How to Prevent and Win Airbnb & VRBO Chargebacks as a Host

May 30th, 2024

Chargebacks are a part of the vacation rental industry whether you take direct bookings or use sites like Airbnb and VRBO. The key is being prepared to face the challenge that arises – and that starts with knowing how these short-term rental sites will handle a dispute with your guests.

What can you do to prevent an Airbnb chargeback or a VRBO chargeback?

This guide gives you everything you need to know about the process along with some tips to help you stay on top of things should a chargeback arise.

What is a Chargeback?

Simply put, a chargeback is a demand from a credit card provider for a merchant to refund money in the event of a disputed transaction. A chargeback is different from a refund in that the guest goes through their bank rather than resolve the issue directly with you.

It starts when a guest reaches out to their bank to dispute what you’ve charged them due to fraud, dissatisfaction with their stay, or, in rare instances, simply an attempt to get out of paying.

The bank will remove the money for the stay directly from your bank account until the issuing bank determines who is in the right. They might side in your favor, returning the reversed transaction. Alternatively, the issuing bank may uphold the complaint of their client (your guest).

Chargebacks are a stressful experience for everyone involved, which is why some people shy away from direct booking websites and rely on sites like Airbnb and VRBO. Here is what to expect from the process if initiated via these platforms.

Chargebacks with Airbnb

When you list your short-term rental with Airbnb, they are the Merchant of Record (MOR). Because of this, they will be the ones responsible for communicating with the bank.

First, they will review the chargeback. Depending on the results of their review, they will decide whether to let the chargeback go through or try to dispute it.

It’s important to note that Airbnb can’t resolve the dispute directly. Chargebacks are initiated through the bank, and the bank will be the one to ultimately decide whether to side with the merchant or the guest. Airbnb, with your support, will simply be the one to provide proof and documentation to the bank when disputing the chargeback.

Chargebacks with VRBO

Airbnb has a relatively straightforward process when it comes to chargebacks, but VRBO’s process can depend on which payment processor you use.

If you use the payment processor native to the platform, then VRBO becomes the merchant of record. Their team will review the dispute and the process will proceed similarly to Airbnb.

Alternatively, you have the option to integrate with third-party property management software. In this case, you become the MOR which makes you responsible for reviewing and responding to the dispute. The process is similar to what you may expect from a direct booking website of your own.

5 Tips for Preventing Airbnb and VRBO Chargebacks

Of course, there are a few ways you can minimize or even prevent chargebacks from taking place. These five tips can help you decrease the chances of a chargeback or prepare you to win a dispute should one occur.

1. Clear, Prompt Communication

Make sure you have quick and completely transparent communication with your guests. All hosts would do well to proactively reach out to guests to set clear expectations surrounding their stay with you, which minimizes misunderstandings. If you’re faced with a dispute, respond to the guest promptly.

In the case of listings on Airbnb and VRBO, always keep communication within those channels so that they have a record of that conversation with the guest.

2. Guest Satisfaction

Set the stage for a successful stay by giving your guests accurate information. This means ensuring that listings contain accurate photos and applicable listing information, which establishes realistic expectations for the guest. Listings that oversell the actual property are more likely to disappoint guests.

Always stay on top of all property maintenance and repairs to minimize disruptions to their experience with your short-term rental. You can also take a look at our Airbnb host checklist for other amenities and upgrades that help you provide guests with an above-and-beyond rental experience.

3. Monitor Transactions

Always prioritize understanding the ins and outs of your transactions. If you can spot problems like duplicate transactions early, you might be able to proactively fix the issue before the guest initiates a chargeback. It’s worth the initial time investment to stay on top of things, even if it’s ultimately up to Airbnb and VRBO to help maintain the status quo.

4. Keep Records

In addition to monitoring your transactions, you should also maintain detailed records on the property. This can prove that you were diligent about resolving a guest’s complaints promptly or in a way that wasn’t disruptive to their experience. Those maintenance records can go a long way to avoid lengthy disputes.

5. Fraud Protection

Fraud protection is a crucial component of a short-term rental business. If you’re listed on Airbnb, you have limited control over fraud protection when guests make their bookings because you aren’t the merchant of record. This limits the extra authenticators you could use when guests make a booking.

Instead, the best thing you can do is only use Airbnb’s system and rely on their security and fraud protection. Don’t accept payments outside of their payment system. Otherwise, they will hold you liable since you operated outside of their rules.

Similar to Airbnb, VRBO has a built-in fraud protection engine if you use their payment processor. However, you can also become your own merchant of record and have the freedom to choose your own processor. Choose with care and look for payment processors with advanced fraud protection features, like PCI-compliant processes and identity verification capabilities.

Chargebacks with Other OTAs

With other OTAs, the chargeback process largely depends on who is the MOR. If you aren’t sure who the MOR is, investigate who is responsible for remitting taxes.

If the OTA is the merchant of record, the process will be similar to an Airbnb chargeback. They will be the ones communicating with the bank and you will have limited say. There’s always the risk that the OTA will accept the chargeback without even fighting to dispute it, which would mean money out of your pocket.

In cases where you are the MOR, you communicate directly with the bank instead of going through the third-party OTA.

The same chargeback tips listed above apply to everyone. However, if you are the MOR, you’ll have a greater degree of flexibility and control to choose a payment processor and set house rules such as cancellation and refund policies.

Get More Control with Ascent

Hosting via Airbnb can restrict how you run your business and your ability to dispute chargebacks. At the end of the day, you’re held to Airbnb’s payment options, rules, and capabilities because they are the MOR.

If you want to scale up your STR business, aim for 60 to 70 percent of your bookings to come through direct bookings. You get to keep more money while maintaining flexibility and freedom over payments and policies like refunds and cancellations.

Ascent Payment Solutions can help you collect the payment for your rentals while minimizing card processing fees. We are flexible and help you to find the exact solution you need at the lowest possible rates. If you’re ready to start processing direct bookings, contact us today to learn more about our services!