May 29, 2013 | In: General

Additional Authorization on PayPal

I have purchased some shoes for my wife from Puma’s online shop (they do have a nice collection). The total order came down to about $124 and I was told that taxes will be calculated at checkout. I paid with PayPal and I wasn’t charged any taxes. That was weird, I thought… Shortly after, I received an email confirming the order (and thanking me) – the total was $124 (as originally stated).

I felt that there was something funny – so I kept some monies in my PayPal balance, just in case. The payment status on PayPal was “pending”. I made the order back on Sunday.

Fast forward to today, I received an email from the merchant telling me that my order is shipped, and that the order’s amount was $130.20 ($124 for the order and $6.20 for the taxes). I thought that it might be that Puma will collect the $6.20 when the item is delivered. No problem, I thought…

However, when I logged in to my PayPal account a few minutes ago, I noticed Puma withdrew $130.20 from my account instead of the original $124. I looked up the order details and it had the original $124 plus an additional $6.20 (which was labeled as “Additional Authorization”).

While I expected something like that, I really didn’t like the idea where a merchant is unsure of how much money you should pay, and then charges you extra (without your explicit authorization). I also wondered, can they actually do that? Well, a quick research revealed that they could. In fact, any merchant can re-authorize an additional $75 to any order – that re-authorization can be for taxes, duties, shipping, tips, etc… But the re-authorization has to happen within 29 days of the date when the order was placed.

This “Additional Authorization” can be a huge pain, because some people don’t have enough money in their PayPal accounts to cover the additional charges, so PayPal tries to capture the money from their connected bank account. If the latter doesn’t have enough money, then a hefty overdraft fee will be charged (sometimes it’s $30). Additionally, it might be that the connected bank account is in another currency than that of the order, so the money withdrawn will also be subject to an (often unreasonable) exchange rate.

So, how can one address this problem? Should he call the company he made the purchase from, or should he call PayPal? Well, if you call the company you will get answers such as: “We don’t know anything about this…”, “Your order seems fine…”, “It might be that PayPal was having a glitch when you first made your order…”, etc…

If you contact PayPal, then you will be redirected to the page linked to above. They will tell you that the merchant has the right to capture more funds (for various reasons) from your account – up to $75.

I think the “Additional Authorization” concept can create a lot of issues, because most people don’t expect to pay more money for something after they have already paid it. The thing is, this feature is needed for those many merchants who run a poor e-commerce system that is not able to calculate their various fees properly. Some merchants (especially fast food restaurants), however, abuse of this feature by dinging their customers with an additional charge that should be optional to pay.

Hope this post helped someone, somewhere!

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