How to prevent guest chargebacks

Chargebacks can be a major headache and pain to rental property managers and owners. In a perfect world, guests that booked and stayed at your property would pay their bill in full without any issues before or after the transaction.

However, if you rent any properties, you know that isn’t always how it happens. Sometimes, whether it is an innocent mistaken charge on a credit card or an intentionally fraudulent claim to get out of paying, guests may dispute a charge after the fact by using a chargeback. As the host, you then have deal with the cumbersome chargeback process.

What is a chargeback?

A chargeback is when a person disputes a charge on their credit card in order to have the charge removed. The bank takes it back right away automatically. Sometimes, it is a charge that the person never made or that they forgot they made. Other times, someone does a chargeback fraudulently in an attempt to evade paying for services that they received or believe they were unjustifiably charged for.

In the rental industry, it is when a guest stays at the property, then calls their credit card company and claims they never stayed there. This can result in the guest getting their money back, and you footing the bill.

Disputing Chargebacks

The process to dispute a chargeback is often lengthy, stressful and costly. The bank may also charge you a fee for each time one is processed–even if you win. In the end, the customer’s credit card company or their bank may not rule in your favor, and it hurts your bottom line. It is critical to collect all the guest information and details you may need to stake your claim if a chargeback occurs.

However, the best way to deal with chargebacks is to focus on preventing them from happening. Here are some key methods:

1. Be clear and honest about policies and charges.

Sometimes guests may not recognize a charge or are surprised that they were charged for some item or service used during their stay. Avoid any miscommunication by clearly outlining all of your guest and payment policies as well as charges before a transaction. Make sure that this information is not only available but clearly and prominently visible on all of your rental listings.
At BookingTeam.com, we make it easier for our property managers and owners to do this by syndicating listings to multiple sites. This saves you the time and effort it would take to post manually.

2. Always send confirmation emails to guests.

After a guest books online, send a confirmation email. In your confirmation, outline the method of payment, the breakdown of the charges and your business or property name, but make sure to protect sensitive information. With these details, they can recognize the charge on their bill.

Also, outline key details about their stay such as the dates, times of check-in and check-out, amenities, charges and policies. These can be easily automated and you can manage your communications through BookingTeam.com.

3. Develop a strong booking and customer service experience.

Ideally, your guest experience will be positive every time and for every stay. In reality, there may be those few outliers or guests that can’t seem to be satisfied, no matter how much you try to accommodate them. These are the most likely to seek a chargeback.

Customer service is key to providing a positive guest experience, but it is also one of the primary ways to prevent chargebacks. It is better for complaints to be filed with you, and hopefully amicably resolved through customer service first. Clearly outline the steps that guests should take if they are at any point dissatisfied with service or stay.

4. Collect guest information for verification.

Most guests are well-intentioned, but don’t create a window of opportunity for people that may be out for a free stay. Collect information to verify that a guest is who they claim to be and that they are authorized to charge to the payment method used. You should collect and make copies of passports and licenses. Get signatures from guests on a rental contract and cross-reference it with the signature on the ID of the guest . You may want to go a step further and get a fingerprint stamp.

Keep paper copies of information and receipts in a secure location. If a chargeback is filed, then this is your proof that a guest did in fact stay at your property for the time that they were charged. Chargebacks are costly and irritating hassles, but they are unfortunately a common issue for anyone running a business or managing a rental property. At BookingTeam.com, we try to make the processes of booking, listing, and communicating with guests easier for property managers by streamlining it into our easy-to-use software. We even take care of submitting the evidence you send us to the customer’s bank for you.

5. Patience and faith.

If you had the guest sign a contract and took the right amount of preventative measures, mosts guests won’t even try to do a chargeback. If they do, it is important to have a little patience and faith that the dispute will be resolved through the appropriate process.

As soon as a chargeback happens, the bank takes back the money. To dispute it, we will ask you for evidence that the guest checked in. The bank has a time frame of three months to respond to the dispute. Whether the charge is returned to you is entirely at their discretion, but when all evidence is present, chances for an unjustified decision in the guest favor are quite slim. The bank nearly always takes the full three months to decide, however. If they decide in your favor, they will deposit the funds back to us, and you will receive them again within two business days.