I want to say up front that this is a legal manipulation. We checked with our bank. They agree that it's unethical but there's no law against it.

That said here's what happened:

On Wednesday April 23 a friend ordered an electronic item from a website. The site advertised the item for $300 less than most other sites. They also advertised the item was "in stock".

The company called to confirm the order on Friday. They immediately starte upselling or trying to add on extra items like insurance and battery packs. They were told at that time he just wanted to purchase the item alone and didn't have enough in that bank account to cover extras.

On Monday April 28th the company called my friend and told him the item was on back order for 8 weeks. My friend cancelled the order. He asked for a confirmation number. The rep said it would be emailed. It wasn't.

My friend went online to check his bank account for another reason and found an odd charge for $421 taken off his debit card. When speaking with customer service at the bank he was told that since an authorization was made the charge could go through. In the meantime this amount was placed on hold.

My friend called customer service at the electronic company. He did get the cancellation number; however billing would have to settle the authorization issue. The customer service rep then transferred my friend to the billing department. The billing department had closed 3 hours earlier. I suppose cs expected my friend to swallow that they were unaware of the time that billing closed.

Back at the bank's customer service they assured my friend he wouldn't be charged because he is protected by the credit card company that issues his debit card. But that the authorization should be withdrawn by the company within 72 hours. In the meantime my friend's account is still frozen for the $421.

This morning, Tuesday April 29th, my friend checked his bank account online again. Much to his dismay a *second* authorization was sent through for the same amount. So now $841 of my friend's account is on hold. My friend hears from the bank that his account is frozen and that if he doesn't put in enough money to cover the $841 he will be charged a $25 overdraft fee if both items are released for payment. The bank says they can cancel the second draft but the electronic company can repost it. And it seems these guys stay up nights doing just that.

Back to the bank -- Since my friend gave an authorization the electronic company is within its' rights to charge the full amount and then make a refund. The "billing department" says it will release the authorizations for payment within 48 hours. Oh yes they are. It's perfectly legal.. If they send the authorizations through for payment *then* that's fraud. But until they do it's legal. My friend will likely sit on his hands with a frozen bank account until May 1 or later.

Now here's how it works, and likely why laws will not be passed against it unless people speak up.

The bank has the money. It continues to use the money toward it's assets. Had my friend not deposited enough to cover the whole amount he would have been charged an additional $25 fee.

The credit card has the money. Yep the same money because while the money is technically "in transit" it belongs to the credit card as well as the bank. And the credit card collects interest on "float".

The electronics company doesn't collect "float", BUT, the electronics company posts this as a sale and return as though the item shipped and even though the item is unavailable for 8 weeks. The electronics company gets to write the lost sale off on it's quarterly taxes. Oh yeah, one more thing -- the electronic company can also charge a restocking fee even though the item isn't in stock.

So a word of advice -- go with who you know. Even if that company charges retail. At least you know they won't keep your money tied up for a week.