The number of chargebacks and other fraudulent refunds has been on the rise in recent years. Every time a refund is administered, it means a loss in revenue. When many refunds are processed fraudulently in the rental property and hotel industries, it could mean the end of a business.
According to a recent research from LexisNexis, the cost of credit card fraud to businesses worldwide rose 1.47% from 2015 to 2016. A large majority of that fraud is the result of chargebacks. In fact, the LexisNexis report found that 49% of revenue loss by online businesses was directly due to chargebacks.
In the rental industry, a chargeback is when a guest calls to cancel a payment after they have already stayed at a property. We’ve discussed before the damaging effects chargebacks have on rental properties, and steps that BookingTeam.com and property managers can take to prevent them from happening. However, there are more payment fraud threats out there. To protect from revenue loss, here are some best payment fraud protection practices for property managers and owners.
1. Clearly display terms and conditions.
When guest book a stay with you, they need to have clear terms and conditions presented to them upfront. There also needs to be a system in place that documents proof that they read, understood and agreed to them.
Make sure that you require guests to click a box to confirm they’ve read your policies and agreed before processing a booking online. Even though, we all know that many simply skip over them anyway--you have to cover your bases. Add an extra layer of protection by sharing a copy with them at check-in and having them initial it there as well. Lastly, make sure you collect the right identification to verify that they were there and signed off.
2. Document everything.
The key to preventing payment fraud is to develop sound policies, procedures, and documentation that make it harder for it to happen. If scammers see a hole in your operations, then they will view it as an opportunity and take advantage.
Documentation is essential for proof. Print policies on all your receipts and confirmations. If guests do have issues, make sure that your contact information is readily available in all communication. The idea is that they come to you first to resolve any issues.
3. Be honest and clear in all your marketing and listings.
Although it is important to have appealing listings with high-quality, professional photos. Don’t oversell your property. Don’t exaggerate the size of rooms, amenities or any other aspect. If your property doesn’t match up to exactly how you represented it in your listings or other communications, guests will request chargebacks. They will likely get them to, because a product or service was not as described.
4. Deliver consistently exceptional guest experiences.
Everything from the online booking process to check-out and follow-up needs to be expertly designed. First, to create the best guest experience possible and secondly, to ensure that it is secure for both you and your guests. When guests stay at your properties, it is important to go above and beyond expectations to deliver quality service.
If there are issues, guests will be more likely to reach out to you then request refunds through a third-party. In some cases, in lieu of a refund, you can offer alternate compensation to appease guests. Give them a free night, discounts to local activities or services. However, make sure that the compensation matches up with the level of the complaint.
To protect against chargebacks and other payment fraud, businesses need to develop the right procedures and have the right tools and team to implement them. When property managers use BookingTeam.com, they have a team of professionals available 24/7 to help them protect and grow their business.