A viewer recently reached out to us after finding out that his California Middle Class Tax Refund debit card account had a -$7.44 balance. With more than 9 million Middle Class Tax Refund debit cards issued so far across the state, KCRA 3 has received questions from viewers on everything from why they haven’t received their inflation relief payment to concerns about fees and possible fraud.| RELATED | California lawmaker wants an audit of the Middle Class Tax RefundsThis viewer said that after successfully using his card for purchases, he checked to see how much money he had left and was shocked to discover it had a negative balance. Did that mean he had to pay it back? California’s Franchise Tax Board told KCRA 3 that people do not need to pay back funds if they get a negative balance on their debit card. Spokesperson Andrew LePage confirmed that the FTB is aware of other reports of people who have experienced the issue. Money Network will not contact Middle Class Debit Card recipients to ask them to return any funds related to negative balances, he said. KCRA 3 asked the FTB for more information about how much money could be involved. The agency responded that FTB did not know that answer, but said the state would not have to foot the bill for any extra amounts. | RELATED | Did you get a Middle Class Tax Refund debit card? Here’s how to use it, avoid feesSo what happened? Why does a Middle Class Tax Refund debit card get a negative balance? LePage said this is happening because of what’s called a “force post transaction” or FPT by merchants. A force post transaction is when a transaction doesn’t go through, and the merchant uses an authorization code provided by a bank to override that decision. In some cases, the merchant calls the bank to get the code. Other times customers can call their bank and then provide the code to the merchant. “From our understanding, this type of forced transaction that may result in a negative balance is normal for debit card transactions as a whole and is not unique to MCTR debit cards,” he said. Ben Jackson, the chief operating officer of the Innovative Payments Association, explained that there are legitimate times when a transaction gets forced because of glitches.”People lose connectivity, something goes down,” he said. “If you’re a vendor at a fair or a farmers’ market. Because it can’t connect to WiFi.” Usually, what happens is that the merchant and the bank settle that later, which means that a customer could potentially overspend elsewhere without knowing that the other balance hadn’t been settled. According to a Justice Department description of the process in 2014, the system is vulnerable to fraud if a fake code is used to force the transaction.But Jackson said over the past couple of years, a lot of companies have become more careful about when they allow force post transactions. “Merchants don’t love doing that because there has been fraud in the past,” he said. “They prefer to have the transaction authorized. They also don’t like unhappy customers and having to refuse a sale if their terminal is offline.”Still, he was skeptical that fraud was an issue with our viewer’s situation. “When you say that $7 is missing, that seems to say that something fell through the cracks, not that there is a big fraud,” he said. Jackson said that there could be another explanation besides a forced transaction that could lead to a negative balance — batch processing. This is when a merchant doesn’t process a transaction in real time. Restaurants and gas stations are more likely to do batch processing. For example, a gas station could pre-authorize $50 on the card but then settle the transaction later. If you’re not paying close attention to your account, you might end up spending more somewhere else. Jackson recommended that people keep track of their balances with Middle Class Tax Refund debit cards as they would with their other cards and take similar precautions. | MORE | California inflation relief: Is your private information being sold to marketing companies?| MORE | Thieves are draining California’s Middle Class Tax Refund debit cards. Here’s why
A viewer recently reached out to us after finding out that his California Middle Class Tax Refund debit card account had a -$7.44 balance.
With more than 9 million Middle Class Tax Refund debit cards issued so far across the state, KCRA 3 has received questions from viewers on everything from why they haven’t received their inflation relief payment to concerns about fees and possible fraud.
| RELATED | California lawmaker wants an audit of the Middle Class Tax Refunds
This viewer said that after successfully using his card for purchases, he checked to see how much money he had left and was shocked to discover it had a negative balance. Did that mean he had to pay it back?
California’s Franchise Tax Board told KCRA 3 that people do not need to pay back funds if they get a negative balance on their debit card.
Spokesperson Andrew LePage confirmed that the FTB is aware of other reports of people who have experienced the issue.
Money Network will not contact Middle Class Debit Card recipients to ask them to return any funds related to negative balances, he said.
KCRA 3 asked the FTB for more information about how much money could be involved.
The agency responded that FTB did not know that answer, but said the state would not have to foot the bill for any extra amounts.
| RELATED | Did you get a Middle Class Tax Refund debit card? Here’s how to use it, avoid fees
So what happened? Why does a Middle Class Tax Refund debit card get a negative balance?
LePage said this is happening because of what’s called a “force post transaction” or FPT by merchants.
A force post transaction is when a transaction doesn’t go through, and the merchant uses an authorization code provided by a bank to override that decision. In some cases, the merchant calls the bank to get the code. Other times customers can call their bank and then provide the code to the merchant.
“From our understanding, this type of forced transaction that may result in a negative balance is normal for debit card transactions as a whole and is not unique to MCTR debit cards,” he said.
Ben Jackson, the chief operating officer of the Innovative Payments Association, explained that there are legitimate times when a transaction gets forced because of glitches.
“People lose connectivity, something goes down,” he said. “If you’re a vendor at a fair or a farmers’ market. Because it can’t connect to WiFi.”
Usually, what happens is that the merchant and the bank settle that later, which means that a customer could potentially overspend elsewhere without knowing that the other balance hadn’t been settled.
According to a Justice Department description of the process in 2014, the system is vulnerable to fraud if a fake code is used to force the transaction.
But Jackson said over the past couple of years, a lot of companies have become more careful about when they allow force post transactions.
“Merchants don’t love doing that because there has been fraud in the past,” he said. “They prefer to have the transaction authorized. They also don’t like unhappy customers and having to refuse a sale if their terminal is offline.”
Still, he was skeptical that fraud was an issue with our viewer’s situation.
“When you say that $7 is missing, that seems to say that something fell through the cracks, not that there is a big fraud,” he said.
Jackson said that there could be another explanation besides a forced transaction that could lead to a negative balance — batch processing.
This is when a merchant doesn’t process a transaction in real time. Restaurants and gas stations are more likely to do batch processing. For example, a gas station could pre-authorize $50 on the card but then settle the transaction later.
If you’re not paying close attention to your account, you might end up spending more somewhere else.
Jackson recommended that people keep track of their balances with Middle Class Tax Refund debit cards as they would with their other cards and take similar precautions.
| MORE | California inflation relief: Is your private information being sold to marketing companies?
| MORE | Thieves are draining California’s Middle Class Tax Refund debit cards. Here’s why
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