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What Is that $1 MobileMe Charge from Apple?

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A call came through to my iPhone from an unknown 866 number while I was in a meeting, so I ignored it. But when I checked voicemail later, the automated message claimed to be from Citibank, with whom we have several credit cards, and said I should call a particular number to talk with them about a potential fraud warning. I have a firm policy never to call such numbers, since there's no way to verify that the people on the other end aren't scammers, but when I called the customer service number on the back of my credit card, the representative confirmed the automated call.

Oddly, the charge which Citibank was worried about was for $1.00 exactly, and it had been charged by MobileMe. Tonya and I both confirmed that we hadn't ordered anything recently via iTunes by logging into our accounts (besides, I've never seen iTunes charge $1.00 exactly for anything) or from the Apple Store (check the Apple Store Order Status page for Apple Store orders, and the Apple Internet Services Order Status page for iPhoto orders), and neither of us has ever purchased additional storage from MobileMe. But it's entirely likely that we could have ordered something from Apple, so I let the Citibank people put our card on hold while I investigated further.

Logging in to my MobileMe account revealed nothing unusual, so I clicked Contact Support, then Account & Billing and then Renew & Reactivate, since that was as close as I could see to information about billing problems. Nothing there looked helpful, but the page offered me a chance to chat with a MobileMe Advisor, so I clicked the Chat Now button.


The support rep asked reasonable questions, the key one of which was if I had other MobileMe accounts. Since Tonya's account is also associated with that card, I said yes, and he asked if either of us had made changes to our accounts recently, such as personal or billing information. Neither of us had, and he admitted to being stumped, but explained that Apple normally uses a $1.00 charge as a preauthorization charge to verify that a stored credit card number is still good.

When I asked what the preauthorization would be for, since we weren't buying anything, he explained further that it could happen any time personal or billing information changed, or when an account is created or renewed. Since we had renewed our accounts by buying less-expensive MobileMe boxes from Amazon (a known trick for paying less than $99 for a year of MobileMe service - you'll currently save $30), he didn't see why a preauthorization should have occurred.

But then came the light bulb, since Tonya noted from the other room that her MobileMe account was set to renew automatically in April 2010, something that I had turned off for my account. When I mentioned that to the support rep, he apologized profusely for not noticing that fact, since it explained everything.

In essence, roughly a month before automatic renewal, Apple charges your credit card $1.00 to verify that it's still good, and 3 to 5 business days later, refunds the money to your card. So most people don't even see the charge. It was only because Citibank's fraud warning system noticed that we were alerted. This makes perfect sense from Apple's perspective, since if the preauthorization charge fails, there's some time for the user to switch to a different card before the renewal date arrives. Otherwise, if Apple cut off access without warning due to a card failing, the user would likely be unhappy about losing access to email and other MobileMe services.

A friend on Facebook said that Citibank had actually denied his WWDC registration fee a few years in a row because Apple did the same thing - charging $1.00 to verify the card, followed by a large charge for the conference registration.

That sort of behavior isn't uncommon for credit card thieves, who try a small, innocuous charge that many people won't notice on their statements, after which they know they can abuse the card more fully. In fact, the last time we experienced a similar problem, it was a touch embarrassing, since we saw a $19.95 charge for Yahoo on our credit card bill, and couldn't figure it out (it turned out that our card number had been stolen). But when Tonya called, the credit card rep told her that it was actually for Yahoo Personals, and asked if perhaps I had made the charge without saying anything. Yeesh!

Meanwhile, back at this MobileMe charge, since it was entirely legitimate, I called Citibank again to explain and remove the hold on the card. It was a wasted hour out of my day, but I appreciated the decent customer service experiences with both Citibank and Apple. And more important, I learned something I didn't know before, and it's something that could help reduce confusion for other Mac users who see unusual $1.00 charges from Apple.

 

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Comments about What Is that $1 MobileMe Charge from Apple?
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Hank Shiffman  2010-03-02 17:24
I just had a fraud hold today on my Citibank card. No fraud; all the charges they reported are legit. But my MobileMe renews in 36 days, so I wonder if that was the reason.
Part of the problem is that Citibank is absurd about their fraud warnings. In my last job, I traveled regularly. EVERY SINGLE TIME I purchased gas for my rental car, I got a Citi fraud warning. No amount of complaining would cause them to turn it off. Their argument is that they're doing me a favor - which is completely untrue. I'm not liable for fraudulent charges. Rather, It's to THEIR advantage to reject charges left and right. I no longer do business with Citi.
Donald Burr  2010-03-06 19:55
According to Steve Gibson on the Security Now podcast, many credit cards are now flagging gas station transactions as possible fraud because it's a popular tactic among criminals. It's a small enough charge, and a reasonable one at that, the idea being that small & reasonable would be the least likely to throw up a red flag in a fraud detection system. Most gas stations these days are unattended, so there's no clerk to frown and ask you if "Steve Jobs" really is your name or demand an ID, and if things go south and the system rejects your transaction, well, you're standing right next to your getaway vehicle. Steve gibson is unable to use his main credit card at any gas station for this very reason.
Jack Hayes  2010-03-02 17:33
So Adam, you never finished the story. Were you busted? Did you make the Yahoo Personals charge?
Adam Engst  An apple icon for a TidBITS Staffer 2010-03-03 06:38
No, the Yahoo Personals charge really was a scammer - as Tonya said, she knew it couldn't be me playing around with Yahoo Personals because I wouldn't be so stupid as to put it on a credit card whose statement she sees. :-)
I had the same thing happen, except that the Citibank fraud rep I spoke with had something of an accent, and as near as I was able to determine over the phone, we had a suspect charge from "Apple Moe Blee". I keep pretty careful track of what I charge and went through all my records trying to figure out if I had bought anything whatsoever from Apple recently--and since I hadn't, and I had no idea what an Apple Moe Blee was, I wound up canceling the card and getting new ones issued just to be safe.

Two days later I was in the fruit aisle at the grocery store when my brain informed me that it must have been "Apple MobileMe" that she was saying. At the time I was worried that I had forgotten about the renewal and that my MobileMe account was going to get shut down or something, but when I got home I checked and saw that it wasn't supposed to renew for another month, so that stumped me. Now I know!
Neil Ticktin  2010-03-02 20:01
Apple has caused me problems with my credit card with Citibank on multiple occasions with this practice. It's as amazing to me that Citibank doesn't know who Apple is, and what this is about, as it is that Apple continues the practice knowing the problems it causes.

Apple if you are listening. PLEASE stop this practice. It's a horrible customer experience to have your credit card denied at the most in opportune time because of YOUR practice of these $1 charges.
David Weintraub  2010-03-03 07:35
The $1.00 charge is a common practice to verify that a credit card is good before using it as part of your account. Anytime you have automatic billing setup on your credit card. This happens. For example, Amazon does this when you save a credit card number with them.

The problem is that scammers tend to do the same thing, and that Citibank's fraud scheme can't tell the difference. I don't know why other banks don't have this problem.
FreeRange  2010-03-03 16:01
Excuse me, but its not Apple doing this to you but Citibank. They are an unethical, immoral, scum suc king financial institution that will screw consumers every chance they get. They are the ones you should be yelling at!
Let's be clear, this is NOT an Apple problem, this is a Citi problem, and it is part of the reason I no longer have a Citi card. Like Joe above, we'd get holds on our card every time we traveled more than about 50 miles from home, constant 'fraud' alerts for routine and periodic charges, and fraud alerts for temporary holds like Apple does.

You will have this problem with any subscription that auto renews on your charge card if it's less frequent than every three months or so. My step-mother used to have the exact same problem with her yearly gym membership, every single year. She moved the charge to a different card and never had a problem again.
Paul Ellis  2010-03-03 04:05
"Since we had renewed our accounts by buying less-expensive MobileMe boxes from Amazon "

That's clever. How exactly do you do that?
Adam Engst  An apple icon for a TidBITS Staffer 2010-03-03 06:39
It turns out that you can just buy a MobileMe box from Amazon for $69, for instance, and use the activation code in it to renew for a year. Easy $30 savings...
Michael B  2010-03-08 16:50
Wow. This is great. Thanks for mentioning this.
David Weintraub  2010-03-03 07:42
I noticed that our two cars were low on gas. I took one car to the gas station, filled it up, and charged it on my credit card. Then took the other car, filled it up, charged it on my credit card, and thought I was done.

Later that day, when I tried to buy groceries, I suddenly found that a fraud alert hold had been put on my credit card. The reason was quite simple: My card had been used to fill up two different cars twice in an hour.
Scott Rose  2010-03-03 07:57
This is not unusual at all, and this $1 charge would never have appeared on your statement. That's because it's actually not a $1 charge at all; it's simply a $1 hold on your account. That $1 hold will actually never show up on your statements... it's an internal hold that only your bank would see, that verifies that your card is legitimate for future charges. This happens all the time with businesses all over the country, so Citibank is being extra-paranoid with your account for some reason. But if it wasn't for them being extra-paranoid, you never would have seen the $1 charge on your statement because it's not a charge. So this fault and blame really belongs with Citibank instead of Apple -- I can't believe that Citibank would give you a fraud alert for this!
Joe Outlaw  2010-03-03 12:10
When I was at my local Apple Store recently, I made a comment to the sales person that my MobileMe was up for renewal soon and made a negative comment about the price. He immediately informed me that as an existing customer could renew me for as many years as I would like for $70. He further advised to turn off the auto-renewal and to always come into the store and ask for the discount. Incidently, I also mentioned to the salesperson how flimsy I thought the iPhone USB charging cables were and that a couple had recently failed due to conductor fatigue at the phone connector end. I had also mentioned that I had misplaced an Apple remote. He thereupon went into the back room and came out with a USB cable & Apple Remote and handed them to me "no charge". He explained that store personnel had discretion in replacing accessory items gratis when sufficient cause and good will was involved. This Apple Store salesperson is well known to me and quite reliable. If you don't ask, you don't get!
artMonster  2010-03-03 14:22
Apple's terms of service explains that they do this preauthorization. Interestingly, the U.S. Postal Service charges a $1 to do an online change of address, to avoid unauthorized changes. They just don't give it back, they keep it.
Adam Engst  An apple icon for a TidBITS Staffer 2010-03-09 09:02
I've heard of several instances of preauthorization charges not being returned, including one related to Apple, and am looking into it. Talk about a license to print money!
Citibank is not the only credit card company that flags the $1 charge as possible fraud. I have a Capital One credit card and it happened to me as well. I was also just as confused. Thanks for publishing this article. Hopefully others will benefit.

Oh and by the way Apple is not the only company that does this kind of thing. Toys "R" Us did this to me over the holidays. They were even more confusing in that they charged me the full price for something that I bought at a discount. After an hour of wasted time I found out from the customer service person that I would be credited for the original charge and recharged the discounted price. Who writes this billing software for them???
Gerry Hornik  2010-03-08 16:58
This same thing happened to us on our Citibank VISA card and they froze the card and embarassed us by refusing a grocery purchase. We have since gotten another credit card and stopped using their card. It's just ridiculous that we customers should suffer so they can avoid a $1 incorrect charge.
Bill Arnold  2010-03-08 17:21
Zactly what happened to me .... And I had just returned from New Zealand and figured that somebody nabbed my login/password and figured out how to be my on file credit card # ... so I have a brand new MasterCard - for no reason! Thanks APPLE~!
Pamela  2010-03-08 18:11
I had this happen with a Chase credit card -- no clue about the MobileMe automatic renewal business, so I ended up with a new card number. Somewhat annoying but I am grateful for the possible fraud warnings. Actual fraud could be much worse.
Barbara Crowley  2010-03-08 18:53
So, add Bank of America. We got a call on one card one day, and a second card the next. We then canceled the cards, and later Apple did ask me for a new number, so they were probably checking on my card. We have two new Visas now. But the extra confusion was that my husband's card showed up with the same charge, and Apple doesn't have that number that I know of. ????? Anyway, it was a pain in the butt. I don't know who to be irritated with, but I like the going to the Apple store idea.
The same thing happened to me several months ago. Was an odder amount than $1 maybe $0.11.
Citibank called me;I called Apple. Apple suggested I cancel the card and I did
Wes Gaige  An apple icon for a TidBITS Contributor 2010-03-08 20:25
I think the fraud watch thing has gone overboard. They all are too sensitive. I've been contacted many times and there never is a problem. Once I determined that it was just a random check; there was no reason to suspect anything was wrong.

They need to figure out a more granular algorithm for triggering the call.

I don't think it was worth an hour of Adam's time. It was total waste of 2 hours of productivity.
Adam Engst  An apple icon for a TidBITS Staffer 2010-03-09 09:01
What's unfortunate is that there is a vast amount of real credit card fraud (a stat cited on Wikipedia claims 7 cents for every $100 is fraudulent, equaling billions of dollars).

I don't like the false alarms either, but since we have had credit card numbers stolen, it's hard to complain too much. We've also been issued new cards without even being told in advance, presumably because abuse triggered some sort of higher level of response requirement.
Brian Hannon  2010-03-08 21:02
I don't understand why Apple needs to do this pre-auth - why don't they just charge the $99 sufficiently in advance of your renewal (a week would do, two to be safe) that if the card is rejected they can communicate with you and get a new one?

Doing a $1 pre-auth is just like sending a "test" email to a mailing list - useless, and in this case, annoying.
Adam Engst  An apple icon for a TidBITS Staffer 2010-03-09 08:57
I don't think they can legally do that, since they haven't delivered the service they're charging you for. Or, even if it's legal, it's certainly not ethical, since they would get the use of your money for an extra month.
Jane Carter  2010-03-09 04:36
I had this happen, but it was explained without a problem.
But here is a new scam, if you order anything from Haband clothing co. and mouse over their free shipping box, you will get a monthly charge on your card from "Haband Perks". They do this without permission, and the charge will be about $9.00 monthly. A lot of people dont notice it. But I did and called Haband, they denied giving my card # out. So I hopped onto the web, its a "Club" that you 'join' when you mouse over the free shipping box. So you have to call and call and call and finally you will get thru to this marketing company and they will remove the charge and take you out of the 'club'. Pretty slimy!
So I never ever will order anything from Haband again, they sure lost this customer and our whole family by scamming me.
Citibank explained that if I ever did want to order anything from Haband again, to do it by Phone and this wont happen. No thanks.
xairbusdriver  2010-03-09 06:29
Since I hadn't read the latest TidBITS until this morning, I was surprised to see that others didn't seem to know something I didn't either, until yesterday. This "charge" to your bank (actually whoever owns the credit/debit card) is just about automatic for quite a few types of purchases. It's not anyones "fraud alert" system, alone. Nor any merchants policy. Here's what I found out with a little Googling yesterday:

When a card holder pulls up to a gas pump and inserts the card for payment, the transaction has not yet taken place, right? So, the card company has no idea how much gas you might pump. Just to be safe, they will automatically 'charge' your account for ~$50. Of course, if you're "good" for that much, you'll get an "Authorized" message and be allowed to start pumping. Otherwise, you'll probably get the infamous "Please see the friendly, unshaven or prepubescent attendant for further grilling" message. ;-) more...
artMonster  2010-03-09 08:37
Restaurants allow for the tip in the check when they run the card as well. So the pending charge will be more than the bill, in fact, probably more than you planned to tip.
xairbusdriver  2010-03-09 06:35
...After the pumping is complete, the card company will either credit your account or cancel the "charge." After the pumping is complete, the card company will either credit your account or cancel the "charge." After the pumping is complete, the card company will either credit your account or cancel the "charge." After the pumping is complete, ***ERROR #E87456n*** Of course, computers never fail, never fail, never... 8-)

The point is, the card companies "policy" is tom protect themselves, if any of them also protect you, it is merely an oversight. But when the oversight is recognized, they will tout it as a benefit...

Read your bills, be careful what you check on order forms, read the fine print, buyer beware. "Forewarned is four-armed!" LOL!
Adam Engst  An apple icon for a TidBITS Staffer 2010-03-09 09:06
I think this practice, though well worth paying attention to, is slightly different from what Apple is doing with the small preauthorization charges. What you're describing is in part aimed at tickling the account to make sure it has sufficient funds for the upcoming transaction, which will be complete in a very short time.

Apple can't charge the full amount or more because the service or product being provided is too far in the future, so this $1 charge is a way of tickling the account to see if it's live at all.

But yes, be careful out there!
Ken Nellis  2010-03-09 18:25
Last summer while on vacation we stopped at a restaurant to eat. When I tried to pay with a credit card, the restaurant told me there was a hold on my card and they wouldn't accept it. You got it...the $1 MobileMe charge triggered MBNA Visa's fraud detection system. You can imagine how upset this made me. It could have ruined the vacation had it happened earlier in the week.
Howard  2010-03-10 14:48
So, I read this yesterday, and today I see a $1 charge from Microsoft. But in this case, it *is* actual fraud, a test and immediate prelude to a couple of much more pricey attempted frauds ($900 in ink jet cartridges, anyone?). I was perfectly happy to get a call from Amex's fraud division.
$1 preauthorizations are a very common way to verify a credit card. Automatic renewals often do this, if you rent a game at Blockbuster they are required to do it, some gas stations do it.

It's stupid that Citi wouldn't have some kind of smart filter that says "OK, this guy get's a $1 charge from Apple every year. It's legit"

Also, depending on the card company, your online balance may show any authorizations currently on hold.
I have been using Citi for 5 or 6 years and have never had anything like this happen. And I use my card for everything! Maybe they like me?
RoseMary K Davis  2010-03-11 13:04
I'm just amazed that you and Citibank are just now learning that companies regularly ping one's credit card accounts to see if they are valid. I would think you would be doing that or would have before going with O'Reilly to handle your online sales.
Adam Engst  An apple icon for a TidBITS Staffer 2010-03-11 14:18
I don't know how O'Reilly does things, but I'd be very surprised if eSellerate (who runs our cart) does such a preauthorization; there's no reason to do so when the transaction will be complete seconds later. The reason here is because the actual charge will take place significantly later.
I had a $1 authorization charge from iTunes (not mine) then a $1 authorization charge from MobileMe (also not mine). Then a bunch of charges (including Yahoo Personals - also not mine) which quickly added up. My credit card company caught the activity. I did spend a half-hour at the drug store verifying my identity so I could take home my prescriptions. I don't care who the ultimate beneficiary is - them or me - I prefer to be the only one using my credit card and today FedEx will deliver my new card.
Phil Davies  2010-04-20 11:44
Interesting to catch up with this item. It happened to me in November, 2 months before my MobileMe subscription was set to renew. At first, I was pleased the bank had acted even on a small amount (1 pound in my case) - my account is in the UK, but I live in Bulgaria). We agreed the card should be cancelled, and a replacement sent to me. Wow! The card failed to arrive. The bank told me there had been some mistake, and would send it immediately. Still no result. Further enquiry established the UK bank had a policy of not sending by mail to Bulgaria! The solution? Send the bank my authorisation (by fax), for them to send the card to a UK resident, for them to take responsibility for delivering the card to me. Luckily, my son was most cooperative; after almost 2 months, I safely received a replacement. So, it seems Apple can really open a can of worms by their checking system. On a purely practical point, what would Adam recommend (as it's not clear to me) - Auto Renewal ON or OFF?
Adam Engst  An apple icon for a TidBITS Staffer 2010-04-20 11:43
I would definitely recommend turning off auto-renewal and buying a MobileMe box from Amazon or the like for $30 less than the automatic renewal. That eliminates the credit card check and saves money, though it's a little more manual effort. But that's what computer calendars are for!
Phil Davies  2010-04-26 04:48
Thanks for the confirmation that one should turn Auto renewal OFF. As you say, that's what a calendar is for! Much better than experiencing the same problem again!