ASK TOM READ
Q Mr. Read wrote in a recent 810 Club Newsletter about his idea for a new "opt out" type of credit card. Could you provide an update?
A. I have talked with a representative of US Bank and received some favorable comment regarding my idea for an "opt out" credit card. They are willing to take the idea "upstairs" to the next management level.
I should probably explain the concept for those that did not read my article in the newsletter.
My idea is for a new credit card that would be used for telephone orders and purchases over the Internet where the merchant does not have physical possession of your credit card or your signature. These are the cases that can result in confusion regarding your authorization to charge your card.
When you pay for a meal at a restaurant, their authorization to charge your card is your signature and the imprint of your card. They submit a scan of your card and if approved, they receive an almost immediate authorization number which is printed on their receipt. This authorization number assures them they will be paid from your credit card account.
However, when you make a purchase over the phone and give an operator your credit card information, the merchant has no documentation that you authorized a charge on your credit card and you don't have documentation that you authorized a specific charge on your card.
Some merchants record your phone conversation and if you later challenge the charge, they will produce a recording of the phone conversation as proof to the bank that they had your authorization to charge your credit card.
The merchant generally does not ask your permission to record the conversation, they say the phone conversation "may" be recorded for training purposes. If you stay on the phone and talk with the operator, the merchant feels they have your permission to record the conversation. In the State of Washington, both parties must agree before a phone call can be recorded. If you do not want the phone call recorded, you should plainly make that statement as soon as the merchant operator comes on the line.,
Often a credit card charge dispute boils down to the merchant's word against yours with no documented proof in the hands of either party. Far two often, the credit card company sides with the merchant and you end up having to pay for an unauthorized charge on your card.
The "Opt Out" credit card, for the lack of a better designation at this point in the discussion, would generate an email which would be sent to the card holder making the purchase. The email would state that a specific merchant is requesting permission to charge your credit card for X amount to cover your order of whatever you are purchasing.
The email would ask if you do or do not authorize the specific charge. You would click on "Authorized" or "Not Authorized", you have the opportunity to Opt Out. If everything seems to be in order, you would click on "Authorized" and the merchant would receive an authorization code just they way they do not when your card is swiped by a restaurant and you sign the charge slip.
This procedure would protect both you and the merchant. You would receive an email for your records showing the exact charge and the details of the purchase and the authorization number.
If some of the information submitted to you in the email is not accurate, you simply click on "Not Authorized" and no charge would be made on your card. You could then contact the merchant again and correct the error in your order or if you did not place an order, that would be the end of the matter and you would not have to argue with the bank and the merchant.
Presently, if you challenge the accuracy of a charge on your credit card, the bank will charge the amount back to the merchant's account but will then provide an opportunity for the merchant to contradict your version of the transaction.
My Opt Out credit card would eliminate virtually all such problems. Let me know if this type of credit card would be of interest to you. Email me HERE.
Q. Is there something I can do to help protect myself while waiting for an Opt Out credit card to become available?
A. Yes. US Bank, Bank of America, and probably others, allow you to set up on line an email notice every time a charge is made over your specified amount on your credit card. The present system is after the fact, through, and does not allow you to Opt Out but at least you will know of an unauthorized charge in advance of receiving your monthly statement. I would suggest setting your dollar amount to initiate an email notice at Zero dollars. That way, you will receive an email every time a charge is made on your card.
BOA will actually give you the amount of the charge and the name of the merchant making the charge. US Bank only gives you the amount, but we have asked them to consider including the merchant name.