topic Re: Lesson learned about Authorized User in Credit Cards

Lesson learned about Authorized User

mato01 — Thu, 21 Jan 2016 22:05:40 GMT

I had added my daughter as an authorized user on my AMEX card. She had an insurance claim, and needed a rental car. She used the card as a deposit, she thought, as the insurance company was going to pay the bill.

I wasn't too concerned, because her usage limit was set to $200.00

Its taking forever them to fix her car, parts, etc, and so today I was surprised when there was a charge (never went pending) to my AMEX for $1780.00.

When I called AMEX on how this charge could possibly go through for $1780.00, when her limit was set to $200.00, the CSR rep stated that they assumed it was an EMERGENCY, because the rental company had kept trying different amounts, $300, then $500, then $700, then $900, all which had been rightfully declined, and finally they approved the $1780.00.The funny thing is that I never received the notification of the charge. If I hadn't looked at my account because I had just made a payment I would not have known.

Wow.

Even though I will eventually get my money back from her insurance company (hopefully), it bums me because I try to be careful about how much I have reporting on a given card.

Anyway, just surprised that this occured. Like I said "Lesson Learned".

Re: Lesson learned about Authorized User

Anonymous — Thu, 21 Jan 2016 22:22:34 GMT

Emergency or not they should have contacted you before approving. my .02.

Re: Lesson learned about Authorized User

CreditCuriosity — Thu, 21 Jan 2016 22:25:55 GMT

Weird as this is the purpose to setting up an AU limit with Amex so they can't go over budget.. Should of been contacted or just keep on declining it. I would be calling the rental car place and giving them a piece of my mind as well.

Re: Lesson learned about Authorized User

UncleB — Thu, 21 Jan 2016 23:13:56 GMT

@mato01 wrote:
I had added my daughter as an authorized user on my AMEX card. She had an insurance claim, and needed a rental car. She used the card as a deposit, she thought, as the insurance company was going to pay the bill.

I wasn't too concerned, because her usage limit was set to $200.00

Its taking forever them to fix her car, parts, etc, and so today I was surprised when there was a charge (never went pending) to my AMEX for $1780.00.

When I called AMEX on how this charge could possibly go through for $1780.00, when her limit was set to $200.00, the CSR rep stated that they assumed it was an EMERGENCY, because the rental company had kept trying different amounts, $300, then $500, then $700, then $900, all which had been rightfully declined, and finally they approved the $1780.00.The funny thing is that I never received the notification of the charge. If I hadn't looked at my account because I had just made a payment I would not have known.

Wow.

Even though I will eventually get my money back from her insurance company (hopefully), it bums me because I try to be careful about how much I have reporting on a given card.

Anyway, just surprised that this occured. Like I said "Lesson Learned".

While the rental company activity is clearly wrong (and even goes against 'best practices' for merchants), what really gets my attention with your scenario is that you set a limit of $200... that should have been it - end of story.

If Amex "felt" there was an emergency, they should have contacted you for an override - we're talking about a rental here, not a surgeon delaying operating because the hospital can't run the card. I might be in the minority here, but if it were me I would be raising hell with Amex about that alone. At a minimum, you deserve an explanation in writing of what happened, and what they have done to prevent it from happening on your account in the future.

Now if your daughter called them and used 'social engineering' to have them override her limit, that's a bit different,... but even that isn't excusable if you (the primary card holder, and person responsible for paying) had clearly set a limit beforehand. Using the 'emergency' argument, pretty much anything short of a Macy's spree could be 'forced' though. I have visions of a rogue cab pulling this stunt and Amex thinking, "well, she must really need that cab...".

All that being said, I agree with you that as long as the insurance does their part everything should be fine (and most likely they'll be prompt - I've dealt with this kind of thing before). I just expected more out of Amex.

Edited to add: that you never got a notification of a 'pending' charge and it just posted indicates that the rental agency might have submitted the charge without an auth code, which is a big no-no. If I'm right, that is grounds for a chargeback if you wanted to pursue it. Of course, the rental company would then turn to your daughter for immediate payment, so that might not be desirable, but you do have options.

Re: Lesson learned about Authorized User

azguy13 — Thu, 21 Jan 2016 23:15:15 GMT

That is extremely obnoxious of Amex. If they felt that it was an emergency, the first thing they should have done is called the primary card holder (you) and requested the charge be approved. The scenario makes me wonder if they have a variation of the "black box" that approves after the 4th or 5th time the charge is requested. I doubt it, but I feel that there had to have been something out of the ordinary going on. I have not heard of this happening before.

Re: Lesson learned about Authorized User

UncleB — Thu, 21 Jan 2016 23:30:26 GMT

@azguy13 wrote:
That is extremely obnoxious of Amex. If they felt that it was an emergency, the first thing they should have done is called the primary card holder (you) and requested the charge be approved. The scenario makes me wonder if they have a variation of the "black box" that approves after the 4th or 5th time the charge is requested. I doubt it, but I feel that there had to have been something out of the ordinary going on. I have not heard of this happening before.

I edited my comment as you were submitting yours to say the same thing. It looks like the rental place forced the transation through, which is fine as long as nobody contests it. During my retail days we could do that as an absolute last resort, kind of like a 'Hail-Mary', so to speak, but there was absolutely no recourse if there was a chargeback. That would explain why the OP never got a notification.

If the OP contests it, the rental place would then pursue the daughter (or the insurance company). Personally, as annoying as it is, since it is actually 'legit' the only way I would do a chargeback is if I wanted to use another card (for points, rewards, etc.)

Re: Lesson learned about Authorized User

Scupra — Thu, 21 Jan 2016 23:23:33 GMT

You would think it was a concern for fraud, not an emergency to approve..

Re: Lesson learned about Authorized User

Anonymous — Thu, 21 Jan 2016 23:25:45 GMT

@Scupra wrote:
You would think it was a concern for fraud, not an emergency to approve..

Exactly.

Re: Lesson learned about Authorized User

UncleB — Thu, 21 Jan 2016 23:26:36 GMT

@Scupra wrote:
You would think it was a concern for fraud, not an emergency to approve..

Exactly... that's why the more I think about it, I doubt it was approved at all - it was just submitted. Definitely a risky way to do business from the merchant's perspective.

Re: Lesson learned about Authorized User

Anonymous — Thu, 21 Jan 2016 23:29:07 GMT

chanting:

"CHARGEBACK, CHARGEBACK, CHARGEBACK, CHARGEBACK!"

Re: Lesson learned about Authorized User

bch238 — Thu, 21 Jan 2016 23:57:06 GMT

Even though I will eventually get my money back from her insurance company (hopefully), it bums me because I try to be careful about how much I have reporting on a given card.

Wow, that's a big rental bill. Insurance coverage for rental reimbursement typically is limited to 20 or 30 days at some maximum daily rate stated in the policy.

Re: Lesson learned about Authorized User

UncleB — Fri, 22 Jan 2016 00:05:17 GMT

@bch238 wrote:

Even though I will eventually get my money back from her insurance company (hopefully), it bums me because I try to be careful about how much I have reporting on a given card.

Wow, that's a big rental bill. Insurance coverage for rental reimbursement typically is limited to 20 or 30 days at some maximum daily rate stated in the policy.

The daily limitation I also have some personal experience with (unfortunately). If you're at fault and your own policy is footing the bill, there will be a maximum limit on the number of days, daily rate limit, etc. Any amount over this is out-of-pocket.

However, if another party is at fault and their policy is covering the bill, the limits generally don't apply - they have to make you 'whole' however long it takes if their people determine the car isn't a total loss.

I once had a car in the shop for 58 days, and Enterprise had to re-up my rental in three-day increments (it was direct bill to the insurance company). The insurance company also called the body shop every three days for 'status' on my repair. Thankfully all of this was done behind the scenes, but the body shop manager at the dealership told me it was a little 'intense'... LOL. (It took so long because twice a replacement hood was delivered damaged, and had to be re-ordered).

Re: Lesson learned about Authorized User

Callandra — Fri, 22 Jan 2016 00:59:41 GMT

@UncleB wrote:
@azguy13 wrote:
That is extremely obnoxious of Amex. If they felt that it was an emergency, the first thing they should have done is called the primary card holder (you) and requested the charge be approved. The scenario makes me wonder if they have a variation of the "black box" that approves after the 4th or 5th time the charge is requested. I doubt it, but I feel that there had to have been something out of the ordinary going on. I have not heard of this happening before.
+1

I edited my comment as you were submitting yours to say the same thing. It looks like the rental place forced the transation through, which is fine as long as nobody contests it. During my retail days we could do that as an absolute last resort, kind of like a 'Hail-Mary', so to speak, but there was absolutely no recourse if there was a chargeback. That would explain why the OP never got a notification.

If the OP contests it, the rental place would then pursue the daughter (or the insurance company). Personally, as annoying as it is, since it is actually 'legit' the only way I would do a chargeback is if I wanted to use another card (for points, rewards, etc.)

When did you work in retail? I worked retail 2005-2008, and then 2013 and there was no way to force a transaction through. Couldn't do that at my last job (online business). Either the card is declined or it's approved and usually after two or three tries, I would tell the customer to call their bank. I would never try it more than three times.

I think you should be more angry at Amex personally since they should have never allowed the charge. What's the point of setting a limit on an AU card then?

Re: Lesson learned about Authorized User

Anonymous — Fri, 22 Jan 2016 01:10:08 GMT

Amex was willing to exceed the limit you had set for your daughter. I wonder if they'd be as quick to go over the credit limit they'd set for you (and by almost nine-fold) in a similar situation.

Re: Lesson learned about Authorized User

Anonymous — Fri, 22 Jan 2016 01:26:19 GMT

I added my kids to my cards to help them build something on their report BUT I requested no card to be mailed out. This is exactly why I did what I did.

Re: Lesson learned about Authorized User

Anonymous — Fri, 22 Jan 2016 01:56:32 GMT

I feel you should've at least received an email, text, or call stating the authorized user had exceeded the limit. Bad on Amex's part., or perhaps it's in account settings somewhere.

Re: Lesson learned about Authorized User

UncleB — Fri, 22 Jan 2016 01:57:02 GMT

@Callandra wrote:
@UncleB wrote:
@azguy13 wrote:
That is extremely obnoxious of Amex. If they felt that it was an emergency, the first thing they should have done is called the primary card holder (you) and requested the charge be approved. The scenario makes me wonder if they have a variation of the "black box" that approves after the 4th or 5th time the charge is requested. I doubt it, but I feel that there had to have been something out of the ordinary going on. I have not heard of this happening before.
+1

I edited my comment as you were submitting yours to say the same thing. It looks like the rental place forced the transation through, which is fine as long as nobody contests it. During my retail days we could do that as an absolute last resort, kind of like a 'Hail-Mary', so to speak, but there was absolutely no recourse if there was a chargeback. That would explain why the OP never got a notification.

If the OP contests it, the rental place would then pursue the daughter (or the insurance company). Personally, as annoying as it is, since it is actually 'legit' the only way I would do a chargeback is if I wanted to use another card (for points, rewards, etc.)
When did you work in retail? I worked retail 2005-2008, and then 2013 and there was no way to force a transaction through. Couldn't do that at my last job (online business). Either the card is declined or it's approved and usually after two or three tries, I would tell the customer to call their bank. I would never try it more than three times.

I think you should be more angry at Amex personally since they should have never allowed the charge. What's the point of setting a limit on an AU card then?

You can if your POS is set up for it, but it's definitely for 'special' occasions and usually reserved for a manager.

One place I worked for years didn't have a special method, we would simply enter '1' in the auth field and the back-office would push it through. The other place the POS would allow it for managers only (most of us were in the system as managers). You would tab to the auth field and leaving it blank you would just hit 'enter' and the system would prompt for a manager's passcode; enter your password and the transaction would sail right through...

It was only used for very special circumstances, like if you needed to void/re-ring something and the card was declined on the second swipe (but you knew it was approved the first time) you could force the card. I also saw it used once when something was shipped by mistake before the card was run, and when the card was processed it was declined. We 'forced' the transaction and then crossed our fingers. The idea was that whatever was keeping the card from being approved would hopefully be cleared up by the time the charged hit (or the account would be permitted to go overlimit), and that the card holder wouldn't initiate a chargeback (since there is no recourse for the merchant for amounts over the floor limit without an auth). Used in this way it was literally a 'Hail-Mary', since without at least trying there was a definite loss.

On the very few times I had to do it, I was never told of a chargeback.

If this is what happened to the OP's daughter at the rental company (again, we're speculating), it's likely they tried the card a few times, and if they were able to get an auth for an amount under the daughter's limit they assumed the account itself was 'OK'. It was very risky (especially for that dollar amount) and would be a guaranteed 'win' if the OP wanted to initiate a chargeback. Since there are service charges attached to chargebacks (in addition to the reversed sale amount) It would definitely be a 'teachable moment' for the clerk that processed the transaction.

Re: Lesson learned about Authorized User

Anonymous — Fri, 22 Jan 2016 02:09:00 GMT

Very informative, thanks for the info and stories everyone!!

Re: Lesson learned about Authorized User

Callandra — Fri, 22 Jan 2016 02:15:17 GMT

@UncleB wrote:
@Callandra wrote:
@UncleB wrote:
@azguy13 wrote:
That is extremely obnoxious of Amex. If they felt that it was an emergency, the first thing they should have done is called the primary card holder (you) and requested the charge be approved. The scenario makes me wonder if they have a variation of the "black box" that approves after the 4th or 5th time the charge is requested. I doubt it, but I feel that there had to have been something out of the ordinary going on. I have not heard of this happening before.
+1

I edited my comment as you were submitting yours to say the same thing. It looks like the rental place forced the transation through, which is fine as long as nobody contests it. During my retail days we could do that as an absolute last resort, kind of like a 'Hail-Mary', so to speak, but there was absolutely no recourse if there was a chargeback. That would explain why the OP never got a notification.

If the OP contests it, the rental place would then pursue the daughter (or the insurance company). Personally, as annoying as it is, since it is actually 'legit' the only way I would do a chargeback is if I wanted to use another card (for points, rewards, etc.)
When did you work in retail? I worked retail 2005-2008, and then 2013 and there was no way to force a transaction through. Couldn't do that at my last job (online business). Either the card is declined or it's approved and usually after two or three tries, I would tell the customer to call their bank. I would never try it more than three times.

I think you should be more angry at Amex personally since they should have never allowed the charge. What's the point of setting a limit on an AU card then?
You can if your POS is set up for it, but it's definitely for 'special' occasions and usually reserved for a manager.

One place I worked for years didn't have a special method, we would simply enter '1' in the auth field and the back-office would push it through. The other place the POS would allow it for managers only (most of us were in the system as managers). You would tab to the auth field and leaving it blank you would just hit 'enter' and the system would prompt for a manager's passcode; enter your password and the transaction would sail right through...

It was only used for very special circumstances, like if you needed to void/re-ring something and the card was declined on the second swipe (but you knew it was approved the first time) you could force the card. I also saw it used once when something was shipped by mistake before the card was run, and when the card was processed it was declined. We 'forced' the transaction and then crossed our fingers. The idea was that whatever was keeping the card from being approved would hopefully be cleared up by the time the charged hit (or the account would be permitted to go overlimit), and that the card holder wouldn't initiate a chargeback (since there is no recourse for the merchant for amounts over the floor limit without an auth). Used in this way it was literally a 'Hail-Mary', since without at least trying there was a definite loss.

On the very few times I had to do it, I was never told of a chargeback.

If this is what happened to the OP's daughter at the rental company (again, we're speculating), it's likely they tried the card a few times, and if they were able to get an auth for an amount under the daughter's limit they assumed the account itself was 'OK'. It was very risky (especially for that dollar amount) and would be a guaranteed 'win' if the OP wanted to initiate a chargeback. Since there are service charges attached to chargebacks (in addition to the reversed sale amount) It would definitely be a 'teachable moment' for the clerk that processed the transaction.

Interesting, thanks for the info. I've never worked anywhere where the POS can do that. I guess all the businesses I've worked for have always been "if the card declines, let it decline."

I found out the chargeback fee at my current job is $50. It's good thing most chargebacks are won! (My last job it was dependent on the merchant account, we had 3, but the highest was $45)

Re: Lesson learned about Authorized User

creditguy — Fri, 22 Jan 2016 05:25:53 GMT

So Amex declined attempted charges of $300, $500, $700 and $900 but ultimately allowed a charge of $1780? Still scratching my head trying to figure out Amex's rationale on that. So I guess if someone decides to go over thier AU limit, its easy, just keep charging higher numbers until Amex assumes it's an emergency and let's it go through. Hate to see how they handle fraud charges. 🤔