In recent years, landlords have faced scrutiny as rent has soared to unprecedented highs, leaving many unable to afford housing. You’ve come to the right place if you’re a landlord dealing with disputes.
At CB-ALERT, we help property management companies avoid costly chargebacks, saving them time and money on chargebacks and processing fees.
Let’s look at why property management firms get hit hard by chargebacks and how CB-ALERT can assist.
- Property management chargebacks can significantly impact owners, especially those with smaller rental portfolios.
- Tenants and applicants may file chargebacks for reasons such as rejected rental applications, financial difficulties, or disputes with roommates or partners.
- Property managers can challenge friendly fraud chargebacks through chargeback representment and providing evidence such as application forms and rental agreements.
- To prevent chargebacks, property managers should carefully screen prospective tenants, maintain good communication with renters during financial difficulties, obtain signed agreements to serve as a deterrent against friendly fraud chargebacks and work with a chargeback management company.
What Are Property Management Chargebacks?
Property management chargebacks occur when a consumer calls their bank to dispute a transaction rather than dealing with the merchant/landlord.
These often prove problematic as the rent price typically makes up a large part of a consumer’s budget.
Why Do Tenants File Chargebacks?
Current and prospective tenants have the option to initiate chargebacks for various reasons. Legitimate chargebacks typically arise from instances of actual fraud or merchant misconduct, which are seldom relevant to housing-related payments. Chargebacks within property management often fall into the “friendly fraud.”
Below are some common reasons why tenants may initiate these chargebacks:
- Application rejection: Many property managers levy an application fee to offset the expenses of conducting background and credit checks on applicants. While these fees are generally modest, tenants may attempt to reclaim their money through a chargeback, particularly if their application was turned down. While the revenue lost due to these chargebacks is typically minor, the accompanying chargeback fees can be substantial.
- Attempting to circumvent payment: Tenants might dispute a rental payment if they abruptly decide to vacate the premises or if they wish to delay the revelation that they can no longer afford the rental.
- Shared Living Arrangement: Co-habitants, whether roommates or romantic partners, who share a residence may not always conclude their joint tenancy on amicable terms. One party may utilize the other’s credit card to fulfill a rent payment, or the party being asked to vacate may initiate a chargeback against a previously made rent payment.
- Use of a third-party credit card: Some tenants opt to make their rent payments using credit cards belonging to a parent or other family member. If the cardholder fails to recognize the charge—or never consented to cover the amount initially—they may choose to file a chargeback.
Why Are They So Costly?
Chargebacks are costly in this industry due to the high cost of rent. Not only will merchants have to reimburse the customer for the rent, but they will also have additional chargeback fees.
Preventing Property Management Chargebacks
To minimize the heavy costs associated with property management chargebacks discussed earlier, you must take proactive steps to prevent them.
- Implement robust fraud prevention tools: Utilize tools like 3DS2 authentication, RDR, and Ethoca/Verifi alerts.
- Ensure a recognizable merchant descriptor: Ensure your company’s descriptor name matches your online storefront name for easy recognition.
- Partner with CB-ALERT: Collaborate with us to proactively identify and prevent fraudsters before chargebacks occur.
- Clearly communicate transaction details: Ensure customers fully understand their purchase, including the price and associated fees.
- Consider issuing refunds to prevent chargebacks: In most cases, offering a refund is a cost-effective alternative to dealing with a chargeback. It also increases the likelihood of retaining the customer.
- Provide 24/7 Customer Service: Offering round-the-clock customer support is crucial in combating chargebacks. It allows you to address issues, provide refunds, or resolve disputes before customers involve their banks.
- Utilize clear and concise billing descriptors: Make sure the descriptor on your customers’ credit card statements is easy to understand, reducing the likelihood of chargebacks due to confusion.
- Maintain accurate records: Keep detailed records of all transactions, including customer contact information, order details, and any communication with the customer. This documentation can be invaluable in the event of a chargeback dispute.
- Monitor and promptly address chargebacks: Use chargeback alert systems to stay on top of disputes and address them promptly.
- Scrutinize irregular orders: Be vigilant about orders from unfamiliar countries or huge amounts. Investigate to ensure accuracy and prevent potential chargebacks.
Hiring A Chargeback Management Company
A chargeback company can significantly reduce your chargebacks and analyze important data that shows what is causing the disputes.
At CB-ALERT we are confident that we can significantly reduce your chargebacks and help you prevent them in the future.
With decades of experience in payments, we know how chargebacks hinder a business’ growth and hurt your bottom line.
Fill out the application below to put an end to your chargeback problems.