As common as it is to leave your card on the bar to run a tab it can be a mistake. Photo: Unsplash/ Simon Kadula
Leaving your credit card on the bar to run up a tab this summer might be an expensive mistake.
Financial Services Complaints Ltd, an external dispute resolution scheme for some of the country's financial service providers, said it was common practice but could be a breach of your card provider's terms and conditions.
In one case it dealt with recently, a couple were in Miami on holiday with friends.
They booked a table at a day club with a minimum spend of $3000.
They handed over their card when they arrived and it was charged when they ordered food and drinks.
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"[They] said they ordered a drinks package and some food for their guests, totalling around US$1700 (NZD$2,941)." FSCL said.
They collected their credit card on the way out but did not receive a receipt. They expected the bill to be US$3000 (NZD$5190).
"When they got home and checked their credit card statement, they saw that they had been charged over US$7500 (NZD$12,110)."
FSCL said they asked for a receipt and planned to dispute the charge but did not get a response. They then applied for a chargeback with their card provider.
"The credit card provider initially issued the chargeback. However, they later reversed the chargeback after the day club provided their response and copies of several signed receipts. The card issuer said that these signed receipts, along with the fact that the charges were processed in person with the card present, supported the day club's view that all the charges, totalling US$7500 (NZD$12,110) were 'authorised'."
They complained to FSCL that the signatures on the receipts were not theirs and they had been overcharged by US$4700 (NZD$8,131).
FSCL looked into it and found the credit card providers' terms and conditions said a consumer would not be liable for unauthorised charges if they complied with the card terms and conditions.
But that included keeping the card in their possession and secure at all times, and not letting anyone else use the card, as well as taking their card back after they made a charge.
"We acknowledged that it may be common practice for some venues, particularly hospitality venues, to ask to hold onto the consumers credit card, and that it may even be required at some venues.
However, allowing anyone else to take possession of your credit card is a risk, and a risk that [this couple] willingly took. By allowing the day club to hold onto their card, [they] compromised the security of the card, and breached the card terms and conditions.
This meant that [they] were liable for the charges even though they claimed they had not authorised them."
FSCL said the credit card provider had done what it could to help by attempting to charge back the disputed charge.
"However, when the day club provided evidence to support the charge, the credit card provider was required to reverse the chargeback.
"We acknowledged [the couple's] comments about the validity of the receipts the day club submitted. However, it was not our role to investigate the day club's actions and assess whether the receipts were valid. We explained that our role was to look at whether the credit card provider had to refund the unauthorised charges. [They] could continue to dispute the charges with the day club directly."
FSCL ombudsman Susan Taylor said it was a good reminder for credit cardholders.
"With the holiday season upon us, people may be tempted to leave a card behind the bar when hosting parties.
"It might feel normal to let a venue 'babysit' your card to keep a tab running, but that convenience can come at a high price," she said. "If you hand your card over and walk away, you are risking someone using your card and charging items to it without your knowledge.
"Your credit card is effectively a direct line to your money. You're responsible for all the charges, even those made without your authority, if you've breached the terms and conditions," Ms Taylor said.
"Keeping it in your hands is the simplest way to stop a fun night out from turning into a very expensive one. Remember to get a receipt for the items you've bought and check statements promptly so any surprises are picked up early."
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