Scam Alert! Online credit card payment disputes and scams

credit_cardsThanks to online credit card gateways, it has never been easier for guests to be able to book and pay for accommodation online, from anywhere.  The increasing number of transactions being processed via our PayBridge credit card gateway is testament to this fact.

However, as most of you are probably aware, there are risks involved when payments are handled online. For a B&B or guest house owner, the main risk is that you are dealing with a stolen card, or that the guest may charge back the money paid to you after they have actually stayed. To help you identify and reduce the risk of disputes, chargebacks and credit card scams, we put together some tips for your accommodation business.

Online (also known as Card Not Present) credit card transactions can be disputed for a period of 120 days from the service date (arrival date) of a booking. The most important thing you need to do, is get a signature for the online transaction as soon as you have the guest on site.

Some of the most common scams that could result in a credit-card chargeback are:

Common scams:

  • Non-valid bookings made purely for the purpose of getting an entry visa into the country. Watch out for bookings of two weeks or longer with a Yahoo or Hotmail address and a foreign telephone number.
  • Stolen credit card details. Watch out where the name of the guest doesn’t match the name on the credit card.
  • Fraudsters contact a guesthouse and advise that they are an agent wanting to make a large group booking. They then also request that other services such as air-fares be included in the credit card payment in return for a generous handling fee to the guest house. Or the oldest one in the book: The extra zero on the number (paid 50 000 instead of 5 000). In both instances, the “Agent” asks the owner to refund the “over”-payment. Of course, the true cardholder sees the charges on their card and charges it back — and you are out of pocket.

The basic rule with spotting a scam:  If it sounds too good to be true, it usually is!

Other reasons for chargebacks:

The bank (who issued the card) will always protect their own customer. It’s the same customer service you would insist on from your own side if you felt your own credit card had been misused. As a card holder, you can ask your bank to return the money to you (reverse the transaction, also known as a chargeback) if you think the transaction was fraudulent. This could happen with:

  • Unhappy guests who cite “Services/Goods not delivered” as the reason for the dispute (this is permitted in the United States and Germany). A way to avoid this is to get guests to sign on checkout (perhaps a copy of the invoice) that states that they were satisfied with the service delivery and goods or services received.
  • Outstanding refunds due to guests. A guest cannot charge just a portion of a transaction back. They will reverse the entire transaction.
  • Confusion over the reference on the customer’s credit card statement. Remember, after any long overseas holiday, especially to Africa, many people check their statements more carefully than they normally would. If they don’t recognise the reference on the statement, this may confuse them and cause them to charge back. Avoid this by pointing out what the reference on the statement will be, e.g. when your merchant account name is different from your guest house name, or if you are using our Paybridge system, where the reference will say Paybridge Accommodation.

General recommendations:


  • Listen to your instincts. If you receive an enquiry and your first reaction is to be suspicious, rather request that they transfer payment via alternative means. EFT (electronic transfers) cannot be disputed.
  • Always ask the cardholder to sign for the transactions that have already been processed on check-in (e.g. If the deposit or full amount had been paid in advance, online). And obviously, if you process a transaction on site, even if it is via an online gateway, get a signature — in the same way you’d be requested to sign for a credit card transaction in a shop. Our Paybridge system sends you a transaction notification that is accepted by the bank as adequate proof of the transaction if it is signed. Keep the transaction slips on file for the 120 day dispute period.
  • If a guest requests a refund, always process the refund in the same way the original payment was made.  If the deposit was processed via PayBridge, only refund them via PayBridge. (That is, never pay back in cash if the first transaction was via credit card.)
  • If you experience a series of non-valid bookings for visa applications’ accommodation proof, you could ask the guest to send a copy of their air ticket as well as the previously mentioned authorisation documents in order to confirm their booking.  However, as with all things in life, it is important to balance the “rules” against the outcome. You don’t necessarily want to set up a process that inconveniences all guests. Try to use discretion and common sense.

We hope that you will find this advice helpful and appreciate any feedback and experiences you’d like to share. The benefits of online credit card gateways far outweighs the time to set up an administrative procedure which will work for you.

Not yet offering a Credit Card Payment System? Try PayBridge:

PayBridge is an easy-to-use credit card service for small accommodation owners offered to NightsBridge clients. We make it easy for you to set up a facility where you take online credit card payments. This is crucial if you want to transact on the web.

How we try to minimise disputes for PayBridge users:

  • We keep a lookout for suspicious bookings and will flag those where, for instance, the name on the credit card is not the same as the guest name, or the ones we suspect may be fraudulent bookings. We will suggest that you ask for alternative means of payment within a specified time limit. And we suggest cancelling the booking if you get no response.
  • Remind guests when they pay via card that the reference on their statement will be “Paybridge Accommodation”.
  • PayBridge may only be used for accommodation and direct extras related to the guests’ stay.
  • If a high value transaction has been processed, we may request additional authorisation documents prior to the payment being transferred over to the guest house. This is necessary, because if we receive a dispute notice, we have to provide the bank with absolute proof that we dealt with the owner of that card and that we had the cardholder’s express permission to deduct the card in the form of a written approval. Without this, the cardholder is in a position to retrieve the money back from our account without us having any recourse.