I was just thinking back to an episode of Silicon Valley, just hear me out, where Gilfoyle tells Dinesh he can close his bank account to avoid having the donation platform collect the $5,000 he doesn't want to pay his brother. I was just wondering then if this is in fact possible to do with pre-authorization holds, just as a tactic, in the future, say, if I make a large purchase and make a mistake, but the people receiving are not amicable in situations where small mistakes need to be amended with large sums.

  • Seems like that would be fraud. – Joe Jan 30 '17 at 23:07
  • Fraud? Really? You've never been in a situation (I'm not talking about the example from Silicon Valley) where you've made a large purchase, but something needed to be corrected, and the vendor was being difficult? – Domemy Jan 30 '17 at 23:21
  • No, but even so I would not. This is no different from bouncing a check (which is fraud). – Joe Jan 30 '17 at 23:22
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    So in other words, never do this. – Domemy Jan 30 '17 at 23:23
  • To be clear I'm talking about a moments-after-purchase type of situation (online). – Domemy Jan 30 '17 at 23:29

A pre-authorization is just that, a hold on funds, which can be either a credit or debit account. Either way, the funds are frozen, until the charge hits. Nearly all transactions on my charge card have that process, a pre-authorization, and the charge hitting the account. You suggest I can go charge say, $20,000 in jewelry, then cancel the card before the real charge hits. It doesn't work that way, any charges will still be your responsibility.

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  • I don't suggest that. I just mean a pre-authorization hold has been made, no exchange of product has been made, and I later notice the shipping address is wrong, the vendor states there is nothing he/she can do. So, in that case, you'd just let it go to the wrong address and sort things out that way? Doesn't seem smart. – Domemy Jan 30 '17 at 23:27
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    @Domemy most financial institutions will not permit account closure where pre-authorisations are active (their business rules should prevent this) – jimsug Jan 31 '17 at 0:54

They're not going to support that sort of dodgy way to stop payment, because, if you have a legitimate reason, they provide a different, proper way to do that.

In any case, if you even begin to think you may have second thoughts, use a credit card. Credit cards are required by law to have more payer-friendly policies, and many go quite a lot further than that, especially AmEx.

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