Credit is a convenience; it allows you to charge a meal on your credit card, pay for an appliance with an installment plan, or take out a loan to buy a house. With credit you can make a purchase when you lack ready cash, and you can enjoy the purchase while you are paying for it.

However, when dining out at a fancy restaurant or spending the night away in a hotel, it’s important to take notice of what the banking industry calls an “authorization hold.”

The issue was first identified by BBB of Southern Arizona when a customer complained that a restaurant had put through a charge equal to his bill, plus 20%, even though he had left the server’s tip in cash. Upon investigation, Dispute Resolution Specialist, Micaela Clubb, discovered that it’s a common practice.

Here’s how it works: Let’s say your restaurant bill comes to $100 and you give the server your credit card. When they run it through, they put an authorization hold on your account for $120, assuming you’re going to add a nice tip to the bill. But you leave the tip in cash on the table instead. Still, your bank or credit card company “holds” that $120 for a couple of days until the actual amount of your charge is processed, and that means you don’t have access to that $20. If you are close to your credit limit, it could mean a purchase is declined. If you used a debit card, it could mean a bounced check and overdrafts fees.

Now imagine it’s a hotel stay. You’ve checked in and given a credit card at the front desk. They put an authorization hold on your card for what they think your total bill will be (room charge, taxes, and incidentals). If you are staying for several nights, this could amount to a lot of money that you no longer have access to; and when you are traveling, that can be a huge problem.

Credit card processors discourage vendors from doing these kinds of holds, but they are perfectly legitimate as long as the vendor notifies customers of the practice. BBB advises consumers to keep tabs on their credit and bank accounts online, especially when traveling, and read the fine print on hotel agreements. When dining, pay for your check and tip together with either credit or cash, but not both. And whenever possible, keep a “cushion” of available funds on credit cards by paying off the balance regularly.

For more consumer information you can trust, visit www.tucson.bbb.org.

Third party vendors are collecting billions of dollars in erroneous charges placed on mobile and landline phone bills and consumers are getting little help from their telephone service providers with removing and preventing such charges, according to a report released July 12 by the U.S. Senate Committee on Commerce, Science and Transportation.

The report further states Federal Trade Commission and other law enforcement actions have been ineffectual in curbing the problem.

While the information isn’t new, Better Business Bureau of Southern Arizona once again warns consumers to be on the watch for this billion-dollar-a-year practice and be proactive in keeping false charges off their bills.

The report, titled “Unauthorized Charges on Telephone Bills,” includes a survey of 500 customers who had third party charges on their bills. Not a single person said those charges were valid.

Because the practice is highly profitable to phone companies, the report added, customers have had a difficult time getting charges removed from their bills.

“Only after these consumers contacted the Better Business Bureau or their state attorneys general did their telephone companies provide assistance for many of them,” the report reads.

Individuals, businesses and government agencies have all been victims of the practice, some reporting tens of thousands of dollars in fraudulent charges.

“Third-party vendors even crammed unauthorized charges for voicemail services onto AT&T‘s own (more…)

Better Business Bureau is warning consumers to be wary of free trial offers online for diet pills, work at home jobs and teeth whiteners among other products and services. In this year alone, BBB has received thousands of complaints from consumers across the country who thought they were getting a free trial, but ended up losing hundreds of dollars in recurring credit or debit card charges.

Ubiquitous, deceptive online ads for “free trials” of various products and services can be found on popular sites like MSN.com, ESPN.com, and Weather.com. Often the ads link to websites of phony news outlets which, according to the Sydney Morning Herald, commonly feature the photo of a well-known French journalist—without her permission—under various names.

“Fighting deceptive free trial offers seems insurmountable at times,” said Kim States, BBB President. “Just as soon as one company is put out of business it’s replaced by another with the same model of ripping consumers off under the guise of a no-risk, free trial offer.”

One company behind these not-so-free trials is XM Brands which has an F rating with BBB. According to the nearly 2,000 complaints to the West Palm Beach BBB, the company sells roughly 40 teeth whiteners, acai diet pills and colon cleansers online.  Complainants say they agreed to pay anywhere from $1.49 to $3.87 to cover shipping for the product trial but were (more…)