Putting Through Credit Card Charges by Merchant on Products to be Shipped

The seller is not required to ship the product first, before putting the credit card charges through. As you are probably aware from a variety of contexts, prepaying a bill or invoice is legal, and putting through a credit card charge before shipping merchandise is simply a type of prepayment.

This does put some risk on the buyer—the risk that he or she will be charged without receiving his or her merchandise. If you consider it from the other angle, if the seller ships first, then attempts to put through the charge, the risk is on him or her if the card is declined. No matter what, unless it’s a completely simultaneous transaction, as in a face-to-face transaction in a brick-and-mortar store, one of the parties will bear some risk of nonperformance.

If the prospective buyer is worried about this risk, there are various ways to mitigate it:

1. Only do business with reputable stores or merchants; in particular, when possible, only do business with ones that are well known (e.g. Amazon, Macys) or at least have a physical address which you know and to which you could direct correspondence (preferably, a local one, especially for smaller merchants).
2. Read all terms and conditions of sale, including any “fine print” carefully, so you understand your rights and responsibilities, as well as the procedures for returns, exchanges, resolving disputes, etc.
3. If you don’t receive your merchandise within a reasonable time and can’t get an answer you believe from the merchant, dispute the charge to your credit card issuer, which can put a hold on the charge, look into the matter for you, and/or refund the money to you.
4. If you have several cards, use one that has some sort of buyer protection program built in.

The reason numbers (3) and (4) are important is that if you are charged but do not get what you paid for, you don’t want to be in the position of having to sue someone over a $50 charge—you’d lose more than you’d gain back. It’s much better to have some other recourse or way to obtain compensation.