’s Office, and to the mini-mart owner. To
no avail, she says.
In fact, the
policy doesn’t show much sign of changing soon, despite some legal
support for consumers. In 2002, California Attorney General Bill Lockyer
issued an opinion that said that gas stations need to tell customers
about the debit-hold policy.
“If the hold
extends beyond the time of purchase and covers an amount greater than
the amount of purchase, then the hold has to be disclosed to the
consumer,” says a spokesman, Tom Dresslar, summarizing the opinion.
Even so, Dresslar
said his office was not actively pursuing any action against oil
companies, and that he was not aware of any barrage of complaints by
consumers.
How to
protect yourself.
How can you
protect yourself at the filling station? Station owners and consumer
advocates offer this advice:
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If
you must use a debit card, pay inside where you can use your PIN
number; PIN-based transactions are registered immediately.
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If
you pay at the pump, use a credit card.
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Oil
companies' proprietary charge cards often don’t have any kind of
block feature on them, but not always. Chevron, for example, briefly
blocks out $18.
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Good
old cash is still good -- and many gas stations, tired of paying
high credit-card fees, now give a discount of up to a dime a gallon
for cash. Look for such deals.
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Finally,
says Dennis DeCota, executive director of California Service Station
& Automotive Repair Association, don’t blame the gas station
owners for this policy.
DeCota, who has
owned a 76 gas station in San Anselmo for 28 years, says he has seen the
contracts between service-station owners and oil companies, and says
that big oil companies set the amount of the hold, and their merchant
banks set the duration.
If DeCota had his
druthers, everyone would come inside to pay, where they’re more likely
to buy a bag of Corn-Nuts and a Coke with their fill-up. |