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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.
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.
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.
Just to clarify, I did have all the documentation which i sent in, including the emails from the tenant indicating that the dispute was an error and was reversed. My point is that AmEx wasn't very interested in any of it, presumably because it is easier to just reverse a dispute once it is started to get it off their books. So even with documentation (and I have it all), you can get stuck. The dispute was not resolved in my favor because it wasn't, not because I was unable to prove that it was erroneous, hence my 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!
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.
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).
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.
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.
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
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...
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.
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.
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?
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.
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