How to win chargebacks and friendly fraud attempts.
Mitigate the risk of friendly fraud in hospitality.
What is friendly fraud?
Friendly fraud occurs when a guest makes a legitimate purchase or booking but later disputes the charge with their credit card company, often resulting in a chargeback. This can happen for several reasons, such as forgetting about the transaction, misunderstanding the charge, or intentionally taking advantage of the chargeback system.
Reasons guests might attempt friendly fraud
- Unsatisfactory experience: The guest had issues with their room and the hotel’s policy did not allow a refund.
- No show reservations: Guests might not show up for their reservation and dispute the charge, claiming they were unaware of the hotel policies.
- Non-refundable bookings - guests may dispute charges for non-refundable reservations, claiming they never authorized the payment.
- Unauthorized guests: Some guests might argue that they were unaware of additional charges for extra guests or services.
- Amenities and services disputes: Charges from amenities such as spa services, mini-bar items, thinking complimentary breakfast is free, and checking out later than scheduled checkout time.
As guests realize how easy it is to get a free stay by disputing the charges, they will take advantage and abuse it.
How to fight chargebacks and friendly fraud?
- Digital records - During the pre-arrival process, guests must verify their identity (name, photo, and ID), and confirm policies by signing. This ensures guests are informed about the rules and makes it harder for guests to claim they never stayed at the property.
- Give them a 5-star experience: Ensure you respond to guest inquiries immediately. Use AI to automate responses to common questions.
- Documentation for proof: Document everything from reservation details to guest information and detailed receipts and invoices. Make sure guests are aware of what they purchased and any potential charges. Highlight cancellation policies clearly.
- Proactive Communication: Encourage guests to reach out to you first before contacting their credit card issuer to resolve any issues directly.
- Train staff: Train your staff to handle disputes and complaints, making guests less likely to file a dispute.
Turn the tables on friendly fraud and protect your property from unwarranted chargebacks.
Time is one the greatest asset and one of the things that [Akia] has helped us out as a property tremendously.
Stephanie P.
Performance Marketer
Time is one the greatest asset and one of the things that [Akia] has helped us out as a property tremendously.
Ethan Fishbane
Director of The Front Office, Prince Waikiki
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