Revealed 5 Tips On How To Prevent Chargebacks

In the vacation rental industry, chargebacks are like kryptonite. They can completely sink your business, forcing property managers to pay refunds, lose out on nights booked, and waste time and resources fighting disputes. What’s most troubling is that according to Chargebacks911, the number of chargebacks are increasing by an estimated 20% each year.

Thankfully, Hostaway’s new partner Autohost is an expert in preventing chargebacks. As a guest screening and automation platform, Autohost scans every booking for signs of risk, flagging anything that looks suspicious.

According to Autohost, the three main causes of chargebacks in the vacation rental industry are:

• Misunderstandings around your cancellation policy and terms of service
• Credit card fraud
• Friendly fraud: When a guest files a complaint alleging they didn’t receive what was promised

To ensure you hold onto your revenue, here are Autohost’s five tips on how to prevent chargebacks:

1. Provide A Clear Cancellation Policy And Terms Of Service

You need to be crystal clear with your guests so that they have no grounds for lodging a dispute. This means making your cancellation policy and terms of service apparent from the start.

Your terms of service should outline exactly what the guest can expect from their stay. This prevents incidents of friendly fraud where the guest claims they didn’t receive what was promised.

As for the cancellation policy, some guests may be under the impression that they can just send you an email to cancel their booking rather than following your process. By making your policy clear and up front, they can’t dispute the cost when it later appears on their credit card statement.

To make sure the guest understands your terms of service and cancellation policy, add both, if possible, to your listing, and include a copy in a rental agreement that the guest must read and sign before the reservation is confirmed. It also never hurts to send the guest a follow-up message after the booking to remind them of your rules and expectations.

2. Verify Credit Cards

If a guest uses a stolen credit card to book your property, there’s no way for you to dispute the chargeback. You will have to pay the refund. To prevent this from happening, you need to be proactive by verifying the guest’s credit card.

A platform like Autohost collects and verifies the credit card information for you, but without this kind of a tool, you’ll have to request the guest’s credit card information. Ensure the card belongs to the person booking by matching the name attached to the reservation with the name on the credit card. Another sign is if the billing address doesn’t match the address on the guest’s ID.

If the payment fails, this should be a cause for concern. It’s a good idea to have a set business rule on how many payment attempts the guest is allowed, so that your guest support team understands that there is a cutoff. If the guest is trying to pay with multiple cards attached to multiple names, this is a major red flag and you should consider cancelling the booking.

3. Monitor Booking Conditions

Signs that a guest may try to defraud you with a chargeback can often be found in the booking details. For instance, guests using a stolen credit card are likely to make a same-day booking. This is to ensure the booking goes through before the card is cancelled, but also to give you as little time as possible to look over their reservation.

Watch for any discrepancies in the booking as well. A single guest shouldn’t be booking a four bedroom home for one night, or a local guest booking a property in their own city. These cases are worth investigating further.

4. Use A Clear Payment Descriptor

This may seem like an obvious tip, but a number of chargebacks come from guests not recognizing the charge on their credit card statement, especially if the charge shows up weeks after their stay.

Your payment descriptor is typically your company name and other identifying details. But with most guests booking through OTAs, they may not always remember the name of the property management company they rented from.

To make sure you don’t have to deal with any misunderstandings, make sure your payment descriptor is something the guests will recognize or that reminds them of their stay.

5. Keep Thorough Records

While you never want to find yourself in a chargeback dispute, if you do end up in one, to win you must provide the bank with evidence. This evidence should include the guest’s name, billing address, a copy of the guest’s ID, any correspondence between you and the guest, a downloaded version of a rental agreement you had the guest sign—this should include their IP address—and, if possible, the original booking from the OTA.

The more evidence you provide showing that the transaction was legitimate, the more likely you are to win the dispute, especially if the guest is denying their stay. And the sooner you send the evidence, the better. Often there’s a deadline for how long you have to submit evidence. By submitting early, you guarantee the bank has everything it needs to make an informed decision.

But remember: If the guest uses a stolen credit card, you’re on the line for the chargeback. To protect your business, be proactive instead of reactive.

Autohost is an intelligent guest screening and automation platform for fast-growing hospitality companies. With its new Hostaway integration, the platform scans all reservations to identify any red flags, determine risk levels and provide a list of action items for handling potential issues.

Autohost ensures your team manages all bookings responsibly, keeping your business safe, your revenues high and your guests happy.

Find out more tips on how to protect your properties at Autohost's website.