Automated tip?

Here's a question for everybody.

Last Friday, I went to a local Chinese restaurant and got some take-out food for dinner. I paid with a debit card. Normally, I don't tip on take-out orders (we can debate that too). I bank on line so that evening I was able to log onto my account and noticed that the restaurant charge was there but was larger than the charge on the card receipt I been given. On a whim, I divided the amount charged to the card by the amount on my receipt and the result was 1.2. In other words, they had billed the card for 20% more than the charge on the receipt I signed. I doubt this was a mistake; I assume they gave themselves a tip. But I don't see how they could do it since the figure was different that that on the receipt I signed.

So has this ever happened to anyone else? What did you do about it? What do you think of the practice?

Did you tell them to process as a debit or as a credit card? If they processed as a credit card there should be no excess charges. If, however, you had it processed as a debit payment there is a charge applied to your account for that. Which is why you always answer credit when they ask if you want it done debit or credit.

They processed it as a credit card. But my account has no charges applied for use as a debit card. I use it that way all the time--every time I go to the supermarket in fact.

I have actually read some about this and near as I can determine, it's actually a lot cheaper for the merchant if you process it as a debit card (costs them a few cents rather than several percent of the charge) so I usually do that with smaller independent merchants but not this time (because they just handed me a receipt to sign rather than offering me the choice to enter my pin).

Actually, there's an update to the story. Today (5 days after the fact), the charge has been reduced to what it should have been--and I did nothing to cause that to happen. I have encountered this before. Apparently, the merchant has to eventually send in a copy of the signed receipt and if it doesn't match the charge there is an adjustment made--at least that's what I was told one time when I had a card run though the scanner twice by the merchant and got double charged.

But still, I find it very "fishy" that they added exactly 20% to the bill--like they had an automatic tip of that amount programmed in.

What that restaurant is doing is called fraud, and they're lucky they haven't been caught and fined for it. Might want to report that to the BBB, they'll keep an eye on them, and/or suggest you report it to the proper authorities.

Maybe it has something to do with the current exchange rate $$$$$$$$$ LOL

Is it at all possible that the order of events went something like this.....

Restaurant presents you with bill....you give them your card.....they assume that they will get a tip on most of their charge cards, so they process your bill amount plus 20....you sign for the charge, and pay no tip (which if you have read anywhere near enough of my posts, you would know that I agree)....they reconcile their account with the credit card merchant, and the bill is charged at the proper amount.

I don't know if that is how it works at restaurants, but I know that has happened similarly with me with hotel rooms while on the road. If I use my debit card, they put a "hold" on your room charge + XX. When you check out, they charge the correct amount and release the "hold." I would think it would be similar for restaurants, but have never looked.

Steve

quote:

Originally posted by stevekoe

Is it at all possible that the order of events went something like this.....

Restaurant presents you with bill....you give them your card.....they assume that they will get a tip on most of their charge cards, so they process your bill amount plus 20....you sign for the charge, and pay no tip (which if you have read anywhere near enough of my posts, you would know that I agree)....they reconcile their account with the credit card merchant, and the bill is charged at the proper amount.

I don't know if that is how it works at restaurants, but I know that has happened similarly with me with hotel rooms while on the road. If I use my debit card, they put a "hold" on your room charge + XX. When you check out, they charge the correct amount and release the "hold." I would think it would be similar for restaurants, but have never looked.

Steve

I'm not sure what scenario you are proposing. What happened was, I went in, ordered the food, sat and waited while it was cooked. While waiting, I went up to the cash register and asked it I could go ahead and pay. They said, "Sure," took my card and processed it. They handed me the usual restaurant credit slip--with a blank space for the tip after the basic charge. As I usually do when getting take-out, I drew a line through the space for the tip and wrote in the amount of the basic charge in the space for the "total" charge. Then I signed. When my food was ready, I took it and left, went home and ate it. Later that evening, I checked my account on-line and saw that the restaurant charge was there but was 20% higher than the "total" amount on the credit card slip I had signed. As I indicated above, 5 days later this amount was revised to the correct "total".

Incidentally, we aren't talking a 5-star place here. We are talking about a neighborhood Chinese joint. The "total" was $17.80. I can't see them feeling the need to put a "hold" on my account. At least I've never seen a restaurant do that before. As far as hotels go, I'm not a "road warrior" and rarely travel with a laptop (that may be about to change) so I can't recall checking for hotel charges while I was still staying there and hadn't yet settled the bill, but maybe they do that.

I have never heard of a debit card incurring an additional charge simply because you are using it. What bank does this? I would say get another bank!

As for what happened, why not call your bank and ask them? Seems simpler than posting here about this.

quote:

Originally posted by renfrew

I have never heard of a debit card incurring an additional charge simply because you are using it. What bank does this? I would say get another bank!

It's becoming quite common, more often than not. Some stores (notably Wal-Mart, ironically) are charging an additional fee for using debit rather than credit if you shop there.

quote:

Originally posted by renfrew

I have never heard of a debit card incurring an additional charge simply because you are using it. What bank does this? I would say get another bank!

As for what happened, why not call your bank and ask them? Seems simpler than posting here about this.

Many banks are now charging fees for using your debit card. They have figured out yet another way to gouge their customers. At my bank they charge no fees no matter how much I use my card, as long as my paycheck is direct deposited. At my wife's bank she's allowed only 5 ATM/Debit transactions a month before they begin to asses fees for use of the card.

I get the corrected entries now and then on one of the debit cards. It usually takes a day to make the correction. When it first happened I got real upset with the merchant and the bank, but I was assured by the bank that it is a normal process and I should recheck my account after 48 hours to be sure it is accurate. So Far it has been. This happens more often with our local bank chain, than with the account held by a large national bank.
So far we have no fees for ATM use at our local bank. But if I go to another bank, or try to use my WellsFargo card in a bank here in Indiana i get hit with two fees....One by the receiving Bank, and one from W F for going out of their system. BUT No charges for cash back when shopping at the local WalMart or grocery, so thats our source for cash-in-hand in this area. Plus no charges for pay at the pump gas with debit card use.

NOW I know why my check book balance is NEVER right...

First, I can't even believe there would be a debate about tipping for take-out. Of course you shouldn't do this!
As for the excess credit card charge, an earlier poster was correct, I believe. Hotels always block out an amount of your credit limit that is greater than the room charge. If you are close to your credit limit, this can cause the card to be declined on a future purchase, if the cc company has not yet reconciled the charge with the final bill. I have known many people who were caught by this, which is why I always use an AMEX card with no limit.
Maybe restaurants are also starting to do this.

This is funny in a way. We had this EXACT same thing mentioned on our local dining newsgroup last year. I'm talking the exact same conversation that went back and forth for more than a week about why and how they could get away with it.... things that make you go hmmmmm......

quote:

Originally posted by renfrew

I have never heard of a debit card incurring an additional charge simply because you are using it. What bank does this? I would say get another bank!

As for what happened, why not call your bank and ask them? Seems simpler than posting here about this.

Many banks charge a processing fee when you use your debit card without inputting your PIN.

BT
For what it's worth, I would suggest that you go get some more chinese take-out and see if it happens again. If it does, have a chat with the owner as well as the BBB.

Of course I do tend to be a bit of an instigator at times.

quote:

Originally posted by BT
Incidentally, we aren't talking a 5-star place here. We are talking about a neighborhood Chinese joint. The "total" was $17.80. I can't see them feeling the need to put a "hold" on my account. At least I've never seen a restaurant do that before. As far as hotels go, I'm not a "road warrior" and rarely travel with a laptop (that may be about to change) so I can't recall checking for hotel charges while I was still staying there and hadn't yet settled the bill, but maybe they do that.

I am sorry, but I may not have been clear in my earlier post. How I understand the process works is as follows:

1. You present you card for payment of your check, of, in this case, $17.80.
2. The clerk needs to get authorization for your charge, and assumes that you may tip as much as 20%, so the clerk gets an authorization for that amount.
3. Bank authorizes the charge, and the clerk prints out receipt, which you are presented to sign.
4. You sign your receipt for the full amount of the bill, and do not add a tip, totalling $17.80.
5. When the restaurant reconciles their receipts, the amount is corrected to the actual charge amount.

In the meantime, you may check your online statement and notice a discrepancy. It likely doesn't show up that often, and you would never notice if you were using a credit card, instead of a debit card, it would likely be corrected before you would ever get the bill.

I am inclined to think that this happens at a lot of restaurants, and I while I personally do not see the need to tip for take-out service, I think that there is a segment of the population that does.

I do not think that this warrants a call to the BBB, or anyone else, until you get a charge that is incorrect, and remains that way.

Steve

Several years ago the banks did pushed us into using our ATM/debit cards rather then using a human teller. They did this by making the ATM card free to use but charging for a human transaction. Some did offer so many teller visits a month free.

About 3 years ago Huntington Bank here in WVa started a 25 cent charge for using their debit card. So we did credit transactions. They left our area by being bought out and the new bank doesn't charge.

I have read a couple articles recently about how many people are getting cash back and how the stores are having to stock a lot more cash, which costs them. I wouldn't be suprised to see more stores charge a fee for debit transactions because of this. I won't like it because I get my bi-monthly allowance from Wal-Mart when I shop there. But I can kinda see their reasoning.

MikeS.

Thanks, stevekoe, for the clarification.

I typically pay cash at small Mom and Pop operations but, otherwise, if a merchant is willing to accept a credit card and pay the higher fees associated with credit card transactions (as I understand), thereby giving me a 30-45 day float on my money and allowing me to earn a cashback bonus, I use credit. It's also easier to reconcile credit card statements twice a month rather than try to keep up with lots of charges directly to my account on an almost daily basis.

Having been mugged once I carry as little plastic or cash as I think I need. I use debit only at merchants that offer a 'discount' for cash, such as Spec's, a huge liquor store that offers a 5% discount for cash or debit (actually, a 5% upcharge for credit). Other than one or two trips a month to an ATM or when I'm on vacation, my debit card stays at home.

quote:

Originally posted by renfrew

I have never heard of a debit card incurring an additional charge simply because you are using it. What bank does this? I would say get another bank!

As for what happened, why not call your bank and ask them? Seems simpler than posting here about this.

My bank is one of the hugest, most impersonal on earth and talking to them can be like talking to a brick wall. But that's another issue. I posted here just because I was curious if anybody else had seen this done. And it was a slow day on the board--thought it might stimulate conversation.

I wasn't too worried about it. Even if the $3+ charge stuck, I'd have food money left for the rest of the month (and, if not, there are any number of soup kitchens within walking disatance). But I kind of suspected it wouldn't stick because, as I said, I've explored what happens when a merchant charges something not backed up by the paperwork before.

quote:

Originally posted by felix4067

quote:

Originally posted by renfrew

I have never heard of a debit card incurring an additional charge simply because you are using it. What bank does this? I would say get another bank!

It's becoming quite common, more often than not. Some stores (notably Wal-Mart, ironically) are charging an additional fee for using debit rather than credit if you shop there.

Are you sure (haven't shopped at Wal-Mart in about 4 months, but when last I did I never experienced a charge)? This doesn't make sense to me--EXCEPT for Wal-Martart. What DOES make sense, even though I agree with others that it would cause me to change banks, is the BANK charging when you use a debit card. And that explains why Wal-Mart is an exception to the rule. Wal-Mart is so big my understanding is they have tried to (and I think succeeded) set up their own bank so they could pay these fees to themselves.

The reason is that debit card transactions are processed through a different network/process/company than credit card transactions. And the fee to the merchant for accepting a credit card is a small percentage of the charge--I think it's about 2% for Visa/MasterCard although I think American Express charges as much as 4%--but for debit cards the fee is just a few cents no matter how large the charge.

At least that's what I've repeatedly read.

quote:

Originally posted by SteveB9

First, I can't even believe there would be a debate about tipping for take-out. Of course you shouldn't do this!

Here in San Francisco, I think it's not quite so obvious. I have seen people do it--mostly people who work in the restaurant business or have friends who do and feel they have some empathy for restaurant employees. Also, I have certain restaurants where I go very often for takeout and they know me. There, I sometimes do add a small tip to a credit card charge but not the 20% I leave when I dine at the restaurant.

quote:

As for the excess credit card charge, an earlier poster was correct, I believe. Hotels always block out an amount of your credit limit that is greater than the room charge. If you are close to your credit limit, this can cause the card to be declined on a future purchase, if the cc company has not yet reconciled the charge with the final bill. I have known many people who were caught by this, which is why I always use an AMEX card with no limit.
Maybe restaurants are also starting to do this.

I deal with the problem by having several cards and using one exclusively for on-line purchases (in case my number somehow gets "hacked") and one for hotels/car rentals (where these "account freezes" are common) and one for other things.

quote:

Originally posted by stevekoe

I do not think that this warrants a call to the BBB, or anyone else, until you get a charge that is incorrect, and remains that way.

Steve

Thanks Steve for TWICE explaining what may have happened. I agree with your last--this is NOT a neighborhood where they could do this often and get away with it (there were two cops in uniform eating there when I was there) so I'm inclined to think it was some kind of mistake--possibly as you postulate.

quote:

Originally posted by BT

quote:

Originally posted by stevekoe

I do not think that this warrants a call to the BBB, or anyone else, until you get a charge that is incorrect, and remains that way.

Steve

Thanks Steve for TWICE explaining what may have happened. I agree with your last--this is NOT a neighborhood where they could do this often and get away with it (there were two cops in uniform eating there when I was there) so I'm inclined to think it was some kind of mistake--possibly as you postulate.

I don't know that I would classify this as a mistake, per se, but rather this restaurant's procedure. I would always reconcile your receipts to double check that the original charge doesn't stick. I use my debit card for almost everything (it is of the miles earning variety), so I have grown quite accustomed to seeing what you experienced. However, I have also dealt with a waiter, who was apparently disappointed in his tip, as he chose to write in his own. Ever since, I ALWAYS check.

Steve

BT
Guess what, I just had this happen to me this weekend. On Friday I had gone to a Seafood Store & made a purchase that came to $39.70. Sunday I was checking my account & found a charge listed for $47.64. It couldn't give me the details yet of where the charge was from. I was hit a few years ago by account number nappers, so I'm a bit skittish about unrecognizable charges. Went in today to check my account & found the $47 replaced by the $39. Looks like this is some new thing the processing companies may be doing. I'm going to check with the bank & see if I can find anything out.

Has anyone ever noticed any Asian restaurants that you've been to NEVER ring up receipts, tickets? Every one I've ever been to here adds it on an adding machine, takes your money and counts your change back. No trail??????

quote:

Originally posted by Rusty246

Has anyone ever noticed any Asian restaurants that you've been to NEVER ring up receipts, tickets? Every one I've ever been to here adds it on an adding machine, takes your money and counts your change back. No trail??????

I don't begrudge them cheating Uncle Sam--just cheating ME.

I think I read some where that gas stations where you pay-at-the-pump do this as well. Since you have to "pay first" they get an approval on your card for something like 75 bucks (assuming a fill-up for a large-size vehicle, I suppose), since they don't know how much you will actually be spending until you fill up. But they don't want to let you pump until they've gotten an approval either. Then the actual charge is processed for the real amount, not the approved amount.

I am also assuming that the whole credit card approval process is actually something like a query. The place where you are purchasing is asking your bank's computers if you are good for this amount. If so, they give an approval. But the transaction is not actually processed at the time of the approval. The store/restaurant/gas station has to close out and submit the transactions for payment before they show up on your bill.

I guess the approval requests are now showing up for people who have online banking? I guess it is kind of like putting a hold on your account for that approved amount then, huh? And then they release the difference later.

Veddy veddy interesting...

quote:

Originally posted by meowzart

I think I read some where that gas stations where you pay-at-the-pump do this as well. Since you have to "pay first" they get an approval on your card for something like 75 bucks (assuming a fill-up for a large-size vehicle, I suppose), since they don't know how much you will actually be spending until you fill up. But they don't want to let you pump until they've gotten an approval either. Then the actual charge is processed for the real amount, not the approved amount.

Around here, they approve your card for $1.00, just to make sure it's valid. The $1.00 charge usually stays on until the actual purchase price goes through. I've NEVER seen anything so ridiculous as $75.00, and I use pay at the pump all the time, everywhere I drive (which is most Michigan).

Edit:
The problem I have with putting a hold on a higher amount than what was charged is that it's my debit card. I don't have overdraft protection. So if they put a hold for a higher amount than that which I'm paying for something, that money is no longer mine, even though it's in my account and it certainly isn't THEIRS. When you live paycheck-to-paycheck, that extra ten bucks makes a really big difference sometimes.

This isn't a guesstament charge, if it was I'd want to know what crystal ball they are using to know to bill exactly 20% more than the actual bill. I know when direct charge from the pump first started they did hold something like $20 but haven't seen that done in quite a while, there is too much immediate access available. I think the only place they may still place a hold on a larger amount is with hotel & rental card bills, where they hold the amount of the full charge until the bill is settled at the end of the stay or rental.