Effectively combating chargebacks in the car rental industry – Rental Operations


At the 2022 International Car Rental Show in April, Marty Williams of Chargeback Gurus presented a session titled “Winning Customer Payment Disputes the Smart Way” with Sandra Coyle of Fox Rent a Car. Here are some of the best takeaways from the presentation.

Knowing when to fight and when to sit down is important to define before you waste time, money and energy on payment disputes.

Photo: Ahmad Ardity/Pixabay

In the car rental industry, chargebacks can be a significant drain on revenue. In addition to transaction cancellation, they come with additional fees and hidden costs and can lead to even greater consequences if certain chargeback thresholds (0.9%) are exceeded.

Fox Rent-a-Car has worked with Chargeback Gurus for the past three years to reduce the chargebacks it receives and more effectively combat these unethical chargebacks. At the 2022 International Car Rental Show (ICRS), Sandra Coyle of Fox Rent-a-Car and Marty Williams representing Chargeback Gurus showed attendees the strategies they employ to effectively manage chargebacks and maximize revenue recovery.

The chargeback process works as follows.


  1. The cardholder disputes a charge.
  2. The issuing bank grants a chargeback.
  3. The merchant chooses to accept the chargeback or fight it.


  1. If they object to the chargeback, the merchant submits evidence.
  2. The issuing bank decides whether to cancel or maintain the chargeback.

Pre-Arbitration/Second Chargeback

  1. The bank can reopen the case based on the cardholder’s information.
  2. The merchant can accept the chargeback or present new evidence.


  1. The merchant can appeal an improper decision to the card network.
  2. The card network will make a final decision on the case.

Winning Refunds

According to data from Chargeback Gurus, rental car companies that fight chargebacks internally only win 37% of the time on average. In contrast, Fox Rent-a-Car wins 79% of its chargebacks. Additionally, car rental companies often fight less than half of their chargebacks, while Fox Rent-a-Car fights 91%.

Part of this is because Fox Rent-a-Car has gone to great lengths to ensure customers are served appropriately, thereby reducing legitimate chargebacks.

“It’s very important to understand … when to fight and when not to, and what processes you can change to make sure you win more,” Coyle said.

The top three challenges facing the car rental industry when it comes to chargebacks are:

  1. Chargeback for customers who do not show up.
  2. Customers Disputing Incidental Charges.
  3. Improve customer service and transparency.

It is important to have as much documentation as possible to use as evidence when fighting chargebacks.

Pay attention to win rates and reason codes more than anything else, Marty Williams, Chargeback Gurus, advises attendees at an ICRS 2022 session. - Photo: Ross Stewart, RMS3Digital

Pay attention to win rates and reason codes more than anything else, Chargeback Gurus Marty Williams advises attendees during an ICRS 2022 session.

Photo: Ross Stewart, RMS3Digital

“Anytime you communicate with a customer, it’s imperative that your system has a timestamp,” Coyle said.

Ninety-nine percent of the time, the cardholder themselves aren’t documenting any conversations, so your documentation is going to trump their verbal response.

Businesses can create invoices for any additional charges on a rental. When a car needs to be cleaned, for example, you can create a separate invoice with cleaning details to prove that the service was performed.

Coyle added that Fox Rent-a-Car includes photos of the area that needed to be cleaned with the invoice, providing conclusive evidence to fight any chargebacks due to the additional charges.

Prevent chargebacks and improve customer retention

Every chargeback tells a story, so if you look at your chargebacks and understand why they happen and you start seeing the same stories over and over again, well, now you know you have a perfect opportunity to do something about it. .

We recommend that companies research the parts of their business processes or customer journeys that may lead to chargebacks and make changes to reduce or eliminate these issues.

If you go ahead and make these changes, you will not only reduce your exposure to chargebacks, but you will also increase customer satisfaction across the board. Not all of your customers are going to file a chargeback. They will simply decide not to rent from you anymore.

Chargeback data can be used by other parts of a business. When aiming to improve your Net Promoter Score, for example, data from chargebacks can provide insights into customers who might not contact you about their negative experiences.

Coyle said Fox-Rent-a-Car uses chargeback data to identify places where employees might not be communicating effectively with customers. Even though the business can fight these chargebacks and win, fixing the customer service issues that cause them leads to better long-term results.

The cost of chargebacks

Here is a breakdown of the various fees associated with chargebacks:

  • Chargeback fees: usually $15 to $25, but can reach $50.
  • Pre-Arbitration: Merchants may be assessed additional chargeback fees.
  • Arbitration: The losing party is charged $500.

While Fox Rent-a-Car maintains a chargeback rate of 0.42%, the average for the car rental industry is 0.75%.

Visa sets a maximum threshold for a merchant’s chargeback rate at 0.9%. When this limit is exceeded, what happens next may depend on the size of the business. Large companies are often placed in a watchdog program that requires them to take specific actions over a period of time and remove certain barriers in regards to reducing their chargeback ratios. Smaller businesses may not have the same leeway, and payment processors sometimes cut them off without much warning.

Chargeback Prevention Tips

Going deeper into more specific issues and solutions, in our ICRS session we discussed how permission issues can lead to chargebacks, especially when it comes to timeouts. Coyle said Fox Rent-a-Car ensures timely authorization transactions only for reservations and deposits. When an overstay occurs, the company submits a new authorization and contacts the customer by phone, SMS and email.

It is important to let customers know when they incur additional charges and to itemize these charges to ensure they are understood. But using a single line item for “incidentals and extras” can confuse customers and cause them to file chargebacks.

Coyle said Fox Rent-a-Car lists all the different types of additional charges in the rental agreement and asks the customer to initial each one. This helps ensure that customers remember accepting these charges when they are incurred. This practice also gives the company strong evidence to fight against any chargebacks when the customer claims to have been overcharged.

Businesses can review their chargebacks to determine which clauses of their contract they might want customers to appear separately. For online transactions, enter the customer’s IP address and proceed with AVS and CVV confirmation. This information can be used as evidence in the event of a chargeback.

Customers need to feel that you are transparent with them. Even if your terms were clearly defined before the transaction, if the customer feels cheated or misled, they can go to their bank to file a chargeback. So you’ve lost both a sale and a customer.

Greater transparency reduces chargebacks, increases brand loyalty and keeps customers coming back.

About the Author: Mike Cannon is a content writer for Chargeback Gurus, providing expertise on chargebacks, payments and fraud. He can be contacted at mike.cannon@chargebackgurus.com.

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