The Intelligent Person

The Life Foundations Nexus






Copyright June 15, 2005 1:40 PM CST

By Dr. Michael J. Bisconti




This past week I made a purchase over the Internet using my bankcard.  When I was done it seemed like everything was fine…but it wasn’t.


A couple of days after my purchase I attempted to use my bankcard to buy some food…but the food purchase could not be authorized.  I was baffled.  I called my bank and found that a freeze had been put on all of my available cash by the company I used to make the Internet purchase.  Over the following week, I was told repeatedly by both the Internet company and my bank that I would have to wait a week before the freeze would be lifted.  In the meantime, I would have been starving had I not had some cash on hand.


Everything that happened was, to the best of my knowledge, perfectly legal.  What I refer to as “freezes” businesses and banks refer to as “preauthorizations.”  Banks also refer to these as “holds.”  These are agreeable-sounding words but words that can have devastating consequences.


My advice to everyone is to avoid purchasing anything over the Internet.  Incidentally, trying to pay by check over the Internet can have worse consequences.  If you are really determined and/or really need to make an Internet purchase, bear in mind that, as I have been told by my bank, as many as 20 duplicate preauthoriztions have been reported being put on an Internet purchase.  This means that, if your purchase was for $50, a business can be paid the $50 and then put a freeze on an additional 20 X $50 = $1,000 of your money.  If you must make the purchase, just be sure you have enough cash on hand to meet any of your expenses without using any money in your bank account.


If you get stuck in a “duplicate preauthorization” situation, my best advice to you is to conduct a three-party conference call involving you, your bank, and the Internet company.  The Internet company can fax over information to your bank so that the freeze can be lifted off of your money sooner rather than later.  Unless you do this, you might have to wait a week before your money becomes available to you.  Also, your bank might NOT allow you to settle the problem through a conference call.


Finally, I don’t want to put a damper on all Internet purchases.  Therefore, keep in mind that you are more likely to have a problem when making purchases using BIG Internet companies.  The reason this is so is that these companies have a more complicated method of collecting your payment.  This extra complexity creates a greater likelihood of mistakes, errors, and glitches.