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[ The PC Guide | The PC Buyer's Guide | Purchasing PCs and Components | Vendor and Order Problems and Solutions | Common Vendor and Order Problems ]

Credit Card Pre-Charge

Of all the different policies that differentiate vendors, the one that is probably the most controversial relates to when a vendor charges your credit card on a mail order or online purchase--especially if the item is backordered or cannot ship immediately for some other reason. Some companies will charge your credit card the instant you place your order, even if the item you are ordering is not in stock, and even if they have no idea when or even if it will ship. Others will take your order but charge your card only when the item actually is sent.

I personally do not like it when companies pre-charge credit cards for items they do not have in stock, and I advise that you avoid companies that do this. The companies that have this policy rationalize it in all sorts of ways--they say it is the "only way their system works" or that it "streamlines operations". Well I'm sorry, but having a system that is fair to the customer is the vendor's responsibility. Charging a credit card for an item that is not in stock is just (ab)using the customer's money. It's not fun to pay a credit card bill for an item that hasn't even left the vendor's warehouse yet.

Companies should be allowed a bit of flexibility in the amount of time between when a charge is made and when the item goes out the door, to allow for variances in order processing time and shipping. Especially with large companies, it's not always possible to control the timing down to the hour; the accounting and shipping departments may be in different time zones or even on different continents. If your item ships within 24 hours of the charge being made to the card, that's good service. Even 48 hours is somewhat reasonable.

Beyond a day or two, the item probably isn't in stock, and the company is "floating" your money as the saying goes. Unfortunately, in many jurisdictions it is not illegal to precharge a credit card for an item that is backordered, though in some places it is. You have to check your local statutes. Where it is legal, many credit card merchant service companies specifically disallow this practice as a condition of the contract the vendor signs to accept credit cards. Of course the typical vendor doesn't publish its credit card merchant agreement, even if they aren't violating it, so it's not like you can easily check this. ;^)

Even if the company is in an area where pre-charging is legal and their merchant account does not preclude the practice, the legality of this behavior is predicated upon the customer being informed of the policy. The only remotely fair way for this policy to be implemented is if at the time you place your order, the salesperson tells you that some items are backordered and that your card will be charged for the item(s) immediately, unless you want to remove them from the order. As much as I don't like pre-charging, I have to admit that this is at least reasonable--the customer is in control of the situation and can decide if this is acceptable or not.

The problems come in when companies pull this without informing the customer, which occurs frequently. I consider this a blatant rip-off; why should the vendor get funds for an item they have not shipped? If the policy is legitimate, why are they not informing their customers? And a footnote in 4-point font buried on a customer support page somewhere is not what I consider "informing".

If you find your credit card charged in advance without your consent, contact the company and ask to speak to a manager. Cancel the order, and insist on the charges being reversed immediately. If the company refuses to cooperate, dispute the charge with your credit card company promptly.

Next: Ridiculously Slow Refunds


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