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Several weeks later, we get a chargeback from Visa. Contacted customer- "Oh yeah, I forgot to cancel the dispute with my bank. No biggie. I'll get around to it." Several more messages asking her to send us a certified letter stating her intent to cancel the dispute. Silence. Meanwhile, we sent all the required documentation to our card processor showing the reservations, the e-mail trail back and forth, and copies of her check-in forms from the hotel and a copy of her passport that one of the hotels made. Visa still sides with her and says we have to find an alternative way to get our money.
Other details: We're a U.S. company and she's a U.S. citizen, although she's living abroad. The original amount was about $650. (Note- we're out the original payment to the first hotel. They have issued a credit for the nights after the no-show, which we can use when we send other reservations there. Plus we had to pre-pay for her other reservations. Plus the chargeback fee. Plus the money for all the phone calls and faxes to the hotels to get all the documentation- so we're about $1,100 in the hole at this point.)
Question: For those who have been in this position, which is the better method? Selling the bill to a collection agency or trying to sue her? Can we report her delinquency directly to the credit reporting bureaus? Can we file a credit card fraud report with the police? (If so, where should we file it- where the company is located or where her U.S. billing address is?) Other suggestions? Which requires less documentation on our part? Which has the most likely chance of success?
[edited by: LifeinAsia at 12:06 am (utc) on Jan. 26, 2007]
You can file a CC fraud report with the police, but that won't get you anywhere.
You could sue, but if she refused to show--which she may b/c she is out of the country--you would win, but what chances would you really have of getting any money? (And, you would be out court costs.)
Best thing: Move on. I know, it is hard, but sometimes you gotta take your lumps and focus on other things...
just do what she does. if she things she can cheat you on $650 she is on a level that does not go to court but quickly pays ince she figures out that you are on the strong side.
we did it a few times. only once out of a few it did not work.
i cannot guarantee your results, though ;)
We may go the small claims court method. It's a bit more money and time. But it would also be an inconvenience for her. And a court judgement would (I believe) carry a lot more weight when reporting an unpaid bill to the credit bureaus. And who knows? The actual filing may do more to prompt her to pay than threats to do so.
Here is a good link to the Fair Debt Collection rules [ftc.gov] that you may find useful (link is to the US Government).
Think before you jeopordize your ability to process credit card transactions.
She responded that she had cancelled the dispute back in November with her bank and that she didn't like my threats.
I responded that it was her word against Visa's. And since Visa was holding the payment and she had already proven to be unreliable in following through, who did she think we would believe. But if she faxed us a signed letter from her bank confirming when she cancelled the dispute, we would consider waiving the extra fees and complain to Visa for their mistake.
A week later I received a terse response from her saying she faxed another letter to her bank and gave me the contact information for her bank. Gee, that helps a lot, considering the bank won't give us any details.
Yesterday received a letter form our credit card processing company saying the dispute was reversed. Today the original amount finally showed up in our bank account.
Needless to say, I'm glad that it's finally resolved and I don't have to go through all the hassle of filing suit and gathering more paperwork and tracking down her legal residence and all the other associated stuff. Too much other work that needs to be done instead of chasing down deadbeats.
But she's certainly blacklisted from ever making reservations through us again! And the 3 hotels involved in the situation know well what happened, so she probably won't be able to get a reservation at any of them again.
I too am in the same boat as you. I too am in the same business as you and i understand the pain.
We are currently thinking of requiring all customer to sign and send a agreement stating that they have made a reservation and that in case of cancellations the cancellation charges (whatever charge applies to that booking) apply and that they will honor that and under no circumstances will chargeback.
Do you think this is enough to convince their bank incase of chargeback.
Also the latest month's credit statement and front and back copy of the card will have to be scanned and sent (due protection can be taken to ensure security of cvv2 code).
I want to know what are the steps that needs to be taken to ensure that we the merchants have better than a fighting chance to win these cases. You know in our case there is no shipping and therefore no delivery signatures from the client also.
I had one customer who booked, went, stayed, got back home and charged back.
I dont mind asking customers to jump a few hoops as overseas customers have to undergo lots of government formalities.
Also do you think there is a chance of forming a central agency for the hotel industry that everybody can pool in resources to find these high risk customers and either outright deny service or ask them alone to jump through hoops. Is there already any agency like that?
Sorry for presenting more problems than solutions. I am hoping that we can put our collective minds together here.
I am definitely all in favor of forming a coalition in the hospitality industry to try to force the credit card companies to clamp down of CC fraud.
Realistically though, I don't see the hospitality industry having the backbone to follow through on threats. For example, a decision by Hilton to not accept Visa cards any more until Visa cleaned up its policies would probably hurt Hilton more than Visa. Plus the publicity would alert the common masses as to how easy it is for them to dispute their credit card charges, making the siutation even worse in the short-term.
However, I do like the idea of a central database of CC deadbeats that all hotels and reservation agencies have access to. They could access that database and decide whether or not to accept a credit card from that customer based on past chargeback information. Actually, this is certainly a system that the credit card companies could AND SHOULD implement, the same way we can do AVS checking and decide whether or not to proceeed with the charge. It's a similar system to what eBay and other online sites have for their members. There are lots of rating sites for hotels/merchants, how about a rating site for customers! (Then again, it's so easy to get credit cards that a scammer can just stop using one card after getting too high of a "risk" rating and switch to a new one. So the system would have to tie into a central agency that got data directly from Visa/MC, AMEX, Discover, etc.,instead of the individual issuing banks.)
As far as giving customers hoops to jump through, that will often backfire. If you make it too difficult for them, they will just go and book elsewhere.
As far as what you can do, we ask for a signed fax with copy of passport in certain situations (if the card holder does not match the guest name, if the total charge is over $1,000, or the address or IP address is from a high risk area like Africa or Russia). We also ask the hotels to make the guests sign a check-in form (although they often don't).
And of course we wont be making all the customers jump through hoops, (We do get a fair share of returning users.) only the big ticket reservations. And i am thinking of implementing a discount for the customer if they do a wire transfer. Else if they want to use a cc then they will have to accept the added baggage.
We are not that worried about fraud as we call up each customer prior to accepting the payment and only on verification do we proceed to accept the payment and confirm the booking. And as fraudsters do not benefit mightily from our industry as such we are a little more confident. I mean whats the point reserving a hotel in India if you are not going to benefit from it. And if you do plan to come here and stay, you really deserve to be pounded as you cant easily pull off a passport fraud and a Indian visa fraud and finally at the hotel you have to be the person who booked right?
And we do not collect the whole money up front. Just the cancellation charges. That is if the customer cancels, the money is not refundable as we have already sent it to the hotels. After convincing the hotels to accept our method of doing bookings as it reduces their overhead too to send back part payment to us (then we send it back to the customer), we just cannot go and inform the hotels that the customer issued a charge back and if they could extend credit.
And just 1% charge back is the difference for us between closing down and being in business. We are looking into increasing the price for overseas bookers and informing them that a discount can be given only if they follow through our hoops. If your time is more precious then pay a premium to cover for those 1% who cant take personal responsibility for their commitment (coz we dont know if you are them). Of course all this will be stated in a feel good, warm fuzzy language but the gist will be this.
Sorry for this rant any thoughts would be welcome.
But when push comes to shove, the credit card companies don't care, especially if it was e-commerce purchase. Their attitude is that if the customer still refuses to pay, then they are not going to be caught in the middle- the merchant has to get the money directly from the customer through other means. Which pretty much contradicts the main reason why we accept credit cards in the first place!
Almost all of our chargebacks have been from the U.S./Canada as well.
I have come across sites where you can list your customers that have carried out chargebacks, the URLs escape me though