How To Process Chargebacks

What to do when you get a chargeback notification email:

What is a "chargeback"?

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A chargeback happens when one of our members is initiating a payment dispute.  They have basically called their bank or credit card company and said that we have wrongly charged them and they refuse to pay.  Out of concern for consumer safety, any time a customer makes this claim the money is pulled back from the business and held by the bank until they can investigate whether the claim is valid or not.  

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If we process contracts with accurate and complete signatures (loops and swoops - no slashes!), and keep accurate records of client communications in Work It, the investigators often rule a WIN in our favor and restore the money they had temporarily taken back.  If we are missing signatures or documents, or it appears that cancellation or freeze requests have been ignored, the ruling can go in favor of the consumer, EVEN IF THEY HAVE ALREADY RECEIVED THE STRETCHES THEY ARE TRYING NOT TO PAY FOR. So let's keep the books clean!

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What happens:

• Usually first the customer contacts the studio about a billing error or misunderstanding.

• If they don't like the response (we usually politely explain what's happening in their account and reiterate our cancellation or billing policy).

• If they don't like our answer, they then contact their bank to initiate the chargeback process.

• We then receive the chargeback notification email, and our account is charged a bank fee, and we have 10 days to assemble then needed info on their account or the consumer automatically and permanently wins the decision.

Each dispute amount is debited from our account, along with a returned payment fee.

Assuming the dispute is invalid, our team of professional dispute analysts at Club Ready assists to defend the chargeback.  We have only 10 days for this.

To prepare the customer’s account for evaluation TAKE THESE STEPS ASAP:

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1.  Set a Task for you Regional Manager to cancel the agreement. This will prevent the account from 3rd party collections placement, should the disputed invoice age over 90 days past due.  DO NOT send email to notify member of cancellation - this may make them mistakenly think they have won the dispute or no longer owe on their account.

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NO LOST SHEEP CALLS

Make an ALL CAPS note in their notes section and also in their Key Note so practitioners do not make calls.  Their account credits are frozen while in dispute.

2.  Ensure all invoices associated with the chargeback remain ACTIVE. If they were cancelled along with the agreement, please reinstate them into active status.  (Even if previously paid, they will now show past due in red since the payment was taken back.  Any remaining credits in their account will be placed on payment hold and cannot be used until the account is made current).

3. Confirm that paper contracts and communication exchanged with the member OUTSIDE of the ClubReady system, has been uploaded to their files section.  Everything with our contracts is done digitally so unless there is some special circumstance, you should not need to do anything here.

4. (Optional) Create a merchant statement. If you would like the Issuing Bank to hear your side, please upload a document into the "Upload Files" section of Club Ready labeled “Merchant Statement”. They will use this as supporting evidence to assist in building our case.

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5.  Make a note in ALL CAPS in the customers Key Note AND in their Notes section that a chargeback is in process so other employees understand and can handle any calls the customer might make about scheduling.  

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6.  Verify that there is fully signed membership Agreement on file.  If there is, mention that in your notes.  Include any relevant extra details from phone conversations or in person in the Notes section for documentation. 

If there is not a signed Agreement in place, do not comment about it.  Take note of it as a hard lesson to train your team from.  We will likely LOSE the chargeback decision if we do not have a valid contract in place with a real signature. 

If payment for an Agreement is ever made by phone, we must have them sign their agreement on their next visit to the studio, so set an Alert and tag their upcoming booking so those in the studio can make sure to complete it.  [Create a new Agreement - Upgrade (to the same level as they are agreeing to) - select the Agreement to replace and click it so that it turns blue and shows it has been selected - set the date to begin the agreement for one day prior to the next invoice - have them sign this new Agreement].

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​5.  We must have these items completed no later than 10 days after receipt of the email.

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NOTE: 

If we lose the chargeback, the money will go from the bank back to the consumer and a note will be made in their Club Ready account noting the ruling.  Their invoices will show unpaid and the account delinquent.  They will have a $20 late fee and $25 returned payment fee also showing delinquent in their account. 

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When we WIN the chargeback, the money will automatically be credited back to the invoices that they disputed and they will show green and paid, however, the date paid will now reflect the date that the bank gave us back the money.  They will still have outstanding invoices for the late fee and the returned payment fee.

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If they wish to return to stretching again, they must bring their account current, including paying the fees that are on their account because of what they did with their bank.  We have already paid these fees and lost this money.  If they have a desire to return to us as a member, escalate it to the Regional Manager if they are asking for the fees to be waived.​

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IF WE ARE WILLING TO LET THE FUNDS GO TO THE CLIENT (highly unlikely):

If we as the Merchant do not wish to pursue the disputed case (rarely, if ever happens), we cancel all invoices associated with the chargeback. The bank will close the case, prompting the cardholder’s Bank to return the funds to the customer.

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