Best practice for reducing chargebacks
There are certain types of chargebacks that happen more often among hotel, lodging and accommodation providers. To support you, we have created this best- practice guide to help you understand the correct procedures for dealing with chargebacks and provide advice on how to reduce the cost to your business. You must authorise every transaction but please remember that this does not guarantee payment. The authorisation confirms only that:
1. The card has not been reported lost or stolen at the time of the transaction.
2. There is enough funds available at the time of the transaction. As the rules stand, except for contactless transactions, you will still be legally responsible for any transactions if the genuine cardholder later says that they did not make or authorise a transaction. Card Not Present transactions are particularly prone to chargebacks at a later date.
If there is no signature on the final bill, we may not be able to defend you if there is a chargeback. There is still an element of risk if the guest is allowed to check out using the priority check-out service.
Taking advance reservations
Wherever possible, you should ask the person needing accommodation or lodging to make the reservation themselves. Of course, for practical reasons you may need to accept reservations from other people, such as secretaries acting on behalf of their bosses.
Tips on taking telephone reservations
As telephone reservations are Card Not Present transactions, we recommend you take the precaution of asking for as many details as possible to check the authenticity of the unseen cardholder. Ask for:
• The name of the caller
• Their direct-dial phone number (not a
mobile number)
• The name of the person who needs the
accommodation or lodging (if not the caller)
• Their expected arrival date and time
• The number of nights they are expected to stay
• The card number of the card to be used for
the charges
• The card expiry date
• The cardholder’s name
• The cardholder’s billing address (this may not be
the company address)
• The card security code (the last three digits on the
signature strip on the back of the card or the three digits in the box next to the signature panel). See the note below
If the booking is for corporate purposes, you should also take:
• The caller’s name and position in the company
or organisation
• The name of the company or organisation
• The company or organisation switchboard
telephone number
Note: If your reservation system allows you to check the card security code given at the time of the reservation, enter it. Even if you use POS processing equipment that cannot check the card security code, still ask for it as this may deter fraudsters. Also, you should discuss and agree the room rate and the hotel cancellation policy. You must ask the caller to agree to the cancellation policy. Once the caller has accepted, you can then issue a reservation code.
If the reservation is made through someone else, for example, a travel agent, make sure they tell the customer about your Terms and Conditions. You should then ask the caller to confirm the reservation in writing, either by fax or mail.
Taking reservations by fax or mail
Double check that the fax or letter looks genuine, for example, that it’s on genuine company-headed paper. Below are some obvious questions to ask yourself.
• Does it contain a company logo and show the
correct corporate colours (you can check on the internet)?
• Does it show a switchboard telephone number?
• Check by calling the sender (the switchboard
operator would normally announce the name of the company)
• Does it contain a registered address for ‘Ltd’ and
‘PLC’ companies?
• Is it signed by someone in authority?
Faxes and postal bookings should contain the same details needed for telephone reservations – except for the CSC. They should also confirm they have accepted your cancellation policy. We recommend calling the sender for confirmation of the reservation, the card details and the CSC. Ideally you would also reply to say you have accepted the reservation in writing (fax or post), together with a copy of your Terms and Conditions, including your cancellation policy.
Taking a reservation over the internet
Transactions over the internet are effectively Card Not Present transactions, so are more likely to result in a chargeback. It is in your own interests to process transactions with the card present, whenever possible. When taking an e-commerce booking, you should use the same procedures and precautions as those for reservations taken by phone. This includes making sure that cardholders can confirm that they accept your Terms and Conditions, for example, in a tick box. We strongly recommend that your website allows ‘Internet authentication’. You can get this service from us and it allows you to confirm that reservations are being made by genuine cardholders.
Extra tips for checking genuine customers
• Set up your reservation system (or a stand-alone
computer) to check the billing and company address by comparing it to the Royal Mail address. See www.royalmail.com. Or, you can invest in PC software that uses a postcode address to confirm addresses. Find out more at this website
• www.streetmap.co.uk
• Check the electoral roll. Companies like
Equifax do this, and will charge for the service (0845 600 1772 or www.equifax.co.uk). Or, you can buy and install electoral-roll software
• Check the Yellow Pages or BT Phone Book for the
customer’s listing. Then call and ask for the person who sent the fax
Taking advanced lodging deposits
If you take advanced lodging deposits under the Visa and MasterCard rules, this is the only amount you are allowed to take from the customer’s card. You will also give up your right to charge one night’s no-show payment. If you operate a no-refund policy, you must tell the cardholder at the time of the reservation. You must make any refunds you agree to the card used for the original booking – never give a refund in cash or by cheque or other means. You can only accept Maestro cards when the cardholder is present, as the card must be processed electronically using the magnetic stripe or embedded chip.
Your cancellation policy
You must clearly explain your cancellation policy at the time of the reservation. Ask the customer whether they accept the policy and to confirm this. The cancellation deadline should be no earlier than 72 hours before the guest is expected.
If a reservation has been made within 72 hours of the expected arrival time, the cancellation deadline will be 6pm on the arrival date. If you need to know about a cancellation before 6pm, you must post your cancellation policy to the cardholder.
If the cardholder cancels the reservation within the time frame shown in your cancellation policy, give them a cancellation code for their records and yours.
Note
• If your cancellation policy is different from the
above, you risk receiving chargebacks
• You can only enforce the cancellation policy
when the customer pays by Visa, MasterCard or JCB card
(Maestro cards do not allow charges to be made for hotel cancellation charges).