Many of our clients charge guest credit cards for damages, if there are any, and find that in most cases there are no issues. But occasionally merchants will see a dispute of the charge and, without the required signed documentation, you might receive a chargeback you can’t win.
For charges for damages, Visa’s regulations state that the cardholder must expressly agree in writing to pay the specific charges after the loss, theft, or damage has occurred, and after receiving all required disclosures and amounts from the Merchant.
In order to have the best chance of winning chargebacks for payment for damages, you would need to provide a receipt signed by the cardholder stating that he/she agreed to and authorized the charge to his/her card, before the charge was assessed, but after the damage occurred.
Other options available to cover the cost of damages within card association regulations:
1. Continue to process charges for damages, expecting to lose a certain percentage to chargebacks you can’t win. For some merchants, it is most desirable to keep their current procedures in place, especially if you decide that estimated losses due to this type of chargeback are in the tolerable range.
2. Offer guests Rental Damage Insurance, which covers most damages unless deemed intentional. There are several insurance carriers that work with the vacation rental industry.
3. Consider assessing a Booking Fee on every reservation up front. You can then pool the income to cover damages that occur. Some merchants find that this ends up being an additional source of income because they make more than they spend on damages.
4. Some merchants collect security deposits and return any unused portion after the unit is found to be without damages. If you choose this option, we recommend you use a payment method other than credit card (personal check, cashier’s check, money order, or cash) to collect the security deposit. This process can be more labor intensive but means that the card companies’ regulations regarding charges for damages would not pertain to your ability to cover the cost of damages.