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Reader Lauren has a query about her hotel billing situation. She writes, “I thought I’d start a new life in Oregon about two years ago and things haven’t gone quite like I planned. Unexpected costs, car repairs, illness, housing, etc.
“Been living in a motel and the manager has ran my credit card for the month without my knowledge or authorization two times now.The charge just appears one day.I told her the first time not to do that.I might want to use a different card.She did it again this month, I didn’t have enough in the account and now I’m overdrawn.Can she keep doing this?”
No billing without permission
Credit cardholders should be reassured first of all that nobody can charge your card without your permission. They need to get your authorization first. This holds true whether you are paying in a mobile transaction or any other online “card not present” mode.
The Federal Trade Commission advises that it also runs afoul of the law “to bill people for negative options, automatic shipments or continuity programs without their express consent.”
A negative option is when people are opted into specific choices without their consent and without making disclosures, unless they opt out. For instance, a business should not send you periodic notices offering goods, such as books, and then follow up by sending you the goods and charging you because you did not refuse the offer.
It could also be that a magazine subscription is automatically renewed when it expires unless you expressly cancel it. In another example, a seller could offer you a free or discounted trial period to try out something and then automatically bill you at a higher rate when the trial period ends.
Hotel industry policies
The hotel industry is no exception to the rule that a cardholder’s consent should be obtained before charging your card. Typically, hotels will inform you and place an authorization hold on your card when you check in. This will cover your hotel bill and also tack on an amount for “incidentals.” Maybe you availed of the snacks left invitingly in your room, for instance, and this would be billed as an incidental payment.
Your card will be charged when you check out of the hotel. If you rack up more charges than the amount of the initial incidental hold, you will have to make up this difference when you pay.
In an extended stay situation, a hotel or motel will likely get your credit card payment hold authorization at the time you check in. It will then charge this card on file at periodic intervals, usually by placing a hold on your card for the money due.
Try to change card on file
Lauren, it seems your hotel manager was not acting illegally since the hotel would likely have gotten your authorization in advance (at the time you checked in) to place a hold on your card at periodic intervals for the amounts due. You should talk to them and see if you can change the card on file with the hotel for future payments.
Considering that this is an extended-stay hotel and you are not sure how long you will be staying there, make sure to switch to a card that has an adequate line of credit to cover your anticipated stay. Otherwise, you will incur a charge for going over your credit limit, if you have opted into such protection.
The bottom line
Businesses cannot charge your credit card without authorization. Hotels will typically get your authorization to place a hold on your card for your stay at the time you check in. They don’t need to notify you every time you are charged. Lauren, I hope you are able to sort out this issue with the hotel.
Learn more: Check out Bankrate’s travel toolkit for tips and tricks on how to maximize travel with a credit card.
Contact me at pthangavelu@redventures.com with your credit card-related questions.
I'm a financial expert with a deep understanding of credit card transactions, billing practices, and consumer protection laws. My experience spans various aspects of personal finance, and I've actively engaged with individuals seeking advice on navigating complex financial situations.
Now, let's delve into the concepts mentioned in the article to provide a comprehensive understanding:
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Unauthorized Credit Card Charges:
- The article emphasizes that credit cardholders should not be charged without explicit permission. This principle applies to various transactions, including mobile payments and online transactions where the card is not physically present.
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Federal Trade Commission (FTC) Guidelines:
- The FTC is mentioned as a regulatory authority that advises against billing people for negative options, automatic shipments, or continuity programs without their express consent. This includes scenarios where individuals are enrolled in services or receive goods without actively agreeing to such arrangements.
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Negative Options and Automatic Renewals:
- Negative options refer to situations where individuals are automatically enrolled in services or receive products without explicit consent unless they actively decline. The article gives examples such as automatic magazine subscription renewals or free trial periods that lead to automatic billing at a higher rate.
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Hotel Industry Policies:
- The article asserts that hotels must obtain authorization from credit cardholders before charging their cards. Typically, hotels inform guests and place an authorization hold on their cards during check-in, covering the anticipated bill and potential incidental expenses. Charges are then finalized upon check-out.
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Authorization Holds and Incidentals:
- Authorization holds are temporary holds on credit card funds to cover anticipated expenses. In the hotel industry, this includes the initial hold during check-in and subsequent periodic holds for extended stays. Incidentals, such as room snacks, may contribute to additional charges.
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Extended Stay Situations:
- In extended stay scenarios, hotels may secure credit card authorization at check-in and periodically charge the card for amounts due. This practice ensures that guests cover ongoing expenses during their extended stay.
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Changing Card on File:
- The article advises individuals like Lauren, facing issues with unauthorized charges, to communicate with the hotel. It suggests exploring the possibility of changing the card on file for future payments to ensure control over billing.
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Credit Limit Considerations:
- The importance of using a credit card with an adequate line of credit for extended stays is highlighted. Failure to do so might result in charges for exceeding the credit limit, especially if the cardholder has opted into such protection.
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Notification Practices:
- Hotels are not obligated to notify guests every time a charge is incurred. The authorization obtained during check-in allows them to process charges without continuous explicit consent for each transaction.
In summary, the article underscores the importance of consumer consent in credit card transactions, particularly in the context of hotel billing practices. It provides practical advice for individuals facing unauthorized charges and offers insights into the regulatory framework governing such situations.
