Towing businesses face enhanced risks for credit card chargebacks due to the nature of our business. Customer emotions and experiences, rational or otherwise, when they use your towing services can cause challenges that you must prepare for to save time and retain the revenue you earned.
Special towing considerations
The on-demand nature of most towing services, the heightened emotions of the urgency and emotional stress of customers, and frequent card-not-present transactions increase the possibility of disputes and misunderstandings over charges. The situations around non-consensual tows only exacerbate these issues.
Chargebacks are unfair to you, so be prepared
Chargebacks can be one of the most frustrating challenges for towing businesses. Disputes feel unfair to towers. Despite your best efforts, your respectful team, and following the rules, chargebacks are never completely avoidable.
However, having strong documentation and practices in place can minimize your risk and protect your business reputation and revenue.
Mitigating Chargebacks: Best Practices
Preventing chargebacks starts with implementing strong payment policies and clear documentation. Here are seven key strategies you can employ:
1. Use EMV Card Readers
Always use chip-enabled (EMV) card readers to accept payments. This reduces fraud-related chargebacks by verifying the cardholder’s identity. EMV chip card adoption in the US in the past decade has led to dramatic reductions in card-present fraud. Although challenges still remain, using EMV enabled processing is an essential first step.
Avoid manually keying card numbers whenever possible, as this increases the risk of chargebacks.
2. Check Identification and Obtain Billing Information
While it may be unusual to request ID during a credit card transaction, there are situations in which it is allowed by some credit card agreements and state laws. For example, if the card is not signed, you can usually ask to see positive ID. Or if there is reasonable suspicion of fraud, you can request positive ID.
It is important to review your merchant agreement for accepting credit cards as well as state laws about requesting positive ID and what you can and can’t record for a transaction.
When appropriate based on the above, match the cardholder’s name with a valid ID. Collect the cardholder’s billing address and ZIP code. This helps verify the transaction and provides evidence in case of a chargeback.
3. Require a Signed Authorization
For non-consensual tows, require the customer to sign an invoice, receipt, or digital form acknowledging the tow and payment terms. This serves as proof that they approved the charge.
4. Provide Itemized Receipts
Clearly outline charges, including towing fees, storage fees, and any applicable taxes. Send an electronic or paper receipt to the customer’s email or phone.
5. Capture Photo Evidence
Take photos of the vehicle before and after, including its location and any visible signage. Retain copies of property signage indicating parking restrictions.
6. Maintain a Clear Cancellation & Refund Policy
Clearly state your refund policy on receipts and signage. If refunds are granted under specific conditions, outline the process customers should follow.
7. Document Comprehensive Service Records
Thorough documentation is key to protecting your business against chargebacks. Ensure every service is recorded with essential details such as dates, times, locations, services performed, and customer interactions. Clear, time-stamped records strengthen your case in the event of a dispute.
8. Staff training in customer service has an impact
Prioritizing customer satisfaction, clear communication, and clear policies are a combination that can reduce chargebacks. They are a combination of soft skills you can train teams for and policies you can print and communicate clearly to customers.
This small training and documentation policy investment can help lower chargeback risk, protect revenue, and maintain a strong reputation.
Despite your best preparation, chargebacks will happen.
Despite the best preparation and customer service, chargebacks are an unfortunate reality in the towing industry. With the right tools and best practices, you can significantly reduce their impact on your business.
See the companion blog post called Mastering Chargeback Disputes: Towing Industry Best Practices for guidance on best practices to rebut a chargeback you may receive.
