At the recent Helloworld Owner Managers Conference in Vancouver, we had the opportunity to talk to many travel agents about their businesses - what they love about their careers, what they love about travel, as well as what challenges they face. Running a business isn't easy, and many agents have had to deal with unforeseen circumstances over the years. Agents work hard to deliver first class experiences to their customers, so when things go wrong that are outside of their control it really hurts. Many of the agents we spoke to at OMC were kind enough to share some of their experiences with chargebacks to help communicate with their colleagues the pitfalls they might run into in the future - here are some of their stories.
A chargeback allows cardholders to dispute a transaction and request a reversal of funds from their bank or credit card issuer, typically due to errors like fraud, non-delivery, or billing mistakes. The bank investigates, and if it deems appropriate, refunds the customer by withdrawing funds from the merchant. The system itself is heavily weighted towards supporting the cardholder, providing them with very strong consumer protections, which unfortunately has an outsized impact on businesses like travel agents who act as sales facilitators for suppliers and trusted advisors for customers.
One client lodged a chargeback against the agent while they were still waiting upon the refund from the supplier – $21K pulled straight out of their accounts.
The client had their holiday booked with Kumuka South America Booked when they folded. The client lodged a chargeback against the agent to get their money back, but later received full compensation from the creditors. They refused to return the $16K to the agent that they got from the chargeback.
A ‘customer’ created a fake physical card in their name, using a chip and numbers taken from a stolen card. They purchased a $5K ticket and the agent got stung.
A customer booked a hotel on behalf of their brother. The customer later lodged a chargeback which the card company allowed – even though the Hotel provided CCTV footage of the customer’s brother staying at the hotel.
A client booked a hotel and airfare, using a credit card with included travel insurance. When they got to the hotel they lodged a chargeback claiming the room wasn’t booked. Even though the hotel confirmed they checked in – the bank pulled the funds and gave them back to the traveller. A few days later, Tempo Hotels went broke, so the hotel itself was chasing payment and early payment rates were out the window. All up this agent lost over $40K – and to top it all off, the booking started out as a price beat:
$15K for the dodgy chargeback
$12.2K lost when the supplier went under
and another $14.6K in repayments to the hotel
The cost of the agent’s time and frustration – PRICELESS
How long would it take you to recover the losses from any of these chargebacks? Depending on the amount, it could take you weeks to months to recover while balancing your margins and other operational costs. The good news is that there are ways you can protect your business.
When it comes to cases of fraud like the two mentioned above, often the best way to combat this is to utilise 3D Secure when collecting card payments online. While cards, their numbers and CVCs/CVVs can be stolen, 3DS helps protect you and the cardholder from unauthorised activity. 3DS requires the cardholder to authenticate the transaction beyond just entering a CVV – their bank will prompt them to enter a code to confirm it’s really them making payment. Completed 3DS checks shift the liability from the business to the cardholder and issuer in cases of fraud:
If a fraudulent transaction occurred on a customer's card, the merchant would typically be responsible for covering the chargeback and any associated fees.
When a customer successfully authenticates a transaction through 3DS, the cardholder and issuer take on the responsibility for any fraud that may occur.
3DS makes it easier to stop fraud in its tracks, and makes it more difficult for cardholders to pretend they didn’t make a payment.
If you’re already with Mint, 3DS is supported through our Virtual Terminal, Payment Links, and integrations with Resworld, Powersuite, VTO & Moonstride mid office systems (Tramada support coming soon). If you’d like to learn more – speak to our sales or support teams.
As these chargeback stories from our friends at Helloworld have demonstrated - even if you’ve done everything right, chargebacks can still leave you in a tough spot. They can come out of nowhere and become a costly burden to recover from. That’s why we built Mint Protect – to safeguard your bottom line and be that safety net you need when thing go wrong and they aren’t your fault.
Mint Protect provides guarantees against chargebacks relating to supplier insolvency, supplier non-delivery, and fraud, and is easily managed with fees factored into our merchant service fees – plus you get 3DS built-in for that extra layer of fraud protection. Speak to our sales team today to get started, or learn more about our solutions, or about why chargebacks such as these are challenging for businesses to successfully contest.