The Misused Authorization Fee or a “Misused Authorization Charge” is a charge that is applied when a customer uses a credit card to pay for an item which has been designated as non-returnable by the merchant. This fee can be levied at the time of payment, on either an individual transaction basis if requested by the cardholder, or as a fee for all transactions within a given time period, typically around 90 days.
For example, if a customer purchases an item from the merchant that is non-returnable and then requests to return it after 90 days, they can be charged this fee by the merchant even though they have not used their credit card for safekeeping or any other service provided by the card issuer.
How much is the Misused Authorization Fee?
For merchants that sell non-returnable items, it can be a percentage of the cost for individual transactions and not round numbers such as $20, but instead lower rounded amounts such as $19.95 or $9.99. These fees should be identified and explained to the cardholder at point of sale. For merchants that do not sell non-returnable items, such as hotels, airlines and car rental companies, this fee is often a flat fee for individual transactions and sometimes for all transactions within a certain time period.
What can be done if I get charged Misused Authorization Fee?
It is important that if you are charged this fee, whether for items that are non-returnable or not, that you contact your credit card issuer immediately. If the merchant gave incorrect information or made a mistake they should be willing to refund the Misused Authorisation Fee even though the law does not require them to do so. This fee is added to your credit card account as part of the merchant’s agreement with the credit card issuer.
What are the Credit Card Issuer responsibilities?
The main responsibility of a credit card issuer is that they must ensure that at least 95% of all cards issued by them meet their standards and requirements, otherwise they will be fined.
What are the Merchant responsibilities?
If a merchant accepts payment by credit card, they are legally bound to honour any chargeback requests made by cardholders for faulty goods. They must also ensure that all their staff have an understanding of what is regarded as faulty and provide them with training to identify these instances. Merchants must abide by laws that allow cardholders to make a chargeback request up to 6 years after purchase.
What is the Merchant Error Policy?
There are errors that may occur at the point of sale which are nothing to do with the merchant but are still their responsibility, these can include incorrectly entered transaction dates or merchants who have charged for more than one item in a single transaction. The merchant should still honour these requests by cardholders and in some cases, may have to refund the card issuer for any chargebacks that have been made.
What is the general purpose of Misused Authorization Fee?
The main purpose of this fee is to discourage customers from making returns after they have purchased an item that is non-returnable as they know that there will be a fee to pay. Therefore, many merchants have been able to stop offering refunds for items which are not returnable as cardholders do not want to incur the costs.
What is the best way to avoid Misused Authorization Fee from your credit cards?
To avoid this fee, cardholders should only use their credit cards for safekeeping purposes and not for purchasing items that are non-returnable. In addition, they should ensure that they pay their statement balance in full each month to avoid further fees being added to the account.