Beware of Chargeback Double-Dipping

Travel companies have had a rough year, but we weren’t aware of just how rough until we saw a recent article on the website about how travel agencies and travel providers are being hit with chargeback double-dipping by some of their customers.

According to ABTA (Association of British Travel Agents), a trade association for UK travel agents and providers, consumers are getting refunds from their travel companies as well as their credit card providers, which means the companies are being charged twice for the same refund.

(If nothing else, this is why you need to save all communication and information related to every transaction. Because travel sales are not cheap. These aren’t $25 pizza orders, they’re tickets and tour packages worth thousands of dollars.)

How Does the Chargeback Double-Dipping Scam Work?

A two-scoop ice cream cone at the beach. A nice metaphor for double-dipping, don't you think?

Back in October, said the double-dipping scam often works because the customer will contact the merchant for a refund, and while the merchant is still processing it, the customer calls the issuing bank and requests another chargeback. In a couple of days, they have both refunds.

The merchant will notify the bank about the refund in their nightly batch, but it will take a couple of days for the refund to be posted. It will also take a couple of days for the bank to notify the merchant about the chargeback. By then, the merchant is now fighting the bank to get one of those chargebacks rescinded and may or may not get its money back.

The practice is highly illegal but very profitable. Whether it’s a case of friendly fraud, malicious fraud, or whatever you want to call it, it can end up costing the merchant as much as three times the amount of the original purchase.

According to the ABTA, they wrote to Paul Scully MP, Minister for Small Business, Consumers and Labour Markets, and told him of several issues their members were facing, including:

  • The problem of ‘double-dipping’ whereby customers are getting a refund from the travel company and their credit card provider – meaning the travel business pays twice.
  • Late notification of a chargeback claim, including some cases where the trader has been notified of the claim after the deadline supplied for appealing the decision.
  • Chargebacks that appear to have been lodged against the wrong trader in the chain, with the consumer pursuing intermediary travel agents rather than the principal of the contract, the tour operator.
  • The very high number of reports of difficulties with the dispute process, which is frequently resulting in large financial losses, even where traders can provide evidence that chargebacks are ill-founded.

In a statement on their website, ABTA laid the blame at the feet of the banks and credit card networks who are “applying insufficient checks to ensure that chargeback claims are justified.”

While this is probably not a widespread problem among travel providers, it’s still enough that many of them are being hit with unwarranted and damaging claims that should never have been processed. It’s bad enough that their professional association has requested a meeting with the government to put a stop to it.

If nothing else, this is a good reminder as to why merchants of any kind need to work with a third-party merchant like CB-ALERT to help them manage chargeback issues. It’s also a good reason to participate in programs like CDRNt by Verifi and dispute alerts by Ethoca. These tools can handle a lot of chargebacks and dispute resolutions, including looking up the transactions on your behalf and dealing with the customer, explaining how and why they should or should not get a refund. It also means the reps can see when a refund has been granted, which means no more double-dipping. The CB-ALERT platform also allows for full automation of the pre-dispute and dispute stage of the customer response to expedite any refund requests, and properly stamp out fraud.

Finally, it’s an excellent reminder as to why you need to dispute any chargebacks that come your way, assuming your product/service has been delivered to the customer as indicated especially if they’re over a certain transaction amount.

If you’re getting stung by chargeback double-dipping or you’re receiving chargeback notifications after the deadline has already passed, speak to your payment services provider or work with a third-party chargeback company like CB-ALERT.

To learn more about how to protect yourself from double-dipping and other financial heinousness, please visit the CB ALERT website.

Photo credit: Alexas_Fotos (Pixabay, Creative Commons 0)

Scroll to Top