4 Types of Chargebacks Property Managers Face
Being a landlord can be rough. Screening potential tenants, handling maintenance and repairs and addressing late night emergencies all come with the territory. Now multiply that experience by a dozen or more apartments and you have the never-ending days of a property manager. The last thing a property manager wants to do is worry about their tenants’ rent getting tied up in payment disputes, but if you accept credit cards it will happen. Below are four common scenarios for rent chargebacks as well as a few tips for handling them.
4 Chargeback Scenarios
Free Meal Scroungers
You will come across tenants who can’t afford their rent and property management fees. Maybe they lost their job. Maybe they chose an apartment out of their budget range to begin with and now regret their decision. They might wait until they move out to file a chargeback, making it harder for you to reach them. Beyond a credit check and asking for pay stubs, there’s not much more you can do to prevent this scenario.
Like many apartment complexes, yours may have an application for all prospective residents along with an application fee. Some of these applicants will be rejected as a bad fit for the apartment based on their credit score, rental history or any number of legitimate factors. Out of revenge, the jilted applicant may then file a chargeback to recoup the application fee.
Confused Sugar Daddy
Some residents may legitimately pay rent with somebody else’s credit card. A common case would be college kids living in student housing. The card may belong to the renter’s parents, grandparents or some other close relation, who doesn’t recognize the charges when they see them on their credit card statement. The end result is a chargeback, even if the renter themselves fully expected you to get paid.
A couple could share a payment portal account with saved credit card information. After a breakup, one of them leaves the apartment. If they split on bad terms, one of the parties could use the other’s credit card information to pay the rent online. The aggrieved ex would then likely choose to file a chargeback because they never authorized the charge.
Tips for Reducing Chargebacks
There are several steps you could take to reduce the likelihood of the above scenarios leaving you out of pocket. They include:
- Make sure that all potential residents accept in writing that their application and deposit payments are non-refundable. The card issuer will want to see proof that the cardholder was made aware of the no-refund policy before they made a payment.
- For the same reason, include a blanket electronic payment authorization form in your lease packet that is signed by the tenant. Remove any ambiguity from the payment process.
- Ensure that you have the name and signature of every single person living in each apartment on each official lease. This will prevent situations where someone leaves abruptly and claims to have not authorized the last charge on their account. Instead, in cases where the tenant household breaks up, the leaving party will first have to ask you to remove them from the lease.
- Use a chargeback mitigation service like AcroCharge to fight payment reversals. We tailor make our solution to each client’s specific needs to achieve the highest success rates in the industry. Our win-win pricing means you assume zero financial risk when using AcroCharge. It can only help your bottom line.