Defense Against Chargebacks

Recommendations to help you avoid chargebacks.

This information is most applicable to centers that process credit card payments through Retreat Guru's payment processor and receive payouts from Retreat Guru. However, much of the information presented will assist all centers, regardless of the processor - check with your card payment processor to learn more about their specific policies and procedures.

 

A chargeback occurs when a cardholder disputes a credit card charge from your center and asks their bank (the Card Issuer) to reverse the charge. Unfortunately, if you accept credit cards it’s likely that you will, at some point, be involved in a chargeback.

While chargebacks are meant to protect cardholders, they can cost you valuable time, a loss of revenue, and additional fees. When a chargeback happens, the disputed funds are held back from your center while the Issuer investigates - a complicated and lengthy process often requiring detailed documentation from you.

The Chargeback Process

The typical chargeback process follows this general path:

• Purchase - cardholder registers for a program or makes a purchase
  at your center using their credit card.
• Dispute - cardholder reviews their credit card statement and takes issue with a charge that appears on the statement. For example, the cardholder may not recognize the charge, may believe it’s a duplicate, think that they had previously cancelled, or be unsatisfied with their purchase. 
• Respond - prior to a strict submission deadline, you will need to provide evidence that the charge was valid. In addition to proof-of-purchase documents, you may be asked to provide copies of email correspondence with the cardholder, proof of prior stays or purchases made by the cardholder, and other details.
• Decide - the cardholder’s bank (Card Issuer) reviews the submitted documentation and information from other sources, and decides if the purchase was valid.
• Resolve - if the charge is deemed valid, your center will receive the amount that was originally disputed - you win. If the dispute is successful, the cardholder will receive a refund - they win. In either case, your center may still incur a chargeback fee.

How to Resolve a Chargeback

Your first step should be to contact the cardholder. Respond quickly and be flexible. If you and the cardholder resolve the problem, you may be able to avoid the chargeback process.

If you resolve the issue directly with the cardholder, always ask the cardholder if they have notified their bank (the Card Issuer) or the card association (MasterCard®, Visa®, or other brands) about the dispute. 

If they have, ask them to email their bank or card association to let them know they wish to drop the dispute. Ask them to copy you. Keep a copy of that email as evidence that the cardholder has notified their bank or card association.

If the cardholder proceeds with the dispute, and you wish to challenge, begin to compile evidence immediately that proves the charge was valid. Submit this information when requested. There is a time limit in each step of the chargeback resolution process - delayed action on your part can result in a chargeback loss. 

Your evidence should include as many of these points as possible:

• A cover letter explaining your side and highlighting key points from the evidence you are submitting. This can increase your chances of a positive outcome.
• A paper record of arrival that includes: the name on the card, card type, the last four digits of the credit card used to make the registration, billing address, and the cardholder’s signature.
• The transaction record that shows the date, time, and details of the items
  purchased in a form that associates the transaction with your center.
• Evidence that your online registration form includes mandatory "click-to-accept" checkboxes identifying your cancellation and refund policies.
• Emails sent to the cardholder that clearly state your cancellation policy
  and other terms as text within the email.
• Proof of prior stays or purchases at your center by the same cardholder.

How does a chargeback affect my center?

The payment processor will likely charge your center an administration fee for each chargeback. If you win the chargeback dispute, your center will receive the original amount of the disputed transaction. If the cardholder wins, they will receive a refund - you will forfeit the transaction amount. In either case, your center may still incur a chargeback fee.

Best practices to avoid chargebacks

Respond quickly - contact the cardholder as soon as you become aware of their question, issue, or dispute. If you and the cardholder can resolve the problem, you may be able to avoid the chargeback process. There is a time limit in each step of the chargeback resolution process - delayed action on your part can result in a chargeback loss. If you contact the cardholder by phone, follow-up with an email that details your phone conversation. Keep copies of all email correspondence with the cardholder. 

Be flexible - chargebacks are a last resort. If your guest, the cardholder, initiates a chargeback, their bank will often suggest that they try to resolve their dispute directly with you. When communicating with your guests, be open and curious, and flexible in your approach - look for other ways to resolve their disputes - you may be able to avoid most chargebacks and associated fees.

Ask for confirmation - even if you are able to resolve the issue directly with the cardholder, always ask the cardholder if they have notified their bank (card Issuer) or card association (MasterCard®, Visa®, or other) about the dispute. If they have, and now the cardholder no longer wishes to pursue the issue, the cardholder must inform their bank (card Issuer) or card association that they wish to withdraw their dispute. If the cardholder has contacted their bank or card association to let them know that they now wish to drop the chargeback request, ask them to copy you on that email and keep that email as evidence that the cardholder agreed to drop the chargeback.

Who to contact - clearly identify the phone and email of the person or department within your organization whom the cardholder should contact if they have questions about the charge. Include this information on your online registration form, in your cancellation policy, and display it on all email correspondence related to payments.

Be clear and concise - don’t make your cancellation policy any longer than it needs to be and write in a style that is easy-to-read and unambiguous. Don't bury your cancellation policy in a generic Terms and Conditions document - make your cancellation policy stand alone as a single-purpose document.

Make it a required checkbox - include an explicit "I will abide by the (your center) cancellation policy" required checkbox question on your online registration form.
In the question’s help text, include a link to a webpage on your site or an online
PDF that provides the full text of the cancellation policy.

Refunds - include an explicit statement about refunds in your cancellation policy. Make this section highly visible, concise and clear. All refund policies should contain language that specifically states under what circumstances and when full, partial, and no refunds will be given. If you need to refund a charge made by credit card, refund to the same card used to make the original transaction - do not refund credit card charges by check or cash.

Require billing address - include a required question on your online registration form to capture the billing address associated with the card payment.

Full text of cancellation policy in emails - be sure to include the full text of your cancellation policy within the registration confirmation email and all other emails sent to guests requesting or confirming payments. In these emails, it is not recommended to simply include a hyperlink to a webpage or online PDF.

Electronic signature - use an electronic signature service such as Echosign, GetAccept, or Docusign to send an agreement to guests prior to their arrival. Include the full text of your cancellation policy in that agreement as well as the last 4 digits of the credit card used.

Verify upon arrival - ask to see your guest's ID and the credit card used to make the registration. Check the expiration date. Check the signature, especially if it's a non-chip mag stripe card. Have your guest physically sign a paper agreement upon arrival at your center that shows the type of credit card and the last four digits of the card account number. Maintain copies of these agreements as evidence in the event your guest initiates chargeback proceedings.

Never alter a receipt - leave printed guest statements and receipts as is. Avoid writing on these documents with a pen or marker, or otherwise changing their appearance. If you need to make changes, follow proper procedures within Retreat Guru and reprint the guest statement or receipt.

Recognizable identifier - ensure that your center’s identifier on the cardholder’s credit card statement clearly references your center - it should be easily recognizable by the cardholder as associated with your center. For example, if your center’s name is “Drala Yoga” the identifier should read something like “RG *DralaYoga”.

Special note for programs delivered digitally

If you deliver a program online, for example, via Zoom, Livestream, YouTube, or another digital channel, there is another data point that may assist you in responding to a chargeback categorized as fraudulent.

In addition to the information mentioned above, like a copy of the registration confirmation email, you may include the IP address used to access the digital content.

If a program is configured in Retreat Guru with an online landing page, you can view the IP address used to access that landing page at Registrations > (choose a specific registration) > Online Landing Page > Show access log.

For more information, see Configuring Programs Hosted Online.

You may also wish to include the IP address used to make the registration. This IP address is included in the Edit Transaction view. 

 

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