Henry Latifzadeh doesn't think he should be charged for bad credit card customers. Also, he thinks Visa USA needs to pay closer attention to modern gas prices.

Latifzadeh, president of Poway's Callaway Oil, is suing for money he had to pay when one of his customers failed to pay for six gas purchases made with a Visa credit card.

The issue concerns Visa's "chargeback" policy. Visa covers gas purchases on a credit card-reading pump for as much as $50, if a customer fails to pay a credit card bill. When the purchase exceeds $50, the company "charges back" the entire purchase to the merchant. The policy could mean free gasoline for negligent Visa customers.

Based on this policy, a common practice among credit card companies, Latifzadeh had to pay almost $560 because one customer failed to pay for six gas purchases during a two-month span.

"I'm going right through the roof (with anger)," Latifzadeh said. "They are stealing in broad daylight."

Latifzadeh filed a suit in small claims court for $556.84 against Bank of America, which distributes Visa credit and debit cards, and Concord Merchant Services in Maryland, the company that processes Visa's credit card transactions. The money represents six gas purchases averaging $72.81 each, made by one customer from March until June, and $120 for the processing fee for six chargeback transactions.

He said the policy equates to Visa and Bank of America telling him how much gasoline he can sell to a customer. The least Visa could do, he said, is adopt policies closer to its competitors. MasterCard's chargeback limit is $75, and only charges back the portion of a purchase higher than that amount, and American Express' limit is $150.

Betty Reiss, spokeswoman for Bank of America, said the company was simply following Visa's chargeback policy. Visa representatives said the chargeback policy is listed in the contract any merchant signs to permit customer use of Visa cards.

"This is a business decision the merchant has made from his side for customer service," said a company official who preferred not to be identified.

Chargeback policies are a way for credit card companies to protect themselves, and customers, from fraud. If a customer fails to pay a charge or disputes a charge due to a stolen card, the company issues a chargeback to the store. The notice informs the store that it won't be receiving payment, or asks it to refund a payment, for the charge. Since gas pumps with installed credit card payment devices don't need a signature, the $50 maximum limits stolen card, or excessive, use at gas stations.

When gas prices were less than $2 per gallon, a purchase of more than $50 was rare. But with California gas prices averaging more than $3, many sport utility vehicles and heavy duty trucks cost far more than $50 for a fill up.

Representatives for the National Association of Convenience Stores said the policy puts stores in a bad position.

"Either the pump shuts off and they get angry customers, or they violate the terms of the agreement and risk chargebacks," said Jeff Lenard, spokesman for the National Association of Convenience Stores. "It's insulting."

Lenard said the association represents 112,000 convenience stores that sell gasoline -- 80 percent of all gas retailers. It is part of a separate 2005 lawsuit against Visa, MasterCard, Bank of America and seven other banks charging the companies with colluding to set higher merchant processing fees for credit and debit card transactions.

Callaway Oil's Latifzadeh said that Visa should do a better job of monitoring customer transactions to avoid nonpayment instead of using chargebacks. Currently, a credit card owner is authorized for a $1 purchase when they use his or her credit card at a card-reading pump because Visa, and other card companies, won't know the final amount until the customer is done.

Latifzadeh said that Visa should deny authorization at card-reading pumps for customers with a history of credit problems or make them use the card inside the store, where they have to prepay before pumping gas.

Visa officials said they monitor gas prices to determine whether to increase the chargeback amount. The figure doesn't look to change since officials said 93 percent of company credit card gas purchases are less than $50. They said what happened at Callaway Oil is rare and must have been a customer who paid enough of his or her credit card bill to permit authorization for the gas purchases each month. Officials wouldn't give out the name of the particular customer involved in the transactions or the specifics of the case.

Until the policy changes, Latifzadeh is prepared to fight as long as possible to protect his business interests.

"Somebody has to stand up to them," he said. "Nobody has the guts to tell them what they are doing is wrong."

Contact staff writer Patrick Wright at (760) 739-6675 or pwright@nctimes.com.