Thursday, August 10, 2017

Vacation Rental Booking Company Chargeback Scam

How owners of vacation rentals get robbed by booking sites

THE DYNAMICS

The private vacation rental business has grown to gigantic proportions.  Likewise several of the web based companies which offer booking and payment services for owners of such properties.  Among the most popular are Airbnb, VRBO (Vacation Rentals By Owner), Homeaway.com and Vacationrentals.com.  

All of these firms solicit the vacationing public online, with owner-provided photos and information of furnished and outfitted properties available for the vacationer to rent short-term.  The companies also take the booking, contract the ower, sub-contract the renter, collect credit card payments of booking fees, rent and deposits from the renter and disburse funds to the owners.  Of course, the companies keep a healthy cut in between.

Homeaway.com is a major player, which owns VRBO and Vacationrentals.com.  All three of these use one company to handle all payment transactions - Yapstone.com.  

THE SCAM

Recently property owners have seen an uptick in renters who spend time at their properties, then deny they ever did any such thing and charge back the payment made to rent the property, by denying it to their credit card issuer.  This puts then puts Yapstone in charge of dealing with contesting the case, as they act as the defacto merchant account for the property owner.

It's not too difficult to document that a renter stayed at such a property.  They execute an online agreement which provides their IP address.  They communicate online with the owner for access to the property by either keys or code locks.  Often coded locks on vacation rentals record when they arrive and depart.  They often text or email confirmations of arrival and departure, etc.  But recently, a new game appears to be afoot.

Renters are denying legitimacy of vacation rental charges to the booking companies, which pass it off to Yapstone.  Yapstone then contacts the property owner to request evidence of communications, etc. But even when the owners provide this, Yapstone has gone on to request such things as "wet signatures" and "copies of identification" of the renters.  Not only are such items not collected and not necessary to validate payment, but they are not collected by Yapstone itself when it collects the payment, and are not provided by Yapstone to the property owner from whom they demand it in order to protect the payment collected.  Yes, they actually require signatures that they themselves waived.

Owners are being charged back the credit card charges based on not being able to provide the evidence Yapstone itself fails to collect.  Further, the buyer does not contract the renter directly. Instead, the renter is contracted by Yapstone's partner, the online booking companies themselves. These companies bring the renter to the owner, not the other way around. Because the renter's agreement is not with the owner but with the online rental agency, the owner has no recourse which can be executed directly against the renter.  

Those property owners who suffer chargebacks from Yapstone have no way of knowing if Yapstone actually got paid, as the property owner is not privy to the credit card information collected by Yapstone, nor are they entitled to the information held on the borrower by Homeaway, VRBO or VacationRentals. It is conceivable that Yapstone and/or these booking companies could obtain the charge, without paying the property owner, using the smokescreen of an unverifiable phantom chargeback.

To make matters worse, these booking companies openly and knowingly operate in markets in which they know short term vacation rentals are either illegal, or require extensive licensing which their client owners do not have.  This willful blindness, coupled with the suspicious credit card activity is attracting the attention of class action firms, and as an interstate, online business is likely to do the same with the Justice Dept.

PROTECTING YOURSELF
 
Accepting renters from these services carries risk, no matter how much you document.  You might be able to reduce the risk by getting signed original confirmations of when renters arrive, together with the other verifiables mentioned above.  But even these can simply be ignored, leaving you with no way to effect recourse against a renter who had an agreement not with you the owner, but with the online broker who may not in good faith contest the chargeback.

If you've lost money in this way, get in touch.


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