Vacation Rental Chargebacks: How to Avoid and Manage them

Vacation Rental Chargebacks: How to Avoid and Manage them

There is always a possibility that your visitors will request a chargeback if they pay for their vacation rental stay using a credit card. When a debit or credit card user questions a charge made to their account, a chargeback occurs. The merchant, on average, wins 40% of chargeback disputes. Being proactive when contesting chargebacks is crucial because this data isn’t very encouraging for vacation rental operators.

Chargeback definition

After their stay, visitors may dispute their charges for various reasons. The house might have lived outside of their expectations, they might not have been able to stay the full vacation, or anything might have happened to them during their stay that they thought called for a refund.

Vacation rental owners can contest a charge that a visitor challenges on their credit card. This can be an uncertain process that takes a long time to complete. The best thing a landlord can do is implement procedures to stop chargebacks from occurring in the first place.

Various Chargebacks

It’s crucial to understand the different forms of chargebacks before we discuss how to prevent and manage them.

Buying Mistake

The most frequent chargeback occurs in this manner. This occurs when the customer thinks that you, the merchant, charged their card incorrectly. The card was charged more than the visitor had anticipated or at a different time than what had been agreed upon.

Even though they are expressly stated in the contract, a guest may regrettably contest late fees or other penalties. Even though recurring payments are uncommon in this sector, they could be a factor in disputes filed by customers.

Card Use Without Permission

Visitors may file a chargeback if they think their card has been fraudulently used. Unauthorized card use, unfortunately, causes commotion and uncertainty, as many vacation homeowners have learned the hard way. When the rightful owner learns that a credit card has been used fraudulently, they may initiate a chargeback to challenge the unauthorized account. Guests may use stolen credit cards to pay for their trip.

Client Conflicts

Consumer dispute chargebacks, sometimes known as “friendly fraud” chargebacks, are among the most annoying chargeback categories. This occurs when a visitor stays at your rental property while on vacation and then disputes the price when they return home. They can assert that they were dissatisfied with the encounter or that they never stayed. This can occur when a visitor requests a refund but prefers not to communicate their concerns to the owner of the vacation home. This is one indication of a fraudulent holiday rental.

The difficult element of this chargeback is figuring out which customers have real issues that call for a chargeback or refund and which customers are just attempting to obtain something for nothing.

Ways to Avoid Chargebacks

The key to avoiding chargebacks is effective communication. Ensure that your refund and cancellation policies are up to date and that all visitors have a chance to read, sign, and comprehend them. Continuous communication will help you remain on top of any issues or worries the visitor may have and want to bring up once they go home.

Here are some steps you can take to stop chargebacks in the future:

1. Make your cancellation policies clear at the checkout

Add a checkbox with a link to your cancellation rules on the final page of the checkout process, or ask visitors to sign a copy. This will guarantee that your visitors study, comprehend, and recognize your policies. To view this signed policy later, save a copy with a date and time stamp.

2. Give guests clear explanations of the properties

Give visitors clear information about your home so there are no misunderstandings or unpleasant shocks. Relevant information includes, but is not limited to, details about the property’s size, views, neighborhood, and parking options.

3. Ensure that your amenities are modern.

Keep all the facilities, utilities, and appliances listed on your website in top shape. What may seem like a little annoyance to you may be upsetting to your visitors. If WiFi, air conditioning, heating systems, or heated pools do not function to your guest’s satisfaction, you may be subject to a chargeback.

4. Make policies readily visible

We cannot emphasize enough the significance of home rules and vacation rental agreements. Encourage your visitors to sign them and inform them of the location of your rental rules and formal terms and conditions.

5. Establish a smooth check-in process.

 Verify that the person paying and the person checking in is the same person by double-checking their identification and the credit card they used to make the payment.

6. Talk to the visitors

The sooner a problem is resolved, the less likely it is to develop into a larger problem; therefore investing in customer service will pay off in spades. Ask for their contact information, such as working phone numbers and email addresses. By checking their email addresses, you can quickly identify potential scammers and stop future problems. For instance, if your guest’s name and email address don’t match, the domain or sequence needs to be clarified (such as [email protected]), etc.

7. Respond immediately to customer complaints

If your cancellation policies permit a refund if your guest requests one, then do so right away. Refund processing doesn’t take very long. But if your guest becomes irate and wants a chargeback, you can waste too much time on it and incur additional costs.

8. Keep tabs on transaction activities

Investigate specific actions thought to be fraudulent, be watchful of all transactional conduct, and impose surveillance. For reservations where there is little time between making the reservation and the guest’s arrival, for instance, you can call the guest and ask for a copy of the ID of the person using the credit card.

9. Keep detailed records.

Remember to record everything regarding your visitors! To begin, add a checkbox during the checkout process, have them sign and return the rental agreement, and include your policies in the email that confirms their reservation. When filing a chargeback claim, it will be your obligation to provide evidence that the claim is false. These papers will be valuable in your dispute because the card issuer won’t rely on your word.

Controlling Chargebacks

Even with the most recent updates to your policies, open dialogue during the booking process, and unmatched customer service, you could still receive a chargeback notification. There are a few options available to you in this situation. The initial phases in the chargeback procedure are as follows:

  1. Look into the specifics of the disagreement. The chargeback’s accompanying codes will tell you about the chargeback’s nature, allowing you to formulate a strategy for the future. Make sure to reply to the notification right away because they contain a “work by date” in their description.


  1. You can take action to contest the chargeback if it results from “friendly fraud” or a client complaint. You won’t be able to contest the dispute if it results from a merchant error or fraudulent card use.


  1. When you determine that it is the result of a customer complaint, you should begin gathering evidence to show that you supplied the service (the vacation rental) the guest paid for, such as:
  • a signed lease and a list of house rules
  • Purchase information
  • Proof that the cardholder (guest) was present during the transaction
  • Response letter to the cardholder’s (guest’s) complaint detailing your efforts to speak with the cardholder directly to fix the issue (guest)
  • image of the credit receipt
  • Passport or ID photocopy
  1. Keep participating because it could take up to 45 days to resolve the chargeback claim.

Fighting unfair chargebacks can take time, but there are many ways it will help your business. You can keep the money you have earned legally. If the tenants are unsuccessful, it might deter them from trying this plan again. You may take steps as a business owner to safeguard your interests and those of your company against ill-intentioned individuals. Chargeback management can be prevented with clear communication, adaptability, and consistency.

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