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84961 Views 136 Replies Latest reply: Feb 22, 2014 1:23 PM by swlinphx RSS 1 2 3 ... 10 Previous Next
Contributor 26 posts since
Feb 24, 2011
Currently Being Moderated

May 25, 2011 4:11 PM

Accepting Credit Card Payments - A Warning

I have been accepting the rare credit cards to faciliate rental at my beach house, processing the transactions via Paypal.  I began to do this in response to the many suggestions from Homeaway and VRBO to do so to promote my propoerty.  BUT I recently had a bad experience which I thought others might wish to know of as a cautionary tale.  A guest made a payment to me in January for a July rental.  In April, his wife claimed to not recognize the charge (on AmEx) and disputed it.  Paypal froze my account until it was resolved.  The guest sent me emails indicating that the dispute was filed in error and that he called AmEx to lift the dispute (even providing me with the confirmation number).  I faxed all the documents to Paypal (prinout of signed lease, emails from guest that dispute was in error etc.).  Despite all this, Amex still reversed the charge, putting my Paypal account into overdraft.  I was told that AmEx is still 'reviewing the matter' and MAY reinstate the charge back to me - but no timeframe was provided.  Fortunately, the guest reimbursed me promptly by check (including the $20 fee I incurred from AmEx for this 'service') and the rental is fully prepaid as contracted in the lease.

 

However, this could have had a much worse ending.  The guest might have stayed in my home already, disputed the charge intentionally and then, I would have had no recourse at all except to continue to fight with AmEx.  Paypal is great as a payment conduit but of no help in this matter.  I feel that vendor do have few rights here.  I was lucky to have had an honest guest who really did make a mistake and was willing to fix it.  Based upon this experience, I will think long and hard about accepting anything beside bank checks or money orders (which I also take) in the future.

  • New Member 5 posts since
    May 25, 2011
    Currently Being Moderated
    1. May 25, 2011 4:37 PM (in response to mle642)
    Accepting Credit Card Payments - A Warning

    That, of course, is always a potential problem with credit cards. Keep copies  of all your communications and rental agreements. If you had all this, the credit card dispute would probably have been resolved in your favor anyway, though you would have been left with the hassle. Glad it worked out and thanks for the warning.

  • sophie Senior Contributor 961 posts since
    Mar 4, 2011
    Currently Being Moderated
    2. May 25, 2011 4:44 PM (in response to mle642)
    Accepting Credit Card Payments - A Warning

    The unique aspect of paypal is that they always take the side of the buyer/renter.  They really aren't a real merchant account. If you have a regular merchant account for credit cards, they always take the side of the seller/owner and will advocate for you on your behalf.

  • swiss-house Contributor 260 posts since
    Jul 6, 2011
    Currently Being Moderated
    4. Jul 6, 2011 2:14 PM (in response to sophie)
    Re: Accepting Credit Card Payments - A Warning

    HomeAway has the new payment system in place, I'd strongly suggest using that over PayPal. 

     

    For us, we currently use a virtual terminal through Authorize.net, but it requires filling out a number of forms and getting appoval from Visa, MC, AMEX, and Disc separately (although as a cohesive process).  Unfortunately, as an indirect merchant, it also means going thorugh a PCI audit process which is TOTALLY inappropriate for someone who only does 40 or 50 telephone-only transactions a year. 

     

    The one nice thing about using the Authorize.net virtual terminal is that it supports pre-authorization transactions.  I use these for damage deposits, which I run as a separate transaction from the actual rental fee.  $500 is pre-authorized in case there is damage to the home I know I can run an additional $500 against their card - or I can cancel the pre-auth when I inspect the hose after the renter leaves.

     

    When HomeAway's system is able to support pre-auth transactions, I am switching for sure!

     

    Tom C.

    http://www.poconoswisshouse.com

  • patrickduncan HomeAway Employee 142 posts since
    Mar 21, 2011
    Currently Being Moderated
    5. Jul 6, 2011 2:53 PM (in response to swiss-house)
    Re: Accepting Credit Card Payments - A Warning

    Hi Tom -

     

    Thanks for your feedback. As you mentioned, ReservationManager does not support pre-authorizations for damage deposits at this time. However, a new enhancement to the system is that all processing fees for deposits which are later refunded are also returned to you, so at the end of the day, it doesn't cost you (or your guests) anything to take and refund a deposit.

     

    We'll look into how we could potentially add pre-auth functionality to ReservationManager in the future.

     

    Thanks again,

    Patrick

  • msdebj Senior Contributor 1,350 posts since
    May 25, 2011
    Currently Being Moderated
    6. Jul 6, 2011 3:57 PM (in response to mle642)
    Re: Accepting Credit Card Payments - A Warning

    I've used Front Line for my cc processing for a long time , and while I pay a small fee, I've NEVER had a problem with processing payments or reimbursements.

     

    I caution ervyone about using Homeaway's credit card processing until they get the bugs worked. I 'm not ready to work with anyone who demands lower and upper case letters to sign into a simple discussion room. You have to question their level of IT developement ( and don't let them tell you it is for YOUR security). 

  • swiss-house Contributor 260 posts since
    Jul 6, 2011
    Currently Being Moderated
    7. Jul 6, 2011 3:59 PM (in response to patrickduncan)
    Accepting Credit Card Payments - A Warning

    Thanks for the update Patrick.  My concern with doing the charge / charge back is the affect it has on the customer.  For the period of time that you have the damage deposit charged against their account until you refund it, their card is XX dollars closer to their limit ($500 in my case).  This is the concern that customers have brought to me when I mention charging their card for the damage deposit, and was a stumbling block until we started using the authorize only approach.

     

    Note that for customers using debit cards, even a pre-authorization will make funds unavailable in their bank account (unlike with a credit card) so even pre-auth is not a perfect solution. It's just better for the credit card users.

  • Contributor 38 posts since
    May 28, 2011
    Currently Being Moderated
    8. Jul 6, 2011 4:36 PM (in response to sophie)
    Accepting Credit Card Payments - A Warning

    I don't think that merchant accounts always stand up for the owner.  As a buyer, we have twice disputed charges.  On both occasions, Citicard imediately reversed the charge, pending a response from the seller.  It seems like PayPal does no differently.

  • patrickduncan HomeAway Employee 142 posts since
    Mar 21, 2011
    Currently Being Moderated
    9. Jul 6, 2011 8:36 PM (in response to swiss-house)
    Re: Accepting Credit Card Payments - A Warning

    All good points Tom. At the risk of sounding like I'm selling, have you considered offering your guests Property Damage Protection in lieu of a pre-auth against their card? Here's some information on this new product: http://community.homeaway.com/docs/DOC-2002

  • swiss-house Contributor 260 posts since
    Jul 6, 2011
    Currently Being Moderated
    10. Jul 6, 2011 9:46 PM (in response to patrickduncan)
    Re: Accepting Credit Card Payments - A Warning

    Patrick,

     

    We already do use the CSA insurance, and in fact I just put in my first claim today!  Once I had all my materials lined up and emailed in, the damage repair cost payment was approved the same day.

     

    We require the CSA coverage for specific groups: Any time the primary renter is under 26, any time the group is all male, and any time I jsut have a funny feeling about the group.  Generally, any group that we have a "funny feeling" about we jsut don't rent to at all, but when we're teetering on the edge, we ask them to get the coverage before we send them a contract.  But this is probably a discussion better placed in one of the other threads...

     

    Tom C.

    http://www.poconoswisshouse.com

  • aznative Contributor 103 posts since
    Feb 8, 2011
    Currently Being Moderated
    11. Jul 6, 2011 10:29 PM (in response to mle642)
    Re: Accepting Credit Card Payments - A Warning

    I'm so glad that mle642 started this thread, as I have wanted to for a long time, but it is still painful to go over because it caused us such a hardship.  I have alluded to this incident in several other threads, so forgive me if you are reading about this for a second time. First, since our "incident" we have spent days, weeks... heck it went on for several months, researching our "rights" in a contract with our processing company and VISA, and I can say without ANY reservation, and this is from going to the TOP people at both institutions, that the "cardholder is always right." A processing company will make an initial plea on your behalf, but in the end, it always comes back to VISA, Mastercard, Discover, AmEx, for the final decision in a dispute.  I will try to relay this as concisely as possible, but it made our life a living hell for almost four months, and now that it is over, we are going to have to come up with $5,000 to reimburse the processing company because we "lost," even though, a court of law would have probably found in our favor.

    1. Day 1 - Early February - Renter inquired by phone and was given quote for all of next January and February (a common "snowbird" time for long rentals in Scottsdale.)
    2. Day 6 - Renter called back and said he and his wife wanted to rent the property. They go on and on about how they are staying in another online home, and they were "burned." The house was filthy, not in good repair, and photos didn't look anything like how it was. We take him at his word and feel badly for them - at this point we are all getting along just great. We took his VISA card information, and he puts his wife on the phone to "meet" us.  She oozes how happy they are about our house, that it looks just beautiful, and it comes out that we are both dog lovers.  We have a dog in the hospital who is very ill  - will die if he doesn't respond to antibiotics soon, how upset we are, and she lets it slip that they have a dog.  I ask what they had planned to do with their dog while they were in Scottsdale in our house next year, and she says, oh, they thought they might bring him along.  Doesn't ASK if they can bring him along, but TELLS us that they will probably bring him along.  At this point we don't want to loose a $10,000 rental contract, and dog happens to be a dog that we approve but I tell her that we will need to add a pet addendum to the contract.  (Notice this was a convenient way to put us on the spot to not take a pet deposit or pet cleaning fee.)  I began preparing our contract to e-mail to him. They signed and returned that night, but hubby didn't charge him because it was almost midnight... made note-to-self to charge next morning.
    3. Day 7 - Hubby still hasn't charged renter. Renter calls and says that he and his wife had dinner with friends last night at [one of the most expensive restaurants in Scottsdale] and that their friends said that they should perhaps consider looking at "retirement" areas to rent a home.  They want to do this, they want to cancel the rental agreement and have their deposit returned, and if they decide they still want to rent from us they'll call us back. I did not know that hubby still had not charged him so I talked to him as though charge had been processed, and that we had an issue because our cancellation policy in our contract was that deposits are non-refundable.  We would, however try to rent out property, and if we are able to do so we will return his money. He gets snippy and says that it hasn't even been 24 hours and it would just be "good business" to return their deposit. I tell him that I will talk to hubby when he gets home, and maybe we will go ahead and return his deposit, but he should know that their credibility as solid renters has been damaged with me, and we may not rent to him again.  I point out that he might go two more months and will call him back having had dinner with some other friends and decide to cancel again.  In the meantime, our property has been off of the market. (Also, not for him to know, but deposit money has probably already been spent because this home is our livelihood.  $5,000 is not going to sit in our checking account very long.)  In the meantime, I engage him in conversation, (mostly out of curiosity) about why they would want to rent in a retirement area, but encourage them to go and look at it to satisfy themselves that they have seen it. We have lengthy conversation about the specific area he is thinking of, and I point out (having lived here my entire life +/-) that the area he is thinking of is quite different than what his friends tell him.  Mostly demographics of over 75, no expensive restaurants, WAY out of town, not near any of his wife's upscale shopping that he wants... but I tell him that I am only telling him this as a favor to let them know what they are getting into, and we leave it that we will talk later, but that if it was up to me I would say that we will refund their deposit, but that they should find another place to rent, regardless of how they end up on other.
    4. Same Day - 1 Hour Later - He called MY HUSBAND, on his cell phone, (hubby and I have not talked yet) and they tell him a partial version of the story with me, beg him to let them have our house, please don't cancel listing, they were SO wrong to even THINK about it, and so on and so on.  Hubby says okay, BUT, in the future, are they clearly aware of our cancellation policy in the contract because next time we aren't going to refund it?  He says Oh, yes, of course! and hubby charges their credit card.  Hubby and I finally get together.  I am miffed that he took them without consulting me, we discuss whether or not to keep them, but now we're concerned that we have a bilateral contract AND consideration has been received by us for it, and he convinces me that they have truly seen the error of their ways, and they will be a great tenant, and to just leave things alone.  We keep things set, and, as I predicted, the $5,000 is used over the next six weeks to pay bills, etc. and it mostly spent.
    5. Day 8 - He calls.  We are still in Scottsdale, and are leaving at the end of February.  May we please come by and see the house before we leave? Well, we have a renter in it until the end of the month, and a new renter moving in on the first of March. It would be very inconvenient. Oh, please? We REALLY want to see it!  Again, hubby (grrrrrr...) Well, okay, but it would have to be at 4:00 the night before the March tenants arrive and after we have cleaned for the move out of the February tenants on the last day of month. I kill myself making house look fabulous four hours before I had to. They come late... 5:30! They walk in house and ooh and ahh, and oh! how beautiful! we're so excited! It's just gorgeous! They stayed for over 90 minutes. He had the nerve to complain that he needed a quiet place to work. Well, we'll get a small desk for third bedroom, would that be okay? Oh, yes! That would be great! And, oh.. you don't have a fax machine? I really need a fax machine to do my business while I'm here. Well, we have been thinking of getting a printer/fax anyway.  We'll make sure we have one by next January.  (In reality, we went out and got computer desk and printer/fax about two weeks later.) They leave VERY happy campers.
    6. Day 52 - I receive a call from him saying that they have decided that they would like to stay for March as well.  I tell them that March is booked.  Oh.  Hmmm.  Are you sure? Yes, I'm sure!  And the group has not indicated any interest in letting March go.
    7. Day 59 - I receive another call from him.  How is your dog doing?  He's just barely hanging on, but has received different antibiotic and it seems to be making a difference. Why?  What's going on?  Well, do you still not have March available?  We REALLY want March.  No... March is still booked, and it is not likely that it will become available as things look now. Oh. Hmmm.  Well, please let us know if that changes as we REALLY want March too.  I say okay.
    8. Day 65 - I receive an e-mail from him. They have decided that they do not want to rent from us because their plans have changed, and they have found another place, and please send their deposit of $5,000 to [their address.]  p.s. Hope your dog is doing better.  (Our beloved puppy dog had passed away two days ago.)  I write him back and tell him that, AS IS STATED IN THE CANCELLATION POLICY in the contract that they signed, the deposit is NON-REFUNDABLE, and that if we can get another renter for the same time period we will return his deposit.
    9. Day 70 - He calls hubby on his cell phone.  He asks again for his deposit to be returned.  Hubby tells him the same thing I told him.  He says, "I hope this doesn't have to get nasty." Hubby says he hopes so too, but we have a contract.  Do you not remember that you said that you understood that we would not return deposit if you cancelled again? Yes, he remembers, but wants it back anyway.  Hubby says sorry, we have a contract that spells out cancellation policy, and we will refund when/if we get those months rented out.
    10. Day 79 - We receive a Chargeback notice from our Processing company, First Data. Cardholder is disputing that we are holding $5,000 of his money, we will not return it, and that he did not understand the cancellation policy. (Don't ya just love some people?)  First Data had attempted to take $5,000 out of our checking account (which wasn't there) and we get hit up with a $35 NSF Fee from our bank. (By the way, hubby does research and learns that they cannot try to take money out of an account without prior notification, but, oh geez -- I guess we did that!  We have deposited $5,000 into this account now; you can get the money out to put on hold while dispute is being resolved -- may we please have our $35 back?  No. How sad, too bad.)  We call First Data's Chargeback Dept and explain our side of the story, they tell us to fill out response to dispute, send in EVERYTHING we have that could support our case, and it will probably be resolved in our favor.
    11. Day 83 - We fax 30 pages to First Data including 11 pages of this story, copies of the contract containing cancellation policy with their signatures, phone records, copies of e-mails, and the kitchen sink. This may not mean much to some, but bear in mind that this is all taking place only days and in the the weeks following the loss of our nine year old dog, who we loved very much. We aren't even allowed the time we need to grieve our loss.
    12. Day 86 - We receive letter from an agent in First Data's Risk Assessment Department terminating our contract with them because "your business is too high risk."  We call and get man and say WTFO, and he says that we shouldn't be taking deposits that far in advance... it's too risky for Chargebacks; also, we are a new customer of theirs as of January, and we already have a chargeback, which is a big no-no. We explain about this unscrupulous man, and he says too bad... VISA will stand behind him and any other cardholder, and even if we win first round, it can still continue on to VISA to be disputed and we can loose, so they have to hold onto our money for six months, even if we win first round. We ask, what are we to do? We can't do business!  He says, go get another processing company right away.
    13. Day 90 - I call First Data to check on the status of the dispute.  They check their notes in their computer and see that their decision is in the mail, but that First Data found in our favor!  Woohoo!  Yippee! Right? WRONG. As man in Risk Assessment said, they cannot release our $5,000 until they see if the cardholder is going to come back and appeal.
    14. Day 95 - We get new Processing Company AFTER doing THOROUGH research. We end up with Flagship, another biggie, but with outstanding reputation. They give us fantastic service right away. Even better rates. We think we are going to be okay with them.
    15. Day 105 - We receive anothe notice of Chargeback from First Data.  Mr. Wonderful has appealed (I can just see him sitting in his $1million home plotting ways to teach us a lesson for daring to cross him. He probably drives a Porsche, not because he appreciates it's cutting edge engineering, it's unprecedented position in the chronicles of the automobile, or because of its elegant, smooth, sexy lines -- no, its becaue he looks cool in it.  Anyway, I digress... sorry about that.. can you tell I'm bitter?)  This one again claims that cardholder was not informed of cancellation policy. This one also asks him on his form if he attempted to resolve problem with merchant, and if yes, did the merchant cooperate? He checked "no" to that box. I would say that offering to refund his money when we get the house leased is certainly an offer to compromise, but does anyone else see it that way? No.  Again, we must respond to dispute. This time it is going to VISA for "pre-arbitration." What is that? Well, if VISA finds in our favor, he STILL has the recourse to appeal AGAIN by use of an arbitrator. I am still wondering where our advocates are in all of this. THIS request asks us for only one of two things: a copy of his signature on the sales slip that had the cancellation policy on it (didn't happen because it was a "phone order"... remember, we had only been doing this for one month when we did this... we were really wet behind the ears) or two, a copy of our cancellation policy with his initials within 1/4" of the verbiage.  Again, not only were we never told by First Data that we needed to do this, but all of this was done by telephone.  Sooo... what do you think our chances of winning this were?
    16. Day 111 - I send in the same 30 pages plus another six pages of a handwritten appeal addressing the "right" and "wrong" in this situation... the obvious attempt to circumvent our policies by their cardholder, the lack of support that we received from our "Start-up Representative" from our processing company in terms of training regarding these persnickety policies... basically, appealing to VISA's sense of decency (silly me!)
    17. Day 122 - I call First Data (for the third time in the past six days) and they finally have a response from VISA.  They have found in favor of the cardholder due to the fact that we did not have a signed sales slip, or a contract with their initials next to the paragraph with our cancellation policy.  We will have to return the $5,000 which, as I had mentioned we had already used to pay bills.  I vent to the First Data person for a half an hour, and she was actually very nice.  Even though we weren't customers of First Data by now, she spent all of that time telling me things that she has seen happen... all unbelievable, and all found in favor of the cardholder. One thing she said is that if you take large sums such as we are taking for deposits (several thousand at certain times of the year) that we need to set a certain amount aside to keep reserved just for chargebacks. As though we have the ability to have the income from this property that we need to pay its expenses just sit in a bank account?  I asked about why hotels can get away with not needing signed sales slips when you call for a reservation, and she said that it is because some of the really big chains have their own processing company, and also, they have deep pockets and can afford to refund a deposit every so often (a word to take note about... those "non-refundable pay-all-in-advance" rates that have become more popular? She told me that none of those would hold up to VISA, MC, DISC, policies... by their policies, they must allow a cancellation up to 6:00 pm the day of arrival for their cancellation policy, and if a cardholder challenged it, they would win. I said that was terrible, because when you book that rate, it is made very clear that the rate is so low because you are paying in advance, and she said to challenge it anytime, and you would win.  I guess in the world of Credit Cards, scruples is the name of a board game.
    18. Day 125 - After all of that, we took a booking during the past week for one month beginning mid-November.  Charged the deposit using our new processing company, Flagship. Received a call from Flagship a few days later telling me that they needed a letter from us allowing them to credit back the cardholder for that charge (which the deposit was for about $1,800) because they will not allow a deposit to be taken on a vacation rental property for more than 90 days out. In the meantime, they have frozen ALL funds in our account.  Now I have to call the renter, make us look like business fools, inconvenience them by asking them to pretty please send us a cashier's check for that same amount and they will be credited back the amount to their card, and, oh by the way, we're so sorry but we'll need you to sign a new contract that specifies payment by cachier's check and not by credit card. We are going to have to re-do our entire method of doing business, as we have other renters who have given us their deposit by credit card that are more than 90 days out, and we need to change our contract, booking receipt, and call and impose on these other renters. Makes for a great start in a happy renting experience for them. I haven't looked into this new system with HomeAway, but if, in the end, it all goes back to VISA, MC, or DISC, I won't have anything to do with them because no matter what THEIR policy is, in the end, it is the credit card company that makes the policies.

    You are absolutely correct that "vendors" (merchants) have few rights here. The cardholders who lost their appeal must have had very unusual circumstances. Also, to think that just because you have a contract that you are okay is folly.  The woman who spent so much time with me on the phone said that the card company could find in favor of the cardholder regarding ANY policy you have, unless the renter initials it.  I said that is ridiculous because one would have to initial at the end of every single line of a contract, and what's the point of having a signature at the end of the contract and even initials at the bottom of each page? She said she completely agreed with me, but from the things she has seen she would think twice before accepting credit cards in our industry.  We now include our house rules and policies as a part of our contract as an Addendum, and reguire it to be separately initialed, but we have had some guff from renters having to do all of this paperwork.  I really don't think it's worth it.  I think we will take a credit card for the final payment due (30 days before the arrival,) for the wines we leave in the house, and for any damages that exceed the Accidental Rental Damage Policy.  Other than that we are going to stick to cashier's checks.  I know this was very long, but I felt that it really shows how much trouble one can get into with CCs.  Our life has been severely impacted by all of the above.  Right now, losing the opportunity to rent January and February (two of our three most productive months) during the time frame when other visitors were in the Scottsdale area to preview and/or inquire, has not only cost us the $5,000 that we don't have right now to return, but we won't get it reimbursed until those months get re-rented.  I hope Mr. Wonderful is happy.

  • Contributor 38 posts since
    May 28, 2011
    Currently Being Moderated
    12. Jul 7, 2011 2:56 PM (in response to mle642)
    Re: Accepting Credit Card Payments - A Warning

       Please excuse my ignorance, but what is a "PayPal account"  Is it an actual account in a PayPal financial institution, from which you must transfer funds to your own bank account?  Or does PayPal have some rights to your bank account?  And, how soon after PayPal receives the money and puts it wherever, can you transfer the funds to your own account?

  • Contributor 38 posts since
    May 28, 2011
    Currently Being Moderated
    13. Jul 7, 2011 3:08 PM (in response to aznative)
    Re: Accepting Credit Card Payments - A Warning


    aznative- your unfortutnate experience brings up an issue which I have not see addressed; and that is whether we legally have the right to spend these deposits until such time as the contract is fulfilled and the renters have taken possession.  In your case, you had a non-refundable deposit, so, technically, it was yours to spend.  However, as an attorney, I must keep all unearned clients' money in a trust account until the work has been completed.  And, yes, I also have a non-refundable deposit.  However, if the amount of the non-refundable deposit were to be considered excessive, a court or the Florida Bar would tell me to refund it.  In your case, it appears that you have a non-refundable deposit for a rental 11 months away.  You may have been very wise not to have taken the issue to the courts.  Heaven only knows what the result would have been! 

     

       So . . . my question to everyone is:  What is the general policy toward refundable deposits pending the renters actually taking possession?  Do you hold on to it or put it in a separate account?  Spend it and hope that you don't experience aznative's predicament?  Are management companies required to keep the refundable deposits separate from their operating account?  Thanks for any input.  

  • patrickduncan HomeAway Employee 142 posts since
    Mar 21, 2011
    Currently Being Moderated
    14. Jul 7, 2011 4:17 PM (in response to swiss-house)
    Re: Accepting Credit Card Payments - A Warning

    Tom - I'm sorry to hear that you've had to file a claim, but glad that the PDP product was easy to use and it sounds like a painless claims experience! Best, Patrick

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