ARC Changes Chargeback Policies in Light of COVID-19

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ARC’s COVID-19 Chargeback Policies Changes

The Airlines Reporting Corporation (ARC) is an organization that provides ticket transaction settlements between airlines and travel agencies. Part of ARC’s function is to the management of debit memos and chargebacks. With travel bans, customers being unwilling or unable to travel, and the postponement of events, the travel industry is under pressure to make things right with customers and handle disputes. In light of the challenges COVID-19 has brought onto their partners, ARC is making changes to their debit memos and chargeback policies.

ARC Changes to Debit Memos and Chargeback Policies

No Action on COVID Related Debit Memos

ARC announced it would not be taking action on any debit memos that involve a flight canceled by an airline or government as a result of COVID-19 or debit memos that are related to a passenger compensation dispute resulting from COVID-19.

This announcement means that ARC will not use the Agent Reporting Agreement (ARA) or threat of termination to enforce debit memos that are related to COVID-19. While ARC will not hold travel agencies liable for the memos, airlines may still enforce all types of agency debit memos. ARC explains, “All decisions on debit memo issuance, validity and resolution remain, as they always have, at the discretion of the airline. ARC does not have the authority to enforce, regulate or waive the issuance or payment of agency debit memos.”

ARC is encouraging agencies and airlines to work towards a resolution of any debit memos to protect the travel agency’s relationship with the airline.

Extended TRS Grace Period

ARC is extending the Ticket Resolution Services (TRS) compensatory fee grace period to 45 days until further notice. This will start with debit memos loaded on April 9, 2020.

No ARC Chargeback Fee

In an attempt to help their customers manage the costs of the influx of disputes, ARC has stopped charging the ARC Pay chargeback fee starting April 9, 2020, until further notice. ARC noted that this waiver does not apply to travel agencies who have been notified they are subject to ARC’s Alternative Business Requirements Agreement (ABRA) program.

You can read the ARC’s announcement here.

Preventing Disputes Recommendations

During this time of increased dispute attempts and pressure on merchants to retain revenue, it is vital merchants take proactive measures to prevent disputes. One of the proactive steps that travel agencies can take is to communicate with customers and have customer services readily available for customers that reach out.

ARC recommends that “travel agencies find all possible ways to proactively contact customers to inform them of the agency’s policy around credits and refunds.” By reaching out to the cardholder instead of waiting for them to try and find a solution helps prevent them from turning to the chargeback process. By continually communicating with the cardholder, it shows them that you are here and happy to help them. When there is no communication or your customer service is hard to get a hold of, working through an issuing bank can seem like an easier option for cardholders.

Keep in mind that card networks ask/require cardholders to reach out to the merchant before issuing a dispute. But the networks will usually consider a cardholder attempting to contact customer service and not being able to get through, as the cardholder reaching out to the merchant. This means that now more than ever, having proactive and available customer service and communicating with cardholders is a vital tool in preventing disputes.

For more information about COVID-19 card network updates and best practices, you can check out our COVID-19 resources page here.

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