Let’s hear it for this gas price bait and switch!

Cheaper isn’t always better.

On a recent trip to Bend, Ore., I discovered that cheaper can actually mean more expensive.

The scam was perpetrated by a service station selling unleaded gas that’s 10 cents lower than the other stations along the road. With gas prices pushing $4 a gallon, a 10-cent saving is nothing to sneeze at.

So I pulled in to the service plaza, and before I could whip out my credit card, an employee walked over said, “I’m sorry, but our credit card machine isn’t working.”

No problem, I thought. We’ll do this old school. I’ll just go inside and give the attendant my card.

And that’s when the scammy gas station sprang its trap.

A small sign near the counter informed me that this particular station didn’t accept any of the major credit cards — only a debit card, to which it added a 50-cent transaction fee.

By the time I’d done the math in my head, I was at the front of the line, at a less-than-honest gas station with an empty tank of gas and a family that needed to be fed lunch.

But the numbers worked out like this: The gas station was charging me a little more than its competitors, once you factored in the ATM fee. And after adding the transaction fee from my bank, I was overpaying for the fuel in a major way.

Ridiculous? Many of you will agree. Some of you won’t. Some of you will say, “Hey, that’s the free market. You could have gone somewhere else.”

To those of you who feel the gas station — which shall remain nameless because it doesn’t need any free advertising — was being completely ethical, I have just one thing to say to you: You’re wrong.

It would have been one thing if the ATM fee had been clearly disclosed before I pulled up to the station. But instead, I was told the machine was “broken” (later I asked how long it had been down, and learned it had been many months). The signs warning of the ATM fee were small and inconspicuous, one inside the store and the other near the pumps, but in small lettering.

Now, to be clear, there’s nothing illegal about any of this. But unethical? Yes.

And this kind of absurdity repeats itself in other parts of the travel industry as well. It’s the party of five that eats at a restaurant, only to discover that a “tip” of 20 percent has been added to their bill. (Check the fine print on the menu, it’s disclosed there, and by ordering from the menu, you agreed to it.)

It happens in airlines and hotels, too, whether it’s the surprise $100 fee to carry on your bag or the mandatory “resort” fee your hotel failed to mention.

The smart customers among us might suggest that if we were just as enlightened as they are and read every contract more carefully, heeded all the warnings, then we wouldn’t fall for this nonsense. But I take a different view. I think anyone can fall for a scam, and I include myself in that group. I think that while we should always be on the lookout for businesses that prey on helpless travelers, we also deserve to be protected from them.

You might not share my point of view. But when you’re standing at a gas station in Bend and you’ve been conned out of a few bucks by a fast-talking gas station attendant, maybe you’ll change your mind.

Do you think the gas station pricing was a scam?

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  • http://www.facebook.com/CarverFarrow Carver Clark Farrow

    They care because its their police that are called to track down perpetrators thus imposing additional burdens on law enforcement and ultimately the tax payers.

  • Joe_D_Messina

    Excellent post. It sounds like Chris needs a new bank. The gas station was being deceptive, but minus the bank fees Chris would still have come out ahead despite the $.50 fee the gas station stuck him with.

    It’s rather stunning to me a consumer advocate and bright guy like Chris would write this article and never even touch on the point that he was being ripped off by his bank. That’s the real story here. With a decent financial institution he’d still have saved a bit at this station even with their extra fee tacked on.

  • Ed Boston

    Thinking about it, the claim the machine is broken doesn’t make sense. If they could run debt cards, sounds like the machine was working. I can’t recall ever seeing a merchant using two different machines, one for credit and a different one for debt.

  • Nigel Appleby

    My son was told by a gas station attendant to enter his phone area code followed by 2 zeros. Apparently it worked, although I haven’t tried it yet. His area code is 604, mine is is 250. If you live in Canada use your area code, if you live in another part of the world use one of ours or look up a Canadian code that’s easy to remember. I hope it works for anybody who uses this.

  • http://twitter.com/DutchessPDX Dutchess

    This math isn’t really adding up for me. Gas price savings = 10 cents/gallon while ATM transaction fee was 50 cents for the entire transaction. If you purchase 5 gallons of gas you’re at break even, so unless you arrived on a riding lawn mower, you’re still coming out ahead.

    Also, why would your bank charge you a transaction fee for debit card? This is almost unheard of when you make pin based transactions they are usually free to the cardholder.

    I think the only scammy thing here is your bank for charging you to use your debit card.

  • http://twitter.com/DutchessPDX Dutchess

    I agree, the only scammy thing here is a bank charging you to use your debit card. Of all the national big bank, this is a fee I haven’t heard of.

  • y_p_w

    There is a little something called paper currency. I’ve yet to find a gas station with personnel that didn’t accept cash without an additional transaction fee.

    Of course there are some gas stations that are open 24 hours or late hours with a credit card, debit card, or gift card. I know of one Chevron station that has low cash prices, and one can get the same cash price with the company’s gift card.

  • Nigel Appleby

    In Canada retailers may not charge the customer a fee for using a debit or a credit card. I think it’s federal legislation, but it was also written in our contracts with Visa etc. Also in British Columbia it is provincial law that one must prepay for gas, either at the pump or inside the gas station. Which solves a lot of problems. The law was introduced after a gas station attendant was dragged under a car to his death while trying to stop a driveaway.

  • Cornhusker

    Living in Lincoln, I am guessing it is at 56th st exit. The ones elsewhere are OK

  • mszabo

    I’m not sure this was ever against the law. What it is is against the terms and conditions the Merchant has signed with the Credit Card companies. Debit cards may be a whole different animal and probably work the same as a 3rd party ATM which almost always has a transaction fee.

  • BillCCC

    Last time in NY State the machine had a sign that had you enter the numbers from your postal code + 00 and that worked fine for me.

  • y_p_w

    There was an segment of the cartoon “Garfield and Friends” where Jon decides to give up his credit card, but when he tries to buy something at the mall nobody seems to recognize this thing called “cash”.

    http://www.tv.com/shows/garfield-friends/cash-and-carry-98049/

  • calbff

    Most places in Manitoba and Saskatchewan, Canada are pump first, pay after.

  • http://www.facebook.com/lbart Logan Bartholomew

    For the sake of informing the conversation:
    The parents of a close friend own a small watch business. My friend tells me that it costs only about $0.25 to run a PIN-based debit transaction, while credit cards usually take a fraction of what is being charged (1-2%). The exception is AmEx, which is known to charge up to a 5% transaction fee.

  • Walhon

    Here’s the thing, there are many gas stations in the country that charge an additional 3-10 cents per gallon when you pay with a card. Many times, this is not disclosed, but when you swipe your card, price just changes at the pump, and there is no notice at all. Here where I live, we have a station that does not accept credit cards, but has an ATM on site. Their gas is 10-12 cents per gallon cheaper than anywhere else in town, but they rely on their cash customers, and make it as difficult as possible to pay with a card! This is simply business, and there is nothing different about it than me telling my customers that if they pay with cash/check I offer a 3% discount (I offer this to credit card customers too), but if they want me to bill it, they will have to pay the full price!

  • y_p_w

    Not in Oregon. That got me the first time I drove into Oregon. I reflexively went to try and pump myself, but the attendant informed me that it was the law in Oregon. I asked if it was OK for me to clean my own windows, which was allowed. I’m not sure whether or not to leave a tip though.

    The prices weren’t bad either (cheaper than most gas stations in California or Washington during the same trip).

  • Phoenix Justice

    I remember taking a cross country trip with my family back in 1979. We were in the pan handle of Texas and every gas station was advertising for 80 cents while one station was advertising for 50 cents. So, my dad pulled into the cheaper gas station only to find out that their price was per liter, not gallon.

    ——

    What I have an issue with is that the gas station plays the game of not accepting credit cards at the pump and only accepting debit at the register.

  • bodega3

    As a small business owner I can tell you that the fees vary with the merchant account company you use. There can also be a transaction fee on top of the percentage cost plus the monthly fee the business is charged. All for the ‘priviledge’ of accepting a customers card.

  • y_p_w

    Oh – the days when the attendant trusted people to not drive away.

    There’s a gas station near where I live which operated that way. Even with self serve, the attendant had to come out to reset the pump with a mechanical reading that made a clicking sound. Even as other gas stations were implementing pay at the pump, the attendant had a credit card imprinter using carbon paper. I think he had a card reader to check to see if a card had been reported stolen or declined, but the place never got a printer. Then they embraced the 21st Century in a big way; they now have a convenience store and attendant inside. Still – that station still has two service bays with an actual mechanic on duty.

  • emanon256

    Good point! I remember my last commercial bank tried to charge me that, i closed my account before it went into effect.

  • Joe_D_Messina

    Agreed. But without question the biggest (and recurring) gotcha in the article was his bank charging him to use his debit card. Yet, strangely, that doesn’t even get mentioned. He’ll never go to that gas station again (possibly will never even be in the area to use them again even if he’d consider doing so) yet he’s apparently still carrying around and using his lousy debit card. That gotcha is still getting him.

  • Andrew F

    If I did that in Chris’s situation, I would’ve been eaten alive by my better half for penny pinching. However, since I never pay with a debit card anyway, I would’ve just used cash.

  • Jeanne_in_NE

    I think it was the merchant that grabbed the 50 cents, not the bank that issued the debit card. ???

  • BeckyAintheBay

    There is a gas station company near where I live which operates in exactly the same way. They are able to offer lower prices by being cash and debit only, and there is a surcharge for debit; they are effectively cash only, but also 10-15 cents cheaper, on average. I live in Northern California and I imagine they operate in Oregon as well. It doesn’t display this unless you drive up to the pump, but anyone from around here knows, so maybe it’s just a case of uninformed traveler (though not your fault, Chris).

  • http://twitter.com/DutchessPDX Dutchess

    I had the same questions when I moved to Oregon 3-4 years ago. You get used to not pumping your own gas and No, tipping is never expected or required. I do occasionally tip around the holidays or on very cold nights or when I see one attendant busting their @ss out there to make sure nobody has to wait longer than necessary.

  • http://twitter.com/DutchessPDX Dutchess

    I love you and as a former starving student you’re my personal hero.

  • Carrie Charney

    No sales tax in OR.

  • y_p_w

    The sales tax on fuel in California is only 2.25% of the “base price” (before other taxes). The difference in prices was closer to 50 cents a gallon.

    Of course I won’t pretend to know how fuel is priced, such as why two Chevron stations a block apart charge different prices. Or why some gas station 100 miles from the closest refinery and in the middle of nowhere is considerably cheaper than a gas station blocks away from a refinery. And yes, I do realize that gasoline is transported through pipelines.

  • http://www.facebook.com/CarverFarrow Carver Clark Farrow

    Nice

  • http://www.facebook.com/CarverFarrow Carver Clark Farrow

    Oh, I agree. I think the store owner is lying through his/her teeth.

  • TonyA_says

    I believe that Oregon and New Jersey are the 2 States where they pump gas for you. Over here in the TriState area, NJ has the cheapest gas. So you get full service and cheaper gas :-)

  • Chris in Oregon

    When you use a debit card for $10.00 we only receive $9.66 of that transaction. The 2.4% fee charged to us as a business is for the company that sorts out all of the various banks that debit cards are issued to and draws that $10.00 from the right bank keeping the .24 cents as the cost of doing this.

  • frnkbnhm

    Would the really way to deal with this to be to inform the credit card companies that they are advertising they accept their cards but do not. There must be some rule about displaying the VISA, MC, etc. logos and not actually accepting the cards.

    Also the math doesn’t make sense. You got charge $.50 for the transaction if the gas was really $.10 cheaper per gallon so long as you bought more than 5 gallons you came out ahead. How would you come out behind?

  • Chris in Oregon

    When you use a debit card for $10.00 we only receive $9.66 of that transaction. The 2.4% fee charged to us as a business is for the company that sorts out all of the various banks that debit cards are issued to and draws that $10.00 from the right bank keeping the .24 cents as the cost of doing this. We do over half of our business in Credit Cards (slightly higher fee) and the monthly hold back by these companies is staggering. To me it just looks like this gas station A is trying to break even with the fee as the other stations have it built into the gas price and if you pay with cash you have given gas station B that fee plus.

    But Chris the real gas station issue here is why do we let gas stations get away with raising and lowering prices as a daily ritual. The gas they have in their holding tanks didn’t go up in price but they play the game so often that we accept it. The price of crude goes up and they raise prices a day later even though that higher priced crude oil is not even close to becoming gas for weeks or even months.

  • sershev

    Arco gas stations always charged 50 cents or something fee for use of debit card and do not accept cash. The gas price at Arco stations on overage a bit cheaper compare to other stations but not always. Everyone knows about this fee. And it is in place even if you buy a gum inside and use a debit card. I wonder, the 50 cents fee was in place when banks charged the merchants the same fee for debit card transactions. However, the government recently capped the fee banks can charge for debit cards transactions to 15 cents or something. Arco, however, did not reduce their debit card fee.

  • Extramail

    Had a similar experience recently when trying to fill up the rental car near an airport. The sign at the station we pulled into was 10 cents less a gallon than one down the road. Only when you try to pay does it say that using a credit card would mean you pay a higher price – the reduced price was a cash only price. Now how many of us have THAT much cash on us. I got in th car, drove down the street and paid one cent a gallon more just because I wasn’t going to do business with a scammer. I remember when pay at the pumps first started credit cards were a different price but haven’t noticed that in a long time.

  • TonyA_says

    I am a quite confused with the way an ATM card is used in the article and posts.
    My understanding is my bank’s (Bank of America) ATM card only allows me to withdraw cash from an automated teller machine (ATM). I cannot use it to pay for gas UNLESS I add a debit card option with it. If I do that (make my ATM card also a debit card), the new card has a Visa or Mastercard Logo added to it.

    Having said the above, when people use the term “pay by ATM”, are they really saying pay by debit card? Thanks for helping clarify this.

  • TonyA_says

    Here in the NYC Tristate Area, working for a gas station or convenient store at night is one of the most dangerous jobs. Sometimes they get even…

    http://www.nypost.com/p/news/local/queens/qns_drunk_fatal_brawl_bCDPAbUR2Gk4H19hMcJE6O

  • Ed Boston

    Pay by debit and pay by ATM terms have pretty much come to mean the same thing, but there used to be a difference. From what I have seen, almost all banks issue Debit/ATM cards these days. I remember some time ago that there was a method for a merchant to accept ATM card by basically having a special card processor at the counter. It basically made an ATM withdrawal the the customer’s account and transferred the money to the merchants account. Of course you had to be a member of the ATM network like Star and Cirrus. This was before debit card were being issued.

  • TonyA_says

    As far as I know the Durbin Amendment to Dodd-Frank capped the banks charging the merchant 22 cents per transaction.
    What I don’t know is whether the merchant is capped from charging the customer the same amount. From what I see here, I don’t think so.

  • http://elliott.org Christopher Elliott

    As would I.

  • Joe Farrell

    I’m going to say this – and wait for the abuse . . . .

    Anyone who rolls into a gas station they have never been to, which is by definition off brand, hoping that they can use a credit card, and does not have enough gas to drive 4 blocks to the next gas station, deserves what they get. At that point, this gas station owner could have charged you $10 a gallon with a ten gallon minimum and apparently you would have been forced to pay it because you were on fumes.

    The basic question remains – when you saw it was impossible to pay with your credit card and there seemed to be unknown transaction costs – why didn’t you just leave? You were THAT low on gas that you could not go someplace else?

    Has common sense been tossed in the trash these days?

  • Joe Farrell

    But could you pump before you paid HERE? We don’t care what the station three states away might have done. . .

  • Joe Farrell

    Most merchant agreements also do not permit merchants to ask for identification in order to use a credit card. I generally refuse to present ID when asked. When I get told ‘its for my protection,’ thats bull. No one has liability for fraudulently used credit cards. Identification is for the merchant’s protection – not mine.

    The merchant is simply required to match the signatures – if the signatures match to a commercially reasonable level the merchant is protected from a charge back. they NEVER check the signatures – everyone is hung up on ID. Which is so easily obtained that any one using a credit card fraudulently can get get an id in about 4 minutes. . .

    For the life of me I don’t understand why we don’t simply use pin numbers for credit card swipes in the US.

  • http://www.facebook.com/franklin.shaffer.3 Franklin Shaffer

    Having lived in CA for many years and using ARCO gas stations quite often, I can attest to the fact that they do not accept credit cards of any kind. They do accept debit cards and tack on a fee (when I lived there it was 35c) for using it. However, I never heard of one that did not accept cash??? The pay-at-the-pump equipment accepted cash or your debit card. Or, you could pre-pay at the counter in cash. Isn’t ARCO now owned by BP?

  • Ed Boston

    Oh man. It’s great to see someone else that refuses to give into the merchant’s paranoia. That is in the MasterCard agreement (Sec 5.8.4 – MasterCard Rules, update 1 Aug 2012 http://www.mastercard.com/us/merchant/pdf/BM-Entire_Manual_public.pdf). I love how they try explaining it’s for my own protection and I point out I am only liable for the first $50 and the issuer of my card waives that fee. Then they try the, “It’s for the store’s protection.” Wrong again. Once they have the authorization number, they get their money.

    I have gotten to the point that if they have a PayPass terminal, I use my Google Wallet. I had one merchant actually ask for ID when I used it and I asked him what he was going to compare it to? I just took my stuff and left while he stammered. With the PayPass, you don’t have to even sign!

  • Ed Boston

    Yes, they are a part of BP now and is one reason I refuse to patronize them. (Not because of the recent gulf fiasco but because of other issues).

    My mom always goes to the ARCO station by her house and pays with cash. I have never heard of one not accepting cash.

  • y_p_w

    Visa Debit only means that a debit card can be used for standard credit card style transactions. It’s not used for PIN-based transactions.

    I’m not sure exactly what would be used, although there is a company called Interlink (owned by Visa) that provides such a service.

  • y_p_w

    I’m guessing this may be close to what’s going on:

    http://www.davidsugerman.com/2011/10/01/arco-debit-card-fees-again/

  • y_p_w

    I knew of one ARCO station that accepted credit cards, although I’m not sure today. The individual franchise owner opted to accept credit cards and business was considerably higher than any other gas station in the area.