The gas pump said my debit card was "authorized", but now the bank says I must pay overdrafts, is this legal?

Question

I used my debit card several times to put about $100 of gas in my car. I got a letter today from a collection agency saying that I owe $600 in overdraft fees and penalties. Each time I went to the pump, and slid my card, the pump said the purchase was authorized. Now the collection agent is saying that my card was approved so "you wouldn't be embarrassed". It seems to me like this is a scam to steal money from me. Shouldn't my card have been declined if I didn't have enough money in my account? I admit I was stupid for not checking my account balance more carefully, but I don't think the fault is all mine. And I might understand if this happened once and they didn't catch it; but I put gas in my car several times and each time the pump said "authorized". The collection agency says I must pay overdraft fees plus penalties for each time I pumped gas. Is it illegal from them to do this since the pump said "authorized"? What should I do to stand up for my rights in this situation?

I don't have "overdraft" on my debit card. Why does, for example, an ATM machine say "insufficient funds" but the gas machine says "authorized"? Isn't his deliberately misleading information from my bank? Finally, my bank is treating me in a very disrespectful manner - - they didn't even take me to a desk to talk to someone, they just talked to me at the teller window. Yes, I realize I made a stupid mistake not checking my balance, but I believed I had $100 left in my account and when the pump said "authorized" this clearly was approval from my bank to make the gasoline purchase. Who is the person to call to negotiate some kind of settlement on this debt? Should I talk with the bank or the collection agency? Who would be the correct "higher-up" to discuss this with, someone who has the power and authority to waive late fees and maybe forgive some of the overdraft charges?

Answer 1

Actual a debit card is linked to a checking account. If the checking account has overdraft protection. It will use this.

Now if the checking account has no overdraft protection. They should of denied all of your transaction after the 1st time you account went into the negative.

However, I would go into the bank an explain what happen. They might be able to help you get back and remove it from the collection agency. They should not charge you 600 in overdrafts and fees.

I would dispute the fees owed. The bank sent it directly to a collection agency without contacting you first. Most banks will contact your first and give you 30 days to pay it back.

Gas stations do put big holds on them.

Banks are supposed to wait till the transactions hard post before applying an overdraft charge. Some don't. This could be illegal.

human_we_are is incorrect. Try to discuss this with your bank before just paying the fee blindly.

Answer 2

My Bank does the same thing and I don't have overdraft protection. Most gas stations only authorize $1, especially since you swipe your card and then pump, they have no idea how much you're going to put in. They just want to make sure you're on the positive side. Let's say they authorize $1, you put $30 in, but you really don't have it, after a few days when it finally goes to the bank they pay the $30 then charge you $25-$32 (depending on bank). That's $60 for a tank of gas, so yeah it can add up fast. Some bank will do this to avoid embarrassment, but in the end it's up to you to know your balance. Even then you need to remember when checking your balance that if you gas purchase hasn't cleared your balance is incorrect. If the bank says you've got $400 and you bought gas yesterday, you need to remember to take that amount from your $400.
They may wave some of the fees for you, but if they don't it's a lesson learned. I had to learn it, I was stupid, it took me a few times to learn it.

Answer 3

Only if u have overdraft protection--it is a false sense of security. Cancel overdraft if u have it. Talk to a Loan officer or someone who is in charge to see if u can get the fees waived----esp.....if this is the first and only time this happened.
Banks will rob people these days especially with their help benefits of which do nothing but give people a false sense of security. The key is "no overdraft protection" , the bank will decline payment on a debit if the money is not there, which will save u lots!!!!

Answer 4

Authorized includes overdraft services and related fees.
Although if an account has overdraft coverage, the $600 seems a bit high unless that includes months of late charges & interest. (letter from collections suggests you have been blowing this off for awhile !)
I would contact the bank directly, offer to pay the actual and see if you can negotiate the fees & penalties.

Answer 5

I am surprised that the bank didn't have a limit set. There are times a transaction is authorized and the funds might show to be there. The answer is usually in the "pending transactions". Legal....but stinks. If you have a transaction that has not posted but is pending and you only have 100.00,but your pending adds up to 101.,then the transactions that keep saying authorized will bounce because the pending will be paid out first. Really should be illegal. You can always try to work with the bank/card center. Alot of times they will actually give you the OD fees back.

Answer 6

You are not going to get any where with them or the collection agency get a atm card that is not backed by visa,master card,American xpress or any thing and this will not happen again "debit Atm" is what you want its just a plain old atm card but you can use in the store or at the pump and when your out of money your out no second guessing

Answer 7

Most banks (that i've dealt with) authorize debit purchases regardless of funds available (unless its some rediculous amount). Its your responsibility to know how much money you have in your account, and use your card accordingly - dont depend on whether or not its authorized.

Credit cards, on the other hand, usually won't authorize purchases (except very small ones), if you have met your credit limit.

Answer 8

The problem is $600 is not a small amount. You should know you do not have that much in your account. However, you still keep using it. It is just like the bank make a mistake and deposited someone else money into your account. You know it is not yours, but you spend it anyway. That would constitute fraud. Don't you think so? I think you should talk to the bank manager and see if you could pay them back on a monthly basis.
I believe the bank would rather cooperate with you if they know you are willing to pay them back.

Answer 9

Well it is your fault you should know thats how banks work. Thats how they make their money. Some banks will decline the card others do not.

Call them up and argue your case. Sometimes they will work a deal with you just to get paid. Then ask for overdraft protection.

Answer 10

Nobody stole any money from you, you overdrew your credit line and your agreement with the bank says you owe them money if you do that.

It's your responsibility to manage your finances, not the banks.