Disputes are a natural side effect of accepting payments online, but they can be avoided with an effective dispute and fraud prevention strategy.
Learn more about what disputes are and how the chargeback process works.
Avoiding fraudulent payments
The most common reason that a cardholder files a chargeback dispute is because their card was stolen or lost and then used to make fraudulent payments.
When a card that has been reported as lost or stolen is used to make a payment, the card issuer is responsible for stopping the transaction. However, if the card does not have a history of fraud or hasn’t been reported yet, the transaction can still be processed—so it’s important to follow the steps below to decrease the number of fraudulent payments you accept.
Manually review payments
We recommend you manually review every payment with the following things in mind:
- Does the customer’s contact information seem legitimate?
- Does the customer’s email address match the name on their card?
- Has the customer tried to make other payments that were declined? If each failed attempt is associated with a different card, there is a much greater risk of fraud.
- If the customer has made multiple payments (including those that were declined), did they use: a) many different cards to make the payments (more than just a couple); or b) the same card but different addresses?
Refund suspicious payments immediately
If you suspect a payment is fraudulent, refund it as soon as possible to avoid a chargeback later.
Verify your customer's identity
Regardless of whether a payment seems suspicious, it’s good practice to ask your customers for proof of identity before check-in.
If a payment made in advance (i.e., when the stay was booked) seems suspicious, we recommend contacting the customer directly to verify their details before you confirm the reservation.
Collect as much payment information as possible
If you only require the minimum amount of payment information from customers, you’re more likely to lose a dispute. Requiring the following information can help you avoid disputes altogether (by allowing the card issuer to verify that the payment is not fraudulent), or it can give you the evidence you need to successfully object a dispute:
- Customer's full name
- Customer's email address
- Billing address and postal code
- Signature (at check-in)