Reader Phyllis asks:

My brother gave me a mastercard debit card for 50.00. His wife paid the 4.95 activation fee upfront. However, when i went to use it at a restaurant, they said only 40.00 could be gotten through. I have tried numerous times to redeem the remaining 10.00 to no avail. What can be done about this fraud.

I’ve read a number of times that restaurant POS systems tend to add an additional 20% or more when running credit card authorizations to account for an additional charge in the form of a tip.  This may be something that is automatic and beyond the control of the person running the card.  In your case it seems that the system added an additional 25% for the authorization and would only allow $40 of charge as the additional $10 was included in the authorization.

With a normal credit card you might never know, because when the transaction settles a few days later and the original authorization expires or is removed, you only see the charge for the exact amount you actually paid (including the tip).

This is a problem that has plagued open-loop (which includes MasterCard, Visa, American Express, and Discover) gift cards from the very start.  In addition to restaurants, gas stations tend to authorize specific amounts (often $50 or $75) which causes problems with gift cards as it makes it impossible to put $10 of gas in your car using a card with $10 left on it.

While your missing $10 might be locked up for up to two weeks before the original authorization expires (and this is not a fault of the merchant, it is most likely the card issuer that wants make sure you don’t charge more than you should – but they go too far) you will eventually be able to spend that $10 if you can find a business that will let you charge that much as a separate transaction if your purchase something for more.  This is called a split tender when you use two different payment methods to pay one total charge (like a $10 gift card + cash).  Most if not all closed-loop (i.e. store-specific) gift cards will allow this, but surprisingly few merchants are familiar with how to do this (or willing to) with an open-loop gift cards, despite gift card issuers claims to the contrary.

In 2008 we started a service that allowed people to get the last few buck off their open-loop gift cards, but the powers that be were not happy with it and we had to shut it down.  There are no similar services that we are aware of, so you have to find a merchant that will allow you to do a split tender, or purchase something for exactly $10 to get the full amount off.