Can merchant charge my credit card for an item on back order?

August 31, 2016

Dear Consumer Ed:

Can a company charge my credit card for the full price of an item that is backordered? I was always told that you legally could not charge someone for something that you did not have in stock and could not charge them until it shipped?

Consumer Ed says:

Despite what you have been told, it is actually not illegal for merchants to charge for a product before it has shipped. However, if your order is not delivered, you are guaranteed a refund under the Federal Trade Commission’s Mail or Telephone Order Merchandise Rule, which requires that your order be shipped within the time stated in company advertising or by phone.  If no specific time is promised, your order must be shipped within 30 days from the merchant’s receiving a "properly completed order" with your name, address and payment by check, money order or authorization to charge an existing credit account.  If the order is not shipped within the promised time, the merchant must notify you of the revised shipping date and give you the option to cancel for a full refund or accept the new shipping date. Since you paid by credit card, the merchant is required to credit your account within one billing cycle. For future reference, had you made the purchase with a debit card (this would also apply to cash, check or money order), the merchant would be required to mail your refund within seven business days. 

However, many credit card issuers have policies against sellers charging a credit card account before shipment. If you think a seller charged your account too soon, report it to the credit card issuer. Otherwise, the issuer has no way to know the seller isn’t following its policies. 

If you are unable to resolve this issue, you can file a complaint with the Federal Trade Commission at www.ftc.gov or with the Georgia Department of Law’s Consumer Protection Unit by visiting www.consumer.ga.gov or by calling 404-651-8600.