28 Replies Latest reply: Nov 22, 2018 9:11 AM by peg'schoice RSS

    You won't believe this chargeback

    rufusisreal New Member

      In May a renter booked our Hilton Head SC condo for a week in September. Hurricane Florence decides to dance off the coast of North Carolina for a few days, and our renter decides they don't want to travel to South Carolina.  They called and asked if we could consider a refund. The contract does not allow for a refund so close to the arrival date unless we can rent the property to someone else. But out of goodwill we decided to refund them 50%. We were able to get a new renter in the condo for a partial week. From the new renter we collected a few bucks more than we needed to make us whole, so we sent the first renter a personal check for that amount. They were delighted and thanked us for working with them. All good.

       

      About a week later we get notified of a chargeback. The first renter wants their 50% back due to "services not rendered". Huh? As if that weren't enough, here is what was written in the email disputing the chargeback, " Note: Per Card Association Rules and Regulations, cancellation policy has no bearing on "Services Not Rendered" chargebacks because the cardholder is disputing the non-receipt of services or goods." So, if a renter decides to be a no-show for any reason, they can claim a chargeback for "services not rendered", and the cancellation policy doesn't apply? They used a Discover card and I've read in other threads that Discover is more of a problem with chargebacks.

       

      We've supplied all the info and are waiting to hear.

        • Re: You won't believe this chargeback
          dinamight Contributor

          You're right, I don't believe it. Well, I believe you. The gall of some people! Where do they get these ideas from?

          • Re: You won't believe this chargeback
            dinamight Contributor

            Please let us know how you go. I'm in the middle of something similar, a chargeback for unrefunded days after they decided to leave early for no good reason.

            I can't see how they can possibly even think they can win this, in both cases. But get ready to lose the first round and keep at it.

            • Re: You won't believe this chargeback
              green_mango Active Contributor

              Anyone can do a chargeback for any reason unfortunately, and sometimes they win anyway - but, in your shoes I would definitely dispute this - provide all the evidence you have, including your cancelled check for 50%, all your communications with the guest, your cancellation policy that they agreed to, and (hopefully if you have it) a signed contract. 

                • Re: You won't believe this chargeback
                  rufusisreal New Member

                  Thanks. I have really good documentation including text messages from the renter thanking us for working with them. So I think I can win on the merits of the the case but I'm concerned that the "services not rendered" allegation trumps any evidence. It seems like they are treating this like a dispute with Amazon rather than a rental.

                • Re: You won't believe this chargeback
                  feibus CommunityAmbassador

                  It doesn't cost the renter to do a chargeback, so why wouldn't they?

                   

                  Enforcing your contract isn't up to the guest's bank (that's who really handles the chargeback).  It's up to you.  So you might try letting the guest know that you plan to seek full restitution in small claims court if they don't withdraw the chargeback.

                    • Re: You won't believe this chargeback
                      rufusisreal New Member

                      Thanks. Re small claims court, the renter is in a different state than the location of my property. If I get an award in small claims court in my state how is that enforced in another state?

                        • Re: You won't believe this chargeback
                          feibus CommunityAmbassador

                          My understanding of the process (IANAL!) is: Once you have the win in court, you also can get the judgment to include court and recovery costs.  Then you take that to the court in the person's location and get the judgment recognized.  Once that's done, you can put a lien on the person's house/car/etc., which really looks bad on their credit reports.  So by that point, the person usually cries "uncle" and wishes they had let you keep the money in the first place.

                           

                          But, I think I mentioned this: I AM NOT A LAWYER, nor do I play one on TV (yet, still holding out hope).  So you should consult with the lawyer who helped you create your contract to make sure what I'm describing is actually correct.

                            • Re: You won't believe this chargeback
                              twobitrentals CommunityAmbassador

                              A Clause in your contract about court disputes as to venue may help. Some states indicate without a specific clause either the property location or guest location prevails. Definitely contact an attorney

                                • Re: You won't believe this chargeback
                                  feibus CommunityAmbassador

                                  Contract Law 101 (at least according to my contract law 101 prof): contract needs to specify the venue and the specific set of laws used to interpret the contract.  You can pick somewhere in Iowa for the venue, and then choose New York for the laws if that's most advantageous and you feel like possibly messing with the judge who gets your case.  Easier to make them the same basic territory... usually the state where your VR is located, since that's reasonably where the transaction happened.

                                    • Re: You won't believe this chargeback
                                      twobitrentals CommunityAmbassador

                                      My contract states that in the event of any claims they are to be handles in my home state of Wyoming. My property is in Missouri. Should a judge decide it must be where the property is as that is where the business license is located then that's fine too. However, I don't want to have to deal with the home state of the Guest.

                                       

                                      Like Floridarob has stated, getting a judgement does absolutely nothing unless you are willing to follow up with attaching their wages, their tax refund etc. (more attorney fees, etc. etc. etc)  I have had judgements for LTR that never paid, worked cash jobs, didn't care about credit reports, etc. and others that have paid even before filing with the threat of filing a garnishment against their wages.

                                       

                                      Haven't had that type of issue with the VR thank goodness and got rid of my last two LTR this last year.

                            • Re: You won't believe this chargeback
                              peg'schoice Contributor

                              No good deed goes unpunished!!!  Seems like the more you do for some folks, the more selfish they act. That' a shame!

                              • Re: You won't believe this chargeback
                                ohst8er Senior Contributor

                                rufusisreal, we also have a condo in Hilton Head.  I sent you a friend request.

                                • Re: You won't believe this chargeback
                                  rufusisreal New Member

                                  So here is an update to our chargeback story, and if you have any suggestions please let me know.

                                   

                                  We received an email from Homeaway that said:

                                   

                                  "Please be informed, we have been notified by the cardholder’s bank, that after their review of all the chargeback documentation you provided for (YOUR RENTER), in the amount of $XXX.XX they are continuing the dispute on behalf of the cardholder.

                                   

                                  Please understand, this does not mean the chargeback has been found in favor of the cardholder, but, it does mean that if you choose to continue to counter-dispute the case you’ll need to decide to move forward to the next stage, which is PreArbitration.

                                   

                                  At this point, if you decide to continue your counter-dispute, please be fully aware and comply with the following, as this information is necessary before we can continue on your behalf:

                                   

                                  Discover Card will be provided the same documentation you previously provided us and will very likely come to the same conclusion, unless you can supply new or compelling evidence, not previously provided to us before, that clearly supports the validity of the charges to the cardholder. If you have new or compelling evidence then provide a new rebuttal letter explaining/outlining that information, along with any additional supporting documentation."


                                  So, it sounds like they didn't think our original rebuttal was enough but they have kept the door open for one last try if we have "new and compelling evidence". Anyone ever run across this?


                                  Thanks

                                    • Re: You won't believe this chargeback
                                      green_mango Active Contributor

                                      Sorry - chargebacks suck!  I assume you provided the proof of 50% refund plus proof of cancelled check for extra amount?  I think you would have to argue that services were rendered (and therefore your cancellation policy applies) - the unit was available for them to occupy, until they cancelled and agreed to 50% refund. 

                                       

                                      I've only had 2 chargebacks, but thankfully won them both (they were identical) - signed contract & ability on invoice to add "non-refundable" were really helpful - I use Square though, not Yapstone.

                                        • Re: You won't believe this chargeback
                                          rufusisreal New Member

                                          yes, gave them all the proof, cancelled checks, copies of the VRBO refund screen, etc.

                                           

                                          So I spoke with a Homeaway rep today. He said that when it goes to arbitration the loser pays a fee of between $250 and $500. I asked, so, who decides the case? The credit card company, he says. So, the credit card company has to decide a case between their good customer and nameless, faceless me? Yes, he says.

                                           

                                           

                                      • Re: You won't believe this chargeback
                                        sage Senior Contributor

                                        This is just one problem that can happen when you give someone else, in this case HA, control of crucial business decisions such as what credit cards will be accepted. Apparently in this instance it was a Discover card used for the charge, so the Discover network rules control merchants' requirements. While I have been able to find online the applicable requirements for Visa and Mastercard, I have been unable to find what Discover would requir of a merchant to defeat such a chargeback.

                                         

                                        It seems to me that HA should provide all its users with links to the requirements of issuers of every credit card a traveler might use so owners might review those and ensure their rental agreements will satisfy the card issuers.

                                        • Re: You won't believe this chargeback
                                          vrdoctor Senior Contributor

                                          Have you called the guest and asked them to drop the chargeback?  It is possible that they initiated before you gave them the refund check.  If they are intentionally doing the chargeback then your option is to take them to small claims court.

                                          • Re: You won't believe this chargeback
                                            sunnycs CommunityAmbassador

                                            This is so disturbing and I'm very sorry for your trouble.  This "friendly fraud," as it's known, puts all of us in a precarious position.  With cancellations on the rise, we really need to be able to fight this particular type of chargeback. 

                                             

                                            Just to clarify, the guest will be receiving 100%+ the amount of the cancelled stay?  You refunded 50% via HA, then refunded an additional amount with a personal check?  Now they want an addtional 50% via the chargeback?  And Discover is ready to comply with that?  I'm guessing that the Service Fee comes into play since you only refunded 50%.  Is the guest essentially hitting you up for HA's Fee? 

                                             

                                            Also to clarify, the "arbitration fee" charged by Yapstone of $250 - $500...   is paid by the loser?  That may be what CS said, but I seriously doubt that is correct.  I'd bet you would be hit with that fee, win or lose. 

                                             

                                            If the rental agreement won't hold up, does the fact that the guest agreed to your rental terms, house rules, etc. on the platform by checking a tick box when they paid carry any weight?  As vrdoctor suggested, have you contacted the guest to ask what's up?  In my mind, this is theft and when is that okay?

                                              • Re: You won't believe this chargeback
                                                rufusisreal New Member

                                                Thanks everyone

                                                 

                                                sage, thanks for looking that up. I found similar site called "chargebacks" and chargebacks911".  Good idea about the links. I read in another thread that Discover Card is particularly difficult to deal with since they are both the card issuer and the bank. I think we can choose not to accept Discover Card for payment on our property.

                                                 

                                                vrdoctor When this first happened I suggested to my wife that she should give them a call. . Before the chargeback she had spoken to her a few times and the traveler seemed reasonable. But, she doesn't think it is such a good idea now...

                                                 

                                                sunnycs. You got the math right. If they prevail in the chargeback they would get 100% of the rental payment back. Re the VRBO service fee, they got  50% of it returned when we refunded them the first time. The chargeback request is more than the remaining service fee, so I'm thinking they want to get 100% of the rental payment. Re the arbitration fee, it is paid by the loser. I asked that question in several different ways and got the same answer. I also saw that on other community threads so I think it is right. Re enforcement of rental contract, I have the same concern. When we first got the chargeback and they were claiming that the cancellation provisions didn't apply, I thought, "surely HA will come running to our defense since this speaks to the core of their business". But silly me, it turns out they are just a processing operation. I saw another thread that suggested HA offer the owners insurance for chargebacks, just like they offer the travelers insurance for no-shows due to weather, etc. Good idea.

                                              • Re: You won't believe this chargeback
                                                floridarob Contributor

                                                I'm not trying to be flippant by suggesting this, as I'm truly sorry for your loss and your hassle, but... What if the charge is for a cancellation fee?  Whenever I charge a guest for dates not used, in my own books, I cancel all of the rental charges, and assign any moneys received to a 'Cancellation Charge'. This is a non-taxable thing generally speaking, so it is just a flat amount that I record, of whatever the guest paid. It is recorded as straight revenue, with no sales tax obligations.

                                                 

                                                In this case, the guest didn't stay with you. Absolutely they did not. You cancelled the reservation for them, and charged them for the service of cancelling the reservation and removing any burden for them to provide you with any additional moneys. The credit card company can't claim that you didn't provide them with a service, because you cancelled the reservation for them, and that is what the charge is for.  It has, for legal purposes, nothing to do with the rental that they didn't use and thus paid nothing for.

                                                 

                                                Your response to the chargeback? "It isn't a charge for a rental they did not use. It is a cancellation fee under the terms of my agreement with them, and they most certainly did cancel their booking, so the fee for that was charged as per the terms and conditions of the agreement between us. They can't claim they didn't receive a service. They requested that the reservation be cancelled. It was, and there is a charge for that. The service provided has been well documented, including their cashing of a check that I sent them refunding rental fees after they requested the booking be cancelled."

                                                 

                                                To refund the cancellation fee would be the equivalent of refunding an insurance premium because the insured never made a claim. Buying insurance is not making a down payment on a claim. It is purchasing protection in case something happens, but it has no inherent intrinsic value. A cancellation fee is the same type of thing. You provided the service, at their request. They can't deny that they received the cancellation, and you are entitled to be paid for it. A refund based on a claim of a service not being received would be completely wrong in this case, as they absolutely did get their reservation cancelled.

                                                 

                                                Let them put that in their legal pipe and smoke it!  Good luck!

                                                  • Re: You won't believe this chargeback
                                                    feibus CommunityAmbassador

                                                    Only works if that's what your contract says you will do.  And even then, it's still up to the CC company to decide whether that charge is valid and if they think it is not for whatever reason, then it's still up to you filing a claim in small claims court and pushing the guest to directly send you whatever money was owed.

                                                     

                                                    It's not up to the CC company to adjudicate claims.  They just want to be the middleman on the transaction and collect their fee, they don't want to have to enforce your contract for you.  (And by "you", I mean any owner, not specifically you.)  So as owners, we have to be prepared to take bad guests to court and have a contract that is enforceable in court.

                                                    • Re: You won't believe this chargeback
                                                      rufusisreal New Member

                                                      Thanks. Interesting thought. I can't use it in this case because our contract specifically has a nominal charge for the cancellation fee, and I've already presented the case to Discover that the chargeback they are claiming are for the travelers obligation for the days we didn't rent.

                                                        • Re: You won't believe this chargeback
                                                          floridarob Contributor

                                                          rufusisreal & feibus

                                                           

                                                          I realize it may be water under the bridge on this one, however in some instances an owner really stands nothing to lose by trying for it anyhow.

                                                           

                                                          I've taken many bad guys to small claims court. Even after you win, you still have to get your judgment enforced, often paying for that to happen. It is not a golden ticket if the bad guy doesn't have the money.  Still, small claims should always be pursued if necessary.

                                                           

                                                          This situation may present a lesson learned and a call for alteration/addition to terms and conditions in order to prepare for just this type of occurrence. Having the wording ready to go, and referring to the charge as a cancellation fee in communications would also be prudent so that one is prepared if the need arises.

                                                            • Re: You won't believe this chargeback
                                                              rufusisreal New Member

                                                              Thanks for everyone's help. We are going to dispute it. The money really isn't the issue. They are disputing a partial week's charge. It just gets up my nose.

                                                               

                                                              So, check back in a month or two and we'll give you an update.

                                                               

                                                              Thanks again!

                                                                • Re: You won't believe this chargeback
                                                                  dinamight Contributor

                                                                  Thanks for the update Rufus, sorry I didn't reply sooner.

                                                                   

                                                                  Yes, that bit about "providing new evidence" really stuck in my craw the first time I encountered it. We're now on our second chargeback (we won the first) and this time we held back some information on purpose (even though Yapstone denied that we would be asked for new evidence). Still waiting for the result of the first round.

                                                                   

                                                                  As it was explained to me, in the first round it's almost always decided in favor of the chargebacker because it's their bank making the decision. The second round goes to the credit card company and they are more likely to go with the vendor (us) because they see these chargebacks so often and they are not beholden to the customer.

                                                                   

                                                                  Good luck and thank you for fighting this. Otherwise they'll just keep doing it and word will get out how easy it is to get a free holiday courtesy of HA/Yapstone.