How Travel Merchants Can Hold the Line Against Chargebacks

As travel bans are in place and we’re all self-isolating, travel merchants have been thrown into a tailspin as vacations and business travel have stopped.

Written by

Corepay

Last updated on

December 29, 2024
Uncategorized

Now that travel bans are in place and we’re all self-isolating, travel merchants have been thrown into a tailspin as both vacations and business travel have come to a stop. And while some states are talking about lifting their stay-at-home orders in May, we’re not sure what that will bring or how long it will be before travel resumes.

Of course, chargebacks may be a big problem, especially as some travel providers like the airlines were holding onto people’s ticket money and not giving refunds, despite the airlines canceling their flights. When an airline cancels a flight without any other options to get to your destination — which United says is within six hours of your original scheduled arrival time — they’re legally obligated to offer you a refund.

Travel merchants have been thrown into a tailspin during the COVID-19 crisis.Except United has been trying to avoid giving refunds, even when they’re obligated to do so. (You can read more about it here.)

This has prompted some travel writers to urge consumers to issue chargebacks and dispute their charges. (You can read more about that here.)

Monica Eaton-Cardone, COO and co-founder of Chargeback911 was asked by CardNotPresent.com about why she thinks the travel industry will see a boom in travel industry chargebacks.

Given everything that’s happening in the world, Eaton-Cardone thinks that while most merchants will se a 20 percent increase in their chargebacks, the travel industry could see an increase by as much as 50 percent.

Of course, as Eaton-Cardone has said, there are some good reasons why the airlines are trying to hold onto their revenue.

When airlines have to run empty or nearly empty flights that were previously booked up, not only do they lose sales revenue from a consumer who can no longer make the flight and files a chargeback, but they must also pay a fee to cover administration costs of handling the chargeback. In contrast, when customers request a refund directly from the airline or travel agent, this could be processed before a flight takes place so that the seat can be resold.

Something that a lot of consumers don’t understand is that the cost of chargebacks always ends up back with them. Once the pandemic is over, the airlines that survive will have to dramatically increase travel costs in order to recover from this huge financial setback.

Eaton-Cardone said that customers have no idea what difference a refund can make in terms of the costs of a chargeback. She said a chargeback may be a more attractive option to a consumer, because then they don’t have to deal with the merchant. They don’t need to spend hours on a call, only to be told there are no options. Instead, it’s just a single phone call to their bank and it’s done in a few minutes.

After seeing many reports of angry travelers who are angry at the runaround, revised policies, and denials (this one and this one), it’s not surprising that customers are getting fed up and going immediately for the last resort option.

For smaller travel providers, like hotels, bed-and-breakfasts, and tour operators, they don’t want to be painted with the same angry brush that the airlines are being slapped with. For those smaller travel providers, there are a few recommendations that the smaller providers can follow to help cut back on chargebacks.

  • Provide 24-hour live customer service.
  • Streamline your cancellation policies and procedures.
  • Work with your customers and keep them happy. If they’re happy, they’re less likely to initiate a chargeback.
  • If you have to, give them the refund. Yes, it sucks, and yes, it means lost revenue. But you’ll also lose fees and time if you get hit with the chargeback.
  • And you’ll spend a lot of time disputing it, only to (probably) lose anyway, which counts as a strike against you when it comes to Visa’s chargeback monitoring programs.

In the meantime, you can also protect yourself. Make sure your cancellation policies are clear and easy-to-understand and that they’re made obvious to your customers at the outset of their bookings. If you don’t give refunds, tell them that when they book their travel with you. Follow it up with written correspondence to that effect.

Second, keep track of all correspondence and conversations. Keep all your emails and record all phone calls. And if the customer actually used your service but then tries to initiate a fraudulent chargeback anyway, you want to be able to dispute it. (See our article on friendly fraud in the QSR industry to understand what that looks like and how to fight it.)

Finally, be prepared to dispute any and all chargebacks that are needless and/or fraudulent. If you’ve fully explained your refund policies, and you didn’t change them after the customer bought your service, then you should be able to dispute any chargebacks being made unfairly or unethically against you.

Chargebacks are a regular-if-annoying part of business, but if you’re a travel provider, you’re looking at a lot more possible chargebacks this season. Corepay can help figure out how to prevent and reduce them. For more information, please visit our website or call us at (866) 987-1969.

Photo credit: Free-Photos (Pixabay.com, Creative Commons 0)

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