This article will guide you through understanding some of the top reasons for customer chargebacks. This will show possible reasons why customer is disputing the charge, the documentation needed/used to send back to the bank, and a brief explanation of what the card companies are looking for and why.
Please Note:
- While we would like to fight and win every chargeback dispute that we get, sometimes we’re prohibited from doing so, and other times we know the fight is lost before it even starts. Learn more about when ClubReady will not fight a chargeback here.
1. Services Not Provided / Merchandise Not Received / Non Receipt of Merchandise
Most Common Reasons:
- Club ceased doing business
- Club was temporarily closed (i.e. weather, renovations, cleaning)
- Staff was unavailable for scheduled service, such as, a Personal Training appointment or a Specialty Class
- Club merged with another location, and member was unaware.
Documentation used to prove member received services:
- Signed agreement
- Check In History and Booking Log
- Club Notes and email correspondence (if provided)
- Email Blast notifications that informed member of temporary closure
- Email notification stating club is merging with another location, or is permanently closing
NOTES:
- Credit Card Companies require the club to prove services were available at the time the payment was taken.
- The signed agreement will normally disclose all policies for rendering services, including scheduling and cancellation.
- A current Booking Log and consistent Check In History will show the member has used the services provided by the membership.
- Emails and notes will show the club communicated to the member regarding cancellations or closing.
2. Cancelled Recurring Transaction
Most Common Reasons:
- Contract is in Auto-Renewal, and billing monthly after the initial term of the contract is Paid In Full
- Member did not understand the length of agreement
- Member did not understand the cancellation policy
- Club did not properly cancel the agreement
- Club did not follow the cancellation policy
Documentation used to provide member did not cancel, OR, proving WHEN the member cancelled:
- Signed Agreement
- Check In History and Booking Log
- Signed cancellation (or freeze, if applicable) form
- Email correspondence between club and member regarding cancellation
- Rescission letter and certified tracking information, and a copy of the dated post mark
- Club notes, showing member and club communication regarding cancellation reasons and terms
- Medical or relocation documentation and date of receipt
NOTES:
- This reason code is both the easiest and hardest to win. If the member is still within the initial term of the membership (and the club did not receive documentation to cancel for rescission, medical or relocation), the contract is not eligible for cancellation and the club most likely will win the dispute.
- If the member has filled out the cancellation form, or the club has record of the member using services AFTER claim of cancellation, the credit card company will accept the dispute and the club will win.
- However, if the contract is in auto-renewal and the member is not using the services after the member claims to have cancelled, the credit card company will not honor the signed agreement as proof. If the member states they cancelled and the club cannot DISPROVE the claim, per regulations, the club has to accept the chargeback.
3. Transaction Not Recognized / Does Not Recognize - Potential Fraud
Most Common Reasons:
- Member believes membership is cancelled
- Member used another person's card to purchase membership (spouse, parent or significant other is primary cardholder)
- Club changed billing services and description of charges on CC statement is changed or different
- A change in the amount normally billed (i.e. the annual enhancement fee is paid along with the typical monthly dues)
- The member has a past due balance and the club collects the money by charging the card on file, to bring the account current
Documentation to show the reason for the transaction and proof of authorization to collect payment:
- Signed agreement
- Invoice and Payment receipt for transaction
- Club notes showing communication between staff and member
- Booking Log and Check In History showing member used the services.
NOTES:
- Providing documentation that proves what the transaction is for, and that the member acknowledged the terms and policies, is effective in winning these particular cases.
- Often times, simple miscommunication regarding the charge is what will prompt a member to initiate a chargeback.
4. Card Not Present - Potential Fraud / Fraudulent Transaction - No Cardholder Authorization
Most Common Reasons:
- Member does not recognize the charge
- Member believes the membership is cancelled
- Member used another person's card to purchase membership (spouse, parent or significant other is primary cardholder)
- Member is unaware of recurring billing
- A change in the billing description on the CC statement, due to a change in billing services
- Fraud
- Cardholder's information from the club does NOT match the bank's information
Documentation proving the club was authorized to take payment:
- Signed agreement
- Check In History and/or Booking Log
- Club notes showing communication between staff and member
- Email correspondence
NOTES:
- Since the payments for the membership are automatically drafted, this is considered a Card Not Present transaction.
- It is easy for members to consider this fraudulent, because they weren't present when payment was deducted.
- It is more difficult for the club to win the dispute as well, since the member can maintain revocation, meaning they did not approve the charge, regardless of the contract policies.
- Make sure the member is the cardholder or an authorized user, and that personal information is correct and verified.
- This reason code requires more communication documented, to disprove fraud. Good club notes and a well written contract are key to winning the chargeback.
5. Credit Not Processed
Most Common Reasons:
- Member is expecting a refund/credit but it is not reflected on CC statement
- Member believes the agreement was cancelled
- Amount of the charge is incorrect, or member was expecting a credit for the difference
- Agreement was previously frozen and reinstated without the member's knowledge
- Member did not properly follow cancellation policy
Documentation needed to show why credit is not due:
- Signed agreement
- Check In History and Booking Log
- Signed cancellation (or freeze, if applicable) form
- Email correspondence between club and member regarding cancellation
- Rescission letter and certified tracking information, and a copy of the dated post mark
- Club notes showing member and club communication regarding cancellation reasons and terms
- Medical or relocation documentation, and date of receipt
NOTES:
- This reason code is very similar to Cancelled Recurring Transaction, but it implies the member is aware of charge and has attempted to reconcile with the club, with no result
- The dispute rights are more relaxed than Cancelled Recurring Transaction, but is still difficult to win without proper documentation. The more often policies are discussed and communication is in writing, the better our chances to win.
- Check In History and Booking Logs are the best documentation, and show the member used the services.
- Emails and club notes are good ways to show the merchant was actively advising member of policies, and attempting resolution to issues
6. Not As Described Or Defective Merchandise / Quality Of Goods And Services Dispute
Most Common Reasons:
- Member was not satisfied with the club's amenities
- Personal Training sessions or Classes were unsatisfactory
- Member did not agree with policies in membership
- Terms and policies in contract were not sufficiently explained at time of purchase
- Billing terms were not adequately explained
Documentation needed to defend merchandise / goods and services:
- Signed agreement
- Signed cancellation and/or freeze forms
- Email documentation showing communication, explaining the services provided and/or terms of the membership
- Club notes documenting verbal and/or face to face communication with member, advising of policies in contract; or attempting to resolve issues with goods and services (PT sessions or classes)
NOTES:
- Even though the policy is disclosed in the contract, members often misunderstand it is their responsibility to schedule the classes and they are charged regardless of whether or not they use the services.
- Showing the CC company proof of usage and/or that the member signed off on the policy is important to prove they are responsible for the charge.
- Documentation is important to prove the club attempted to clear up any confusion to the terms of the membership, as well as take step to improve any problems with services provided.
7. Chip Liability Shift
Most Common Reason:
- EMV card processing standards
NOTES:
- Previously, credit card issuers were responsible for funds stolen during a fraudulent transaction. Now liability for fraud or payment disputes goes to whichever party is least compliant with the new EMV system.