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[00:00:00] Sarah: Hello. Welcome back for another great episode. My name is Sarah Karakaian.
[00:00:03] Annette: I am Annette Grant. And together we are–
[00:00:05] Both Annette & Sarah: Thanks for Visiting.
[00:00:06] Sarah: Let’s start this episode like we do every week, and that is sharing one of you, our incredible listeners, who is going to strshare.com and sharing their Instagram handle and your information so we can share you here on the podcast, to our entire email list, of course, on Instagram. Annette, who are we sharing this week?
[00:00:23] Annette: This week we are sharing Seascape Villas TX. Seascape Villas TX. What I want to mention here, I haven’t noticed this before, and if you have this luxury, please add this to your listings and to your Instagram handle. This particular property is award winning. It’s an oceanfront villa. And what I love is they put the architect, architect Hugh Newell Jacobson. I’m not familiar with this architect, but I’m just telling you it feels like whether it is or not, whether this is a big name architect, I would promote that if you had your home designed by a specific architect to champion that. Because it means that the home is custom in some way, shape or form.
[00:01:07] And then also, SEO wise, if this is a big architect, it could put you out there if people are looking for these style of homes. I think it’s definitely something to champion. I’m always like, oh my gosh, I would love if we could get a Frank Lloyd Wright house. There’s a few here in Ohio.
[00:01:24] I like saying that because people put those notches on their belt of like they stayed in those properties. But I think it just brings this extra level into your home. So if you have that, I would attach that to any of the information that you have on your home. And the other thing I want to mention about this Instagram is yes, is it beautiful?
[00:01:43] But they have another link in their Instagram bio because they also do property management, event planning, and a concierge. I like that they’re letting the people know that are looking at that one, like, hey, if you’re coming here, we might be able to help you with a special event or be a concierge because it is on an island.
[00:02:00] They might need a little bit more advice, and maybe it’s a special event, but I like that they link that and they can get that extra level of concierge or event planning that they need. And so these hosts have also turned their expertise into that business too of property management, event planning, concierge. So well done there. All right, Sarah, let’s get on to the episode.
[00:02:21] Sarah: All right, listeners. Today’s episode is– sometimes these episode concepts come from selfish reasons. This being one of them. I’ll never forget one day when I was talking to a colleague here in Columbus, and he was telling me about all of his chargebacks for his guest stays. We left the hangout and I was like, Annette, I have to admit something to you. I don’t know what a chargeback is. I don’t know what that is.
[00:02:46] At the time I had patted myself in the back of being a great host and having good systems and everything being just buttoned up. Well, not more than a month ago, I got my first chargeback, and of course it was on the property that Annette and I own together that I manage and I felt like such a failure.
[00:03:05] And when I combated the chargeback and I lost even though I of course, old valedictorian Sarah, overachieving, you should have seen the documentation I submitted to the credit card company. And they came back and said still not going to give you your money even though this guest did stay and he claimed that he didn’t. I then went on a rampage of trying to find someone I can bring on this show.
[00:03:28] And not only share with me how I can improve my systems, which this episode does that in spades, Keith, our guest talks about how it makes you feel like you’ve gotten robbed. It makes you feel like you’ve been violated because you have in a lot of cases. In some cases there are hosts out there that are not great hosts, but I know that if you’re listening to this podcast, that is not you.
[00:03:51] And so we found Keith, and he is a chargeback expert. He owns floridavacationrentallaw.com. So he has niched down into vacation rental law, and he’s very passionate about this topic. He also let us know that he’s very passionate about serving owner operators and the co-hosts. He’s very passionate about that because we need this education. We need this information. Annette, what was your favorite part about the episode that just made you say, wow, that was great?
[00:04:26] Annette: The preventative, the Harvard hunch.
[00:04:30] Sarah: Keith, welcome to the show. We are so excited to have this conversation with you.
[00:04:35] Keith: Thank you for having me.
[00:04:36] Annette: Well, let’s just dig right in. It’s not a fun topic, but it’s a necessary topic. Can you just dig into how you got started in the– you’re Florida Vacation Rental Law, but specializing in chargebacks. So can you tell us about getting into just vacation rentals, vacation rental law, and then specifically the chargebacks?
[00:05:02] Keith: Earlier in my career, I did a lot of work for and with Disney in the vacation rental space. So that’s how I got introduced to vacation rentals. And before you know it, my career became entirely vacation rentals and changed the name of the firm about five or 10 years ago from Keith Brady Law to Florida Vacation Rental Law and realized I want to focus on just vacation rentals.
[00:05:30] And one other progression of my career is in May of 2020. I handed over the reins to all the litigation to my son, Charles, and he’s a great litigator, and he practices statewide. I shut down my four offices and said, you can have it all. I just want to work with people that I can help with preventative care.
[00:05:55] Sarah: And what does preventative care mean to the vacation rental owner space?
[00:05:59] Keith: Well, it’s akin to preventative care and health. There’s a lot of things we can do that are pennies on the dollar to avoid long term consequences, much like a little bit of oatmeal and salad instead of open-heart surgery. So preventative care means having good agreements in place and good policies in place. The strong emphasis on diplomacy and avoiding conflict and deescalating conflict.
[00:06:30] Sarah: Keith, talk to us like we’re five. What is a chargeback, and why does it impact vacation rental owners?
[00:06:38] Keith: Okay, I’m not going to literally talk to you like you’re five. I think that will be a little weird. No. But let me say this, that chargebacks are heartbreaking. So it’s not just the money. It’s how betrayed we feel the same as if we were mugged, the same as if we were robbed to watch these people enjoy our beautiful house and find out that they got it for free because they scammed us.
[00:07:11] I’m not going to address the odd bird that’s entitled to the chargeback. That’s nothing that I see. Nothing crosses my desk. Crosses my desk is the heartbreak of I can’t believe the credit card company sided with them so unfairly. So my job is to come up with agreement terms and policies to help greatly reduce that. We can’t get rid of all of them, but we can get rid of quite a few of them, most of them.
[00:07:43] Annette: And for our listeners, some of them have maybe never encountered this heartbreak because a lot of times, let’s say they’re only listing on Airbnb. They may not have encountered a chargeback. I would say if you have a direct booking site, this is something that your exposure is really heightened.
[00:08:01] I believe on Vrbo, you can also experience a chargeback because you are the merchant of record also there. We just want to share with listeners, this is something that if you are thinking about, that direct booking site and enlisting elsewhere, this could be something that could impact you.
[00:08:17] Sarah: And Keith, correct me if I’m saying anything that’s not aligned, but also for everyone, a chargeback is someone books a stay with you. They check in. Like he said, they enjoy your beautiful home. They paid with their credit card. After they check out, either that day or the next day, you get on your Stripe account, the fact that, hey, this person said that they actually didn’t stay in your home and they did not receive their goods and services and we’re actually taking that money back from you.
[00:08:44] And then you have to try to work with a credit card company to prove that you did indeed do what you said you were going to do, and I can tell you that from my understanding of other people who’ve experienced this, the chances of winning, before we talk to Keith here, are hard. So Keith, did I explain that correctly, and did I miss anything?
[00:09:03] Keith: You explained it correctly. I want to add to it, though, with Airbnb and with Vrbo, if Vrbo handles the money, which they offer as an option, we have the equivalent of a chargeback, which is a platform refund. So what I say is going to apply the same to platform refunds as to chargebacks. And to a minor extent, good policy is good policy and it will also help with negative reviews.
[00:09:33] Now, technically, we can divide credit card fraud from chargebacks. So if they say that was never them and they never stayed there, we would call that fraud, where a chargeback would refer to a complaint that we stayed there but it was so bad. We’re entitled to our money back.
[00:09:51] Annette: Oh, that’s a good deciphering there. Have you seen, though, in all of your experience, a fraud complaint when that guest actually did stay at the home, but they were just saying that it was fraud, that their card was stolen?
[00:10:07] Keith: Yes. And we’re dealing with people that are, I want to say professional for context, and it’s an important part of their annual income stream like a part time job. They know what they’re doing. So they’ll book your house, and then they’ll pay with somebody else’s card. And it’s often what we call friendly fraud.
[00:10:29] It’s their grandmother’s card. It’s their separated spouses where they’re not divorced yet card. And it’s easy to talk about fraud. It’s a very simple topic. It’s about 3% of what we can cover today. So let’s talk about that.
[00:10:46] With credit card fraud, there’s two barriers to avoid credit card fraud. The first is that all last-minute bookings must require that you see their credit card and matching ID before they check in. Now, how do we define a last-minute check in? Somewhere between one week and three weeks out. The reason why most clients don’t check credit cards all the time is because the risk reward’s too low.
[00:11:16] Nobody has a stolen credit card that they can use six months later. They’re almost always reported within a few weeks. So one to three weeks is fine. I need to see your credit card and your matching ID. That gets rid of the fraud, including the friendly fraud.
[00:11:35] So that’s number one, is checking the card and ID. Number two is look for the telltale signs of wanting to divide the bill between two cards or one card’s declined and they want a second card. That’s because they have a list of numbers, and they don’t know which ones have been reported stolen yet.
[00:11:55] So as soon as one credit card is declined, you definitely need ID and the matching credit card to go. So that’s two things. And the third thing is taught at Harvard, and we’ll call it a Harvard hunch, although they don’t call it that. And I was excited to find what I’ve always referred to Harvard and Harvard’s training at the master’s level, I now found 3 professors at Harvard are teaching what I’m about ready to tell you and save you.
[00:12:28] Annette: Give it to us. Give it to us, the Harvard hunch.
[00:12:31] Keith: Yeah, we’re going to save $300,000 in tuition here.
[00:12:34] Annette: I’m here it. I don’t know if they’d admit me to Harvard.
[00:12:38] Sarah: Or me. It’s fine.
[00:12:41] Keith: There’s an old saying, I would never go to a school that would allow somebody like me to attend. What Harvard teaches, and of course they have all the empirical studies to prove it, your hunches are accurate. It’s not Christian intuition. It’s not a woman’s intuition. It is unorganized memories where you’re associating something somebody’s doing, something’s not right.
[00:13:06] You have a feeling about them that’s wrong, but you think the customer is always right. You think you don’t have proof and you don’t want to miss the money, and so you don’t go with your hunches. When you have a hunch not to trust somebody, don’t trust them. That’s it. Period. That’s a Harvard hunch.
[00:13:25] And an amazing follow up I did with my clients, I asked them when you have a chargeback, how often do you say I knew it? And most people, most, said 100% of the time. You had a hunch, but you didn’t act on it because you didn’t think it was intellectual. You can read the Harvard articles that will let you know it is intellectual.
[00:13:48] It’s old memories that are fragmented. You can’t quite put your finger on it, but you do know that you need to turn those guests down. So we’re done. That’s it. That’s all there is on credit card fraud.
[00:14:00] Sarah: I have a question, Keith. How do we check their photo ID and their credit card? Do we have to do it in person? Or if it’s weeks out, do we ask them to submit a photo? Is that legal to have a photo of their credit card? How can we do this?
[00:14:17] Keith: Well, the way most people do it is that as soon as they establish communications on the platform, they tell them, hey, let’s exchange emails. Now, I don’t want to be disrespectful to platforms that may discourage that, and they have good reasons to discourage that. You want everything online for record keeping purposes, but you do that, and then it’s through email that you request that information.
[00:14:44] It’s old school, back in the day, and it’s still possible now if your property is nearby that you just meet them upon arrival and you just message them and let them know, hey. Just like a hotel. And by the way, great thing to say, because customer service is an issue. We don’t want to look like a military campsite. We have hotel standards, both with service and policy. So just like a hotel, you have to show your ID and credit card when you get here.
[00:15:15] I like how you’re anchoring it to something that most guests are very, very familiar with. That’s the routine they’ve done after checking in at a hotel every single time. I will share that it’s probably difficult for most hosts to meet that guest in person, or I would even be off put, I’ll be honest, about a guest or a host asking me to meet them in person. So then would the next thing be for me to take a photo and email it over? Is that what you would ask next, Keith? It would be rare to meet them in person. I just threw that in there.
[00:15:49] Annette: Fair enough. Yeah, for sure.
[00:15:52] Sarah: I know Keith and for everyone tuning into, especially when we have our midterm guests stay in my lease agreement, I have them send me a picture of them holding up their ID next to their face so that I can prove that– it just helps me like, this is you. So I like this. I just wasn’t sure if we were allowed to have a photo of their credit card sent to us via email. But I guess as long as they send it they’re giving us their consent to do that. And then do I have to destroy that email in any sort of way? Or anything there that I should be concerned about?
[00:16:22] Keith: I love that question because negligence, what you can be sued for is for not storing it properly. So storing that information in any major commercial cloud-based device, Google Docs, Google Drive, any platform platform software like OwnerRez is all going to have what they call 8-layer encryption, and that’s considered safe.
[00:16:48] Otherwise, you don’t want to just leave that stuff floating around. Surprisingly, Gmail is more secure than most of these snazzy website developers’ security. So good security tip as an attorney, you’ll see this all the time, of course, I have a .com that I own, but a lot of people don’t know this.
[00:17:11] I can use Gmail with my proprietary website. So my at floridavacationrental.com emails are run through Gmail for security reasons. Beware of the little, we’ll host your site, and click here and there and quick put together a website. They’re not so secure usually.
[00:17:32] Annette: That tip right there–
[00:17:35] Sarah: That tip, that information, that advice from Keith is worth so much. Okay, Keith. So you said that’s how we combat–
[00:17:42] Annette: Friendly fraud.
[00:17:43] Sarah: Friendly fraud. What else is out there? What else do we need to watch out for?
[00:17:46] Keith: Well, that would be friendly and not friendly fraud. It’s a side note that when they commit fraud, it’s often with– just like you may have heard burglaries are usually teenagers and people that have been to your house. The fraud is usually some connection to the card. It’s less common that they have the data breach where they stole the numbers. That’s not as common as having your ex’s card that just got mailed and you decided to go on vacation.
[00:18:17] If you’re asking me what’s next, I think it’s to move on from fraud and onto how to avoid chargebacks.
[00:18:23] Annette: Yes, let’s do it.
[00:18:25] Sarah: Let’s do it.
[00:18:26] Keith: With chargebacks, the worst place, the least effective place to combat it is the place that everybody tries to combat it, and that’s stating your story to the platform again, or the credit card company. There’s about four or five other places to combat it that are actually a lot more effective.
[00:18:46] And the first one is to learn to turn down the occasional guest. Just again, borrowing from the idea of Harvard hunches, when you turn down guests, or, I know this sounds extreme, that’s why I paused, if they checked in and you’re like, this is bad trouble, and you just move to have them removed, and that’s a whole other topic.
[00:19:10] You can avoid an amazing amount of your liability just by saying, oh, no, no, no, we’re done here. You guys can have your money back and leave if you’ve got six dogs and putting up a party tent. We’re good. I have the right to decline business. I’m canceling, and you’re done.
[00:19:30] Setting aside that, it’s something that happens before they check in where they start asking you how well stocked the local distributorship is for beer and stuff. It’s like, well, what are you going to do when you get here? So here’s the first tip. I estimate that my model clients turned down 2% of their guests. That’s it. And the first reason you turn them down again is you have a hunch.
[00:19:55] You just have a feeling about these people. The second reason is because they are projecting. That’s a Googleable psychological term. They think you’re a scammer or a con artist only because of one reason. They are. So when they say, how do I know the code’s going to work when I get there? How do I know you really own the house?
[00:20:18] How do I know these pictures to the house? You can’t let them in. Because they are scammers. Period. If I’m wrong, I’m seldom wrong on that. The customer is always wrong. That’s my motto. I don’t care if I get rid of a few that were honest because the odds are extremely high, let’s say, 80% that they’re scammers. That’s why they think you’re a scammer. So that’s the first barrier.
[00:20:45] So the second barrier is what we call a groomer, and it’s a horrible term. People question, are you really going to compare them to child molesters? We’re all mad at these people, but, come on, that’s a little extreme. I know. I know. But I call them groomers because the psychology they exhibit is the same as a child molester. They start by making non demanding complaints. Remember the show Family Feud for anybody over 60 like me?
[00:21:22] Annette: I remember Family Feud. Come on.
[00:21:25] Keith: Yeah. Show me the top 10 stupid complaints they make when they’re just trying to establish ground to build towards a chargerback.
[00:21:34] Annette: Oh, okay.
[00:21:34] Keith: There’s a single dead bug. Ding. The pool’s cold. The fridge is warm because we left it open for an hour loading it up. The house has a little wear and tear. We smell something funny. There’s leaves in the pool. We’ll move you right away if there’s leaves in the pool. There’s construction nearby. The weather is bad. So those are the top answers.
[00:21:58] When they just start saying, I just thought you’d want to know, then what you know is that this is a high risk for a chargeback and a negative review, and a platform complaint. We’ll throw all three together. So we know that if we acquiesce, we start accommodating them–
[00:22:18] I’m so sorry. I’ll give you a free pool heat. I’m so sorry. I’ll knock a night off the rent. I’m so sorry. I’ll send somebody right out to look at the brand new refrigerator that you left open for an hour. The minute you do that, you’re sending them a signal. And just imagine the visual with a little bully on the street corner, raising a fist and he raises a fist and you throw some money on the ground and run.
[00:22:45] That’s who you are. Next time they see you, they’re going to raise that fist again. You just let them know– you write them a letter, dear guest, I want to make it very clear when you threaten me, I am going to give you stuff. So expect them to threaten you again.
[00:23:01] Sarah: If you permit it, you promote it, is what you’re saying.
[00:23:04] Keith: Yeah, so we want to be 100% nice, just to let you know, not leading up to being mean to them, but we can be firm and nice. So a little bit of a story here, I know, but I’m getting to my point. I’m emotional because I’m tired of these people. They’re unfair. And this is what’s on your mind on vacation, how to work me over. So we know what they’re doing so much so that when you have a chargeback over 50 percent of the time, they’ve already been compensated.
[00:23:34] Think about that. That compensating people elevates your risk of negative review, chargeback, and platform refund. So you can’t just compensate them. What you have to do instead is, for example, send them a highlighted version of the house rules or the rental agreement if you have one, and highlight some good terms.
[00:23:58] Here’s some good terms to have. The house is as is. Now, it might sound counterintuitive for a tough attorney writing great contract terms, but I put, the house may have a little wear and tear since we took the pictures, and all those other things. There might be a little bad weather, construction nearby, dead bug too. In Florida, we call that the welcoming committee, and the other things. I’ll skip the rest of the list.
[00:24:27] And we put that all in there, and we let them know, number three, besides as is number 1 number 2, we’ll disclose or maybe this stuff. Please understand. Number 3, if anything’s wrong with the property, please report it immediately, or you waive your right to complain later. That’s illegal.
[00:24:51] That’s called waiver. That’s some great stuff to put into your arrival instructions, your house rules, your rental agreement, wherever you can. And now, when they start saying the little complaints, you just let them know, well, as a friendly reminder, please see the attached house rules. If you wanted to address this as a complaint, then we can do so.
[00:25:18] But if you’d rather address it as a customer service issue, just give me a call, and I’ll do what I can. You have to get them on the phone. Nothing I say works if you communicate in writing, because–
[00:25:31] Annette: Ooh. But you got to explain that because everything that I’ve heard is like you want to keep everything in writing so you have it.
[00:25:38] Keith: That’s right. And you can do both. But I meant not that that’s important, but you’re right that that’s what everybody says. But written communications escalate conflict. We all learned, especially during COVID, how brazen people get on social media. In person, you just never get that attitude. So you have to get them on the phone, number one. We’re going to get it in writing. Don’t worry. We’re coming to that. Number two, you have to hear them out.
[00:26:09] Sarah: Mm-hmm.
[00:26:09] Keith: Now, at this point, they haven’t really asked for anything, so usually what you’re saying is just call me. And just have them call you and hear them out, and that will deescalate it. They realize that they’re not going to just keep texting and getting bolder and bolder.
[00:26:24] Some of what I say, I know it sounds theoretical, but this has been my whole life. And these things that sound theoretical aren’t. They’re based on 1,000 times, I’ve been through this. And if you pardon the storytelling, I’ll tell you a quick story.
[00:26:39] When I was in high school, my friend Jeff got into a fistfight in gym class, but first they stared at each other. Then they let each other see them and badmouthing them to a friend. And then they start pushing a little bit. And then they talk about their mother, and then they slap, and then they punch.
[00:26:57] Nobody walks up and punches. They’ve got to build up to it. And these people build up to it through written communications. You have to stop the written communications and get them on the phone. It stops it. So whenever you have a conflict you want to settle, you get it in writing. So that’s in the next step.
[00:27:17] That instead of groomers, we’ll call them scammers, they’re actually asking for some. If you don’t give me this, I’ll give you a negative review. By the way, that’s illegal. That’s called extortion. I’m totally dissatisfied that the microwave didn’t work the first day. The entire purpose of our vacation was microwave like we did with grandma, and you’ve ruined it.
[00:27:42] The whole vacation’s ruined. And everything always ruins the whole vacation. So once they say that, then you tell them, again, here’s what it says in writing, if you want to go the complaint route. All I can tell you is the house is as is, but if you want to address it as a customer service issue, pick up the phone and call me.
[00:28:07] And then you hear them out like Dr. Phil, and then you tell them magic words. Because you’ve been nice and because you’ve heard them out, you can actually tell them I know I don’t have to do anything.
[00:28:20] Sarah: Hmm.
[00:28:21] Keith: Because if you tried to say that earlier, I don’t have to do anything, I don’t have to do anything, you don’t know my lawyer, I will put you out a bit, they would blow up. But now you say, I’m glad I listened to you. I really understand your side of it. I know I don’t have to do anything, but if it will resolve the whole matter, what I’d like to do is buy you guys a nice lunch at my favorite little bistro or give you a discount on your next stay, or whatever, fill in the blank, whatever you think is appropriate.
[00:28:54] And they’ll say, yeah, that will settle it. Now, they might say that not really mean it. They might say, we’ll take that, but we might come back for more. But then you email them and now you get it in writing. Whenever you compensate them, if you don’t have it in writing, your risk of chargeback just escalated.
[00:29:12] If you get it in writing, your risk of chargeback just was eliminated. So thank you for the call, Mary. As discussed, just reply to this email, letting me know that, in exchange for the gift certificate that will resolve the matter in full, and I will get that gift certificate out to you this afternoon.
[00:29:36] They reply, and you give them the gift and you just eliminated your risk of chargeback. This works so well that some clients have learned to offer compensation even before they ask. Because to get that written that this resolves– oh, and by the way, very important note, this resolves all of your concerns, all of your complaints about the house, not just the one, not just the cold pool.
[00:30:09] And a little bit of money. You don’t get a sense of justice, perhaps, because we didn’t state this. But if you think about it, this plan is to give compensation to the last people you want to give it to, the people scamming you. But you do it because your lifestyle of stress just improved and you do it because financially you’ll have more money in your pocket in five years because you just eliminated it, eliminated the stress, eliminated the risk.
[00:31:02] Annette: I think I want the listeners to understand some of the amounts that you’ve seen with chargebacks, if you could go from the lowest amount to some of the highest extremes. Because our listeners are probably wondering, like, oh, this seems like a lot of work. But let’s talk about what you’ve seen come across your desk that really are crippling chargeback amounts.
[00:31:05] Keith: So I’d have to think about it. I’ve certainly seen charged backs for under 100 and over 100. I remember one guy, and he actually withdrew it. He seemed to not remember, but he just wanted to– he said, it’s just as one thing you shouldn’t have charged me, for $110 or something. So I’ve seen small amounts, and what we do on that is just ask him to please reverse the chargeback to protect my credit, and we’ll pay you.
[00:31:35] Annette: Okay.
[00:31:36] Keith: When you do, please do that for me. We agree with you, but please. And the biggest ones I’ve seen, I had a house– it’s a bad example because they were entitled to a refund. I wish they wouldn’t have charged back. The most expensive house I’ve ever been related to was $50,000 a night.
[00:31:59] And it was 1,000 square foot. 1,000 square feet is 50,000 square feet. It was 1,000 foot long beachfront property, and it went all the way through the bay side. And so, yeah, 50,000 a night. And after the hurricane, they couldn’t come. So the people just called the credit card and canceled, I think, for 389,000 or something like that. And I was like, ouch, why didn’t you just call and ask for a refund? I hate when they charge back without calling.
[00:32:34] Annette: So what do you suggest for those of us, they get the Stripe notification, and it’s normally just a notification from your credit card processor that there has been a chargeback? And if you haven’t encountered this before, they give you a certain amount of time to plead your case. Share with us, once we get that email about the chargeback, what are the best practices for us to try to win that back?
[00:32:58] Keith: Yeah, we definitely want to try and we can have success, especially with what I’m going to tell you now. So they’re usually an orange envelope, the dreaded orange envelope that says you’ve received a chargeback. So what we want to understand is that these places are factories. This goes to a room with not high-level employees.
[00:33:23] This is actually an entry-level position to review chargebacks, and they don’t spend a lot of time on them. As a matter of fact, what they get is black and white, so they don’t have anything in color. What they get is the first 10 pages of what you sent them. Very important to know. If you send them 23 pages and all your maintenance reports and pictures, they don’t see it.
[00:33:49] 10 pages, black and white. That’s all they’re going to get. And they have a paper called a rubric, and it’s going to judge whether or not you’re entitled to the chargeback. And about the first three questions, and I’ve seen Amex’s rubric, are– and I paused to put it in context. It’s really designed for like a Facebook scam.
[00:34:14] They want to know, were you able to contact them after you got the money? So you’re already doing well that, oh, yeah, I can reach the property owner. Okay. Did they have a grievance policy? They want to know number two. And the grievance policy says, yeah, if you see anything wrong, call me as soon as you find it, and we’ll do what we can to repair it.
[00:34:38] Did they have a cancellation policy? Yeah, they had a cancellation policy. So they’re going to look at some very basic information. The last thing is, did they have contact information? Can we reach them? Or are they gone? Is it some post that’s come and gone? And everything’s like, no, no, no, no.
[00:35:00] This looks like a real company. So now they’re going to look through this stuff. Now, just so you know, they’re not supposed to give a chargeback over compliant of quality, only for fraud. So not that we want to get in a lawsuit with Amex, but I have a friend that won 600 million against Amex because they’re not allowed to do those chargebacks for anything other than fraud.
[00:35:26] But they do. They do it for quality of services. They’re not allowed to do that. Just to be clear, we can’t fight Amex. That’s not what I’m saying. I’m just saying, isn’t it interesting that the law is on our side?
[00:35:39] Annette: Mm-hmm.
[00:35:40] Keith: And so they’re going to read very little of what you write. So don’t tell them about your morality and your commitment to service and your super host status. They don’t care. None of that’s going to move them. All that’s going to move them is robots, like AI, the facts. This is what our agreement says. Here’s the pictures of the house. Here’s what they said. Here’s what we said. And that’s it. Just give them the facts, plain and simple. A lot of times, I don’t want to say a lot of times, but this is a good motivator.
[00:36:18] Certainly, sometimes people had an argument, but they buried it in 17 pages, not knowing these people are rated on how many they get done a day. So you might only get 30, 60 seconds on your case. Don’t think anybody wants to take 10 minutes and read your case. So in your first paragraph, your first half paragraph, you just give the facts.
[00:36:43] And personally, I’d like to add the following, I don’t know if you can help me, but please help me if you can now. I don’t say that lightly. I say that to every law enforcement officer, to every clerk of the court, to every credit card processor. And pardon me, if I’m overthinking it, but psychologically, these people are reading this is an outrage.
[00:37:07] It’s wrong. You don’t know my commitment to my house. That’s all they read all day, is they’re confronted all day. So when you tell them, I don’t know– let’s add a third thing. I know you don’t have to help me. Oh, somebody understands the power I yield. That felt good. But please help me if you can. Oh, please. Wow. I like this one.
[00:37:30] If you can? How dare you question the great and powerful laws? I can. I’m in charge here. And I find that, again, what sounds like untested theory actually isn’t. I find that good manners, write this one down everybody, help. Please and thank you goes a long way with the chargeback. Don’t think you’ve got your legal arguments all lined up and they’re going to read all your paperwork. They’re not. Just spit it out. Plain and simple. And that will help you hugely.
[00:38:04] Annette: I’m hearing this. I’m listening to this. I’ve never been able to win a chargeback to a point in one of my businesses, I stopped even replying. I just said, it’s not worth my time anymore. Can we win them?
[00:38:18] Keith: I understand that it’s that hard. And I agree, it’s the hardest place to win the dispute. I can say this, is it worth having our policies, have black and white, have 10 pages to spit out the entirety of our argument in the first half page to let them know we’re easy to contact? We’re here all the time.
[00:38:41] They had our information. We’re responsive. We had a grievance policy. We have a cancellation policy. And I told them this. They told me that. Here’s the pictures. I know you don’t have to help me. I don’t know if you can help me, but please help me if you can. Will that help? Absolutely.
[00:39:00] Annette: Okay.
[00:39:01] Keith: But again, this is our least effective strategy. The other two help a lot more.
[00:39:06] Annette: What are the other two?
[00:39:08] Keith: The turning down some clients.
[00:39:10] Annette: Oh, so getting ahead of the problem.
[00:39:12] Sarah: Being preventative.
[00:39:14] Keith: Yeah, preventative care. Yeah. But there is post chargeback things you can do. There’s actually three of them.
[00:39:20] Annette: Okay.
[00:39:21] Keith: The first is that you can appeal the chargeback.
[00:39:25] Sarah: Mm-hmm.
[00:39:26] Keith: And then it goes to an attorney, and that helps. Now, you can give a little more detail, and you can be a little more lawyer like to let them know exactly how firm you are in your position, you did a good job, and you think it’s wrong that they did the chargeback.
[00:39:48] The next thing you can do is, if you have an attorney, there’s two great things you can do. You can send them a letter letting them know, you committed fraud when you got the chargeback because you lied about what happened. And if you don’t pay up, we’re going to sue you, and we’re going to get attorney’s fees. But my client’s so nice. They said, even if you just pay half, we’ll drop it.
[00:40:14] So just to be real clear, say the chargeback was for $2,000 and the attorney charges $200 for the letter. We have to look at statistically like Wall Street. And that attorney sends out 100 letters for $20,000, and it gets back all of the money from 10% and half the money from 5%.
[00:40:45] Then that would be 30,000 return on investment for 20,000 spent. It makes sense. As a matter of fact, those letters are so effective that bringing it down to more personal numbers, say you did that letter 10 times in 10 years and you spent $2,000. On average, you should expect to get back, on the 20,000 you lost, about a third of it or triple your money on those letters.
[00:41:15] By the way, the last thing isn’t to sue unless it’s a whole lot of money. There’s not good money in a lawsuit. And by the way, there’s not good money, even if what you do is have attorney’s fees when you win.
[00:41:29] It’s still the wrong place to supplement your income. Well, if I win, I get attorney’s fees and my money. Yeah, that’s so stressful because the whole time now, if you lose, you not only don’t get paid, but you paid an attorney and their attorney. Attorney’s fee clauses, make it double or nothing, still no bargain.
[00:41:47] But what is a bargain is bluffing. And there’s a little joke there from a movie, but what you do is you just have the attorney sign a letter, just any little bluff. I just a notice of representation. I’m the attorney that’s going to be suing you. You do have 10 days to accept the final offer. Otherwise you can expect service of process, etc.
[00:42:07] Although you might only get a good response less than half the time, it’s still cost effective because the letters aren’t that expensive. And the old joke is you want to tell the people, if you don’t pay me now, you know what’s going to happen?
[00:42:26] What’s going to happen? Well, actually, absolutely nothing. I’m not actually going to sue. I’m just trying to see what I can get without a fight. But that’s all the steps. That’s everything you can do.
[00:42:38] Annette: Well, so hiring this attorney to write the letter, though, if these people are fraud and they probably don’t have the money, does that really help us? I’m just thinking this is a lot of work. Let’s say this person is already saying, hey, the place wasn’t up to snuff or I never even stayed there in the first place.
[00:42:53] It’s like, do we even have a leg to stand on to try to go and sue the people for the money for the chargeback? I’m just like, they’re already dishonest. They’re already committing fraud. Why do I think they’re actually going to take any time or care about my letter from my attorney that I’m sending them to maybe an address or an address that isn’t even theirs?
[00:43:11] Keith: Well, they’re probably not, and you’ll get no argument out of me over saying, I want three of these steps, everything from fighting the chargeback onward. Financially, it makes sense. From a lifestyle point, it doesn’t always make sense. Changing your own oil instead of going to Jiffy Lube makes financial sense.
[00:43:31] It doesn’t mean you want to do it. And if you do want to do it, let me know. So let’s talk about this for a minute. My passion and my brand, if you will, is preventative care. That’s literally in my slogan. And what I like to do is to focus in on that if we have, number one, a couple of methods to avoid fraud, number two, we’re going to turn down about 2% of suspicious people, we’ve just cut our chargeback risk down by so much, you’d be amazed, probably 50%.
[00:44:09] Now, when you add on to it, that when somebody’s making complaints without asking for anything, I’m going to get them on the phone, and if somebody’s going to complain, I’m going to compensate them, even though I don’t have to, and I don’t want to, I’m going to compensate them because I just want it done with, and there’s good money in it.
[00:44:30] And let me digress. I hate to leave the flow of the list, but remember, when you emphasize, I don’t have to. It’s as is. So if you want to go the customer service route, you don’t have to compensate them that much. They no longer want a free vacation because you got them on the phone and reminded them it’s as is.
[00:44:49] So that’s the fourth thing. If you said, I’m going to stop there, fine. But if I take an hour to fight a chargeback, it might help. I have clients that went over half of their chargebacks, so you might want to try it before you decide it’s not worthwhile. Appealing chargebacks, I have clients that do that.
[00:45:09] Frankly, that one’s less successful. And then as far as the letters afterwards, remember, if it’s a 9,000-dollar chargeback, if it’s a month stay, or it’s an 800-dollar a day unit, now when you spend a couple hundred bucks, the question is, am I going to pay 500 on attorney for two letters just to make up a number?
[00:45:31] Am I going to pay 500 on an attorney for a one out of 10 chance I get back half of my 9,000 added to a one out of 10 chance I get half of all of it back? So all of a sudden, 500, like a lottery ticket for some odds I might get 4,500 or nine grand makes sense. If it’s only a 800-dollar chargeback, all of a sudden those numbers don’t make sense.
[00:45:59] So I don’t want to get too logical, too mathematical, because what I’ve learned, and I know it sounds very unprofessional, but what I’ve learned is that my client’s barrier to success is stress. It’s not finding a nice house, decorating it nice, getting it rented, making money. It’s none of the traditional business concerns.
[00:46:20] It’s that some of them wonder, is it worth it with the way people are treating me? So remember that varies greatly by market. If you’re in a market like Miami, you’re going to have a lot more complaints than if you’re in Boone, North Carolina, where apparently the nicest people in the world, according to what I see when I go there.
[00:46:40] So I don’t judge people on what they want to do, what they don’t want to do. There’s a list of five-plus tools that you take a la carte. And to be frank with you, a lot of my clients don’t squeeze every option out to get the money. They just don’t want to be embroiled with the frustration and the anger and the worry about going through all this fighting again.
[00:47:05] And this preventative stuff knocks it down, but if I said that the three preventative methods cut the liability in half, I would be understating it. It works a lot better than that. And a lot of clients just leave it that. They don’t even bother once there’s a chargeback there. They’re done with it.
[00:47:24] Annette: Right. I think that’s probably the biggest lesson for today’s show, is the feeling that you’re going to have when you get that chargeback. When it does happen, most of the feelings are going to be, I think you said enraged, a gut punch. You used some really great terminology at the beginning, but I think that’s what we need to share, is that they’re not alone on an island.
[00:47:48] This happens to hosts everywhere, and really emotionally figuring out what toll they’re going to let it take on them stress wise, their bank account. They can do what they can try, but most of it is in that preventative. I know that kind of what you’re saying is maybe complaining about the property is the chargeback. What if someone is stating they didn’t show up there? It was fraud on their account, but the guest did come to the home. They did stay there?
[00:48:14] Sarah: Annette’s asking, Keith, because this happened to us. And just to give everyone, everyone likes to hear stories from Annette and me when we’re like, our life sucks too, guys, sometimes. So Keith, this guy booked directly from our Google search.
[00:48:28] They found us on Google. They booked directly with us. I did not have the policy in place where I need a photo of their credit card with their photo ID, which that is going to change today. and so he stayed. And then the next day, Stripe alerted me I got a chargeback and they said it was fraud, that the guest never stayed there.
[00:48:47] I did take the time– I printed out the smart lock with his code. It’s unique to his stay. Only he gets it. I submitted that along with our communication, before the stay, but they still came back and said no, we’re siding with the cardholder that this was fraud and then Keith, he tried to book again. And when we declined his stay, he was like, why did you decline my stay?
[00:49:12] We were like, because you owe us $780. That’s why we declined your stay. It blew my mind that he tried to book with us again. And then we said, hey, we try to get him to honest up and pay us for that initial say and of course he ghosted us after that, and I didn’t pursue it any further than that. I just told it’s the cost of doing business at this point. And then that is when we actually started searching for a chargeback expert. If this is happening to us, we–
[00:49:38] Annette: How can we prevent it?
[00:49:39] Sarah: How can we help our listeners? So that’s why Annette’s asking that. It’s like, if we can prove they were there and that was their reasoning for the chargeback, is that common with your clients? Does that happen often?
[00:49:49] Keith: Yes, most people don’t implement preventative care until they have a bad experience. Makes sense. And a good trip to the doctor can get you eating some salads too. I understand. So yeah, it’s tough. And it’s amazing how they come back with some regularity. I never understood that either. I have no explanation for that.
[00:50:13] I see it regularly. But here’s the thing. The smart locks, which are wonderful, only prove that somebody entered the property. And it doesn’t prove who. The credit card and matching ID proves who.
[00:50:29] Sarah: Mm-hmm.
[00:50:30] Keith: And even if you had a ring doorbell and you had photographs, what are you going to do? Hire a detective to go to Ohio?
[00:50:40] Annette: There were a lot of things we were thinking too.
[00:50:42] Sarah: We had some extreme sides, Keith.
[00:50:46] Annette: Okay, so Keith, I have to ask one more question. It’s been like on my mind since you’ve said it. And I know a lot of hosts are going to have this. How can we reframe or rephrase the as is? You’re saying, like the property comes as is. And I’m here for that. But how can we just restate that in our house rules or in our rental agreement?
[00:51:10] Because as is feels really like, well, what’s this mean? Get as is. Because I know as real estate investors, when you go online and you see that Zillow listing that says as is, you’re like, oh, this ain’t got no toilet. It ain’t got no wall. How do we say as is without saying as is?
[00:51:27] Sarah: She wants to say it with a hospitality tone.
[00:51:29] Annette: Yeah, because I know our listeners are like, well, I can’t get on the phone and say, you know you rented this place as is. What’s another way to state that in our house rules in our rental agreement that the chargeback would be defended?
[00:51:41] Keith: Right, so I’m going to start with the politician’s answer. I’m glad you asked that question. They say that even when they don’t have a good answer though.
[00:51:51] Sarah: It buys them five seconds.
[00:51:53] Keith: Well, I do have a good answer, though, and the first thing is that we want to talk about what they read versus what they don’t read, and here’s where you find your answer. If I want them to read it like house rules, it’s written like Frankenstein. I don’t say, please understand that we put a fire pit, but we really want you to be safe. Nobody reads it. We just put fire bad, and just very rudimentary. House rules should never be over about 40 words.
[00:52:25] No smoking. Please understand we put a lot of effort into this and we know some of you smoke. And while we want to respect it– nobody’s going to read it. So just no smoking. Simple as that. So when we don’t want them to read it and we only want to use it when conflict arises, then we bury it. So house rules, for example, could be something that’s very short. Arrival instructions might be very short, but then you might have rental terms or rental agreement where you bury it in a 700-word paragraph.
[00:53:02] Annette: Okay, so it’s not like the Zillow listing. Don’t bother anyone, as is.
[00:53:06] Sarah: All caps as is. Yeah.
[00:53:07] Annette: Okay, so that makes sense. It just needs to be in there, somewhere in that rental agreement, somewhere in your house rules, so when you’re going to this charge, you can highlight that and send it in your first pages of your dispute.
[00:53:18] Keith: In the middle of a long rambling paragraph, nobody will read it. Trusting that nobody reads it is such an effective contracting strategy that I have to check myself for moral reasons and make sure I only put in there what’s fair. And I do. I’m a big believer in only putting in what’s fair, but we could put anything in there. People will not read a long rambling paragraph.
[00:53:43] Annette: Right.
[00:53:44] Sarah: You know me. Everyone listening, you know me. I’m here for the hospitality tone as well. But at the same time, you’re not wrong, Keith, where it’s like, there probably is a scuff or two on the wall, and there probably is a fly that flew in when my inspector was closing the door and the fly flew in.
[00:54:01] So I also want to have that backup. We always say here on the show, a backup for your backup. That backup as is being in that rental agreement what we can say so that we can keep our prices what they are, that the property is, yeah, as is.
[00:54:18] Keith: You remind me of an important point that I was just getting ready to say something I learned not to say from my clients. I’m like, if anybody reads it and wants it changed, you’re like, well, we’ll remove the as is, and we’ll put in there it’s hotel quality and the pictures are accurate.
[00:54:36] And I’m like, oh yeah, we don’t want to miss a reservation. Guess what I found out? Yes, we do. Yeah, the only people that read the thing are scammers, and they want to change for a reason when they’re like, I don’t want to put in there– we put in there, why not? Your wave you’re right to charge back.
[00:54:52] You wave your right to negative reviews. Why not? Because it stops some of it. Hey, I’m going to charge you back if you don’t give me money. Well, you actually waived your right. Well, I don’t care if only 10% believe that credit card company isn’t going to listen to us. I’ll tell you that. They’ll give them the money.
[00:55:10] They just ask how much do you want. But I do want to say that when people are concerned about rental terms, it’s for a reason. My clients say, yeah, those people we accommodated them with terms. We realized they needed that edited for what they were getting ready to do.
[00:55:30] Annette: Right, right, right. For sure.
[00:55:33] Sarah: Keith, this has been an incredible conversation. I know that you have thousands of hosts after they listened to this episode changing and being–
[00:55:40] Annette: Some preventative care.
[00:55:41] Sarah: And I know a lot of them would love to reach out to you too. So how can our listeners reach out to you, find out more about you, and if they don’t live in Florida, can they connect with you?
[00:55:51] Keith: Sure, there’s only one thing I can’t do out of state, and that’s advise you on litigation. A lot of what we’re talking about is national law, things like credit cards, service animals, surveillance cameras. So that’s fine. And people can reach out to me, I welcome them, by emailing admin@– and that’s A-D-M-I-N as in administration, admin@florida.vacationrentallaw. L-A-W, like lawyer. .com floridavacationrentallaw.com.
[00:56:35] And they’ll get an invitation to schedule a free five-minute call. I get a lot of calls, so they’re only five minutes long, but it’s free. It’s good for business. Turns out people like free lawyers. And so I’m glad to do it, and I just make sure everybody understands I’m not doing this because I’m nice. That’d be very bad for my lawyer image. I’m doing it because it’s good for business.
[00:57:04] Annette: Awesome.
[00:57:05] Sarah: We love the honesty, and thank you for being so generous with the advice that you’ve shared here on today’s show to all of our owner operators and co-hosts that tune in every week. Keith, we really appreciate it. With that, I am Sarah Karakaian.
[00:57:18] Annette: I am Annette Grant. And together we are–
[00:57:20] Both Annette & Sarah: Thanks for Visiting.
[00:57:21] Sarah: Talk to you next time.
