OTAs, Let’s Talk About Disputes

Alex ForbessReason CodesLeave a Comment

There has been much growth for online travel agencies (OTAs). And one main factor for this growth is providing a seamless way to find the best travel deals for everything. After all, why would cardholders jump on numerous pages when they can simply compare prices, book rooms and search for activities all in one place?

As these multi-billion dollar enterprises continue to grow, so will the threat of receiving disputes. The impact of disputes will vary, depending on an OTA’s business model and hotel partnerships. But the outcome will be relatively similar: a chargeback will be initiated, and the OTA and affiliated hotels will lose revenue from the initial booking. We are here today to talk about three common disputes that affect OTAs, and how you can manage, prevent and resolve these disputes in real-time.

No-Show Disputes

You can look at this post in order to read something more descriptive about no-show disputes and chargebacks. Here, we are going to extend the conversation with additional advice.

No-show disputes are when cardholders dispute a fee assessed by a hotel for not showing up at their reservation. There are one of two scenarios that could have motivated the cardholder to contact his or her issuing bank. Either:

  • The cardholder claimed the booking was made by his or her stolen card information; OR
  • The cardholder made a legitimate booking and did not adhere to the cancellation policy presented by the hotel. He or she decided to dispute the ‘no-show’ charge with their issuing bank.

Each card network has its own reason code tied to no-show disputes. American Express provides an explicit reason code that addresses this dispute (see American Express C18). Here are some other reason codes OTAs should be aware of:

Card Network

Dispute Reason Code

Definition

Discover

AA

Does Not Recognize

MasterCard

4840

Fraudulent Processing of Transaction—Multiple

Visa

11.3

No Authorization

Visa

12.4

Incorrect Account Number

Visa

12.5

Incorrect Transaction Amount

Visa

12.7

Invalid Data

Preventing No-Show Disputes

It will be up to the hotel to decide whether they should charge a ‘no-show’ fee. And if they do, OTAs must disclose this fee before cardholders confirm a booking. It is likely that a hotel’s impression will be earned only on an OTA site. That means cardholders may expect OTAs to provide every detail about the hotel as the book a room.

For example, let’s say a cardholder found a hotel on an OTA site. He finds a hotel that meets his budget for a weekend trip to Oregon. He skims through the descriptions that outline the hotel location, the amenities and other things that he is interested in knowing. Then he notices a small (yet important) description that explains all the taxes and fees associated to the booking. This is where you can state whether the hotel charges a ‘no-show’ fee. It can be framed something like this:

Taxes and Fees Information
All displayed prices include sales taxes and service fees.
Please note that [TAX AMOUNT] will be paid at the hotel in order to pay a mandatory city tax.
This hotel does charge a ‘no-show’ fee. Failure to show up for your booking will result in a [FEE AMOUNT] charge to your account. You can cancel or reschedule your booking on our site if there has been a change of plans for your trip.

Responding to No-Show Disputes

In most cases, cardholders either forget about the hotel’s no-show fee or they have not thoroughly read the disclosure like the one above. This will be an example of friendly fraud, where a legitimate cardholder made a mistake that is not considered malicious. This form of no-show disputes can be easily disproved with a screenshot of the OTA’s description that outlines the fees associated to a transaction. It will be helpful to also provide the URL where the issuer’s analyst can find the description.

Furthermore, here are some additional evidence that should be provided along with the screenshot:

  • A transaction invoice
  • AVS and CVV data
  • Proof that the customer name matches the cardholder name
  • Policies that outline the cancellation and no-show procedures
  • Email confirmations of the authorized transaction

Not As Described Disputes

As it is stated, these disputes are filed whenever cardholders claim the service was ‘not as described.’ This is a very board dispute that can address more than one description and more than one party involved in the transaction.

There are at least three scenarios that can motivate a cardholder to file this kind of dispute. One may specifically address the OTA, another may specifically address the hotel, and the other may address both parties. We will give one example of each scenario that can foster a dispute.

OTA Scenario

Cardholders will view your site first before they (might) jump to their hotel of interest. That means you will need to describe exactly what the hotel has to offer. It is recommended that you periodically update your descriptions and revise your lists when necessary. If your description does not match the experience they earn during their trip, there may be enough motive for them to file a dispute.

Hotel Scenario

Like the OTA scenario, it is important to provide clear and comprehensive information about the accommodations and services. The main challenge hoteliers face is that they must deliver on the information they provided. This can range from housing keeping, lounges to even the events that are being hosted at the hotel.

OTA and Hotel Scenario

The main element that connects these two parties is information about the booking and the expectations of the hotel experience. The descriptions from OTAs does not have to match verbatim with the hotel’s description. But it must be consistent in describing what the cardholder can experience once they arrive at his or her room.

Here are some reason codes that are tied to not-as-described disputes:

Card Network

Dispute Reason Code

Definition

American Express

C31

Goods/Services Not as Described

Discover

RM

Cardholder Disputes to Quality Goods or Services

MasterCard

4853

Cardholder Dispute

Visa

13.3

Not as Described or Defective Merchandise/Service

Preventing Not as Described Disputes

As stated above, the main objective is to provide clear and comprehensive information about the booking and the hotel. Update your descriptions where necessary in order to ensure the cardholder that what they see is what they get—and more from the traveling experience.

Responding to Not as Described Disputes

Here are some evidence that OTAs can provide to disprove a not-as-described dispute:

  • A transaction invoice
  • AVS and CVV data
  • Timestamps and usage of the cardholder’s profile on the OTA site, if applicable
  • Screenshots of the description that challenges the cardholder’s merit for disputing the charge. The related URL should also be included.
  • For recurring bookers: Provide transaction history and highlight that no dispute had been previously filed for these transactions.
  • Related social media posts created by the cardholder. You will need to describe how these posts discredit the cardholder’s merit for filing the dispute.

Altered/Incorrect Amount Disputes

Cardholders who book via OTAs want the best deals. And sometimes those deals include discounts and loyalty programs that further reduce the price. All of this is great for OTAs since it increases the likelihood of recurring customers. But cardholders may feel compelled to file a dispute for an altered or incorrect transaction amount.

This kind of dispute is often tied to processing error reason codes, such as Visa 12.3. But instead of generally addressing the OTAs’ payment processing, the cardholder claims the OTA charged him or her the original the booking price, not the discounted price when factoring in discounts and/or loyalty credits. Here are some reasons codes that are tied to this dispute:

Card Network

Dispute Reason Code

Definition

American Express

P05

Incorrect Charge Amount

Discover

AW

Altered Amount

MasterCard

4831

Transaction Amount Differs

Visa

12.5

Incorrect Amount

While cardholders may have legitimate claims, there are some who may take advantage of an OTA’s discounts and loyalty programs. This is one example of chargeback fraud, where the cardholder submits a fraudulent dispute in order to earn a refund in the form of a chargeback.

For example, let us say I want to be mischievous and earn a quick buck from an (anonymous) OTA. I will make a booking for a hotel in Boston, only to then file a dispute to Wells Fargo. I will then access my mobile app to dispute a recent transaction with the OTA, and say they charged the wrong amount, as shown in this image.

We will explain how to respond to this kind of fraud further below. But here are some ways to help you prevent altered/incorrect disputes from being filed in the first place.

Preventing Altered/Incorrect Amount Disputes

Discounts never last forever, so it is important to remind cardholders when a good deal is set to expire. This may be something simple like a text caption that says ‘Book by Friday,’ such as Southwest’s Transfarency® display ads. Or it could be something personal like an email, stating how much cardholders could save if they book with an OTA.

With regards to loyalty programs, your payment processor should have flexible programs that allow you to offer what cardholders expect in return. And that is rewards for being a consistent and loyal customer to an OTA.

Responding to Altered/Incorrect Amount Disputes

Let us first explain how to response if a cardholder either:

  • committed chargeback fraud and is attempting to receive a refund via chargeback; OR
  • committed  friendly fraud and is simply unaware that the discount or loyalty credit did not apply during the transaction

Here some evidence you can provide for both scenarios:

  • A invoice that provides the data affiliated to your processor, gateway and ecommerce platform
  • For loyalty disputes: The cardholder’s customer profile that shows how much credit, or no credit, was available at the time of the transaction. If the loyalty credits did apply, provide evidence that show the cardholder was charged the correct amount based on the loyalty program.
  • For discount disputes: A screenshot of the ad, email and other related content that shows discount was not applicable during the transaction. If the discount did apply, provide evidence that the discount did take effect during the transaction.
  • For loyalty disputes: Transactional history that shows previous transactions were made, and that no dispute was previously filed before the current dispute.

How Should OTAs Manage These Disputes?

It takes time to manage these disputes, let alone respond to these disputes. It is counterproductive to manually provide data that can easily provided through automation. This includes data from your processor, gateway and ecommerce platform. And if your spreadsheet is unorganized, OTAs will run the risk of providing incorrect data to irrelevant disputes. That’s why it is most cost-efficient (and rational) to manage disputes through automation.

Let’s Talk About Real-time Resolution

The Chargeback App integrates with OTAs’ data sources, and that makes Real-time Resolution more possible than ever. Invalid disputes, such as those committed by friendly fraud, will be automatically managed and resolved when the App interacts with Visa Resolve Online (VROL). This will require no labor from your internal team, and they will have more time to focus on what matters most: helping customers book the best deals.

Furthermore, the App equips teams with automated actions to manage and resolve disputes. For example, let’s say the cardholder did file a legitimate dispute, and the discount did not take effect when it should. Chargeback Alerts will notify OTAs of the incoming dispute, and their team can preset partial or full refunds in real-time.

And for disputes that require more compelling evidence, the App’s response form will guide you through the process. First, the integrations allow the App to pull data that is tied to the disputed transaction. It will all be presented on the top of the form. Your team will be able to provide additional evidence based on the reason code tied to the dispute. Every requirement is different, and the response form automatically adjusts in accordance to each reason code and the card networks’ guidelines.

Once everything is submitted, the App will perform DocGen, which will convert the form into a response document ready to be sent to your processor. Here is a GIF that shows this workflow.

Response GIF w/ Button

The whole point of automated dispute management is to save OTAs time, lower their dispute ratio and improve their win rate. Feel free to contact us to learn more about the App and Real-time Resolution. You can also request a demo the showcases more of the App’s features. Until then, we hope that we helped improve your current dispute management method.

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