YapStone Blog

“Are You Prepared? The Vacation Rental Security Quiz” written by Heidi Sobranes, Director of Global Chargebacks, YapStone.

There is fraud risk everywhere on the Internet, and with their skyrocketing popularity, vacation rental websites are no exception. If you are a vacation rental homeowner or property manager, and use an online marketplace to rent out your vacation home, it’s important not to take the platform’s security measures for granted. While advanced technology can usually spot fraudsters, there are also actions that you should take to ensure that you do not become another fraud statistic, or be taken advantage of by your renters looking for loopholes in your rental contract.

To see if you are maximizing security measures to prevent being victimized, take this short quiz on the vacation home rental process:

1. You have listed your vacation home online and chose to use the online marketplace’s rental agreement. What is your next step?

A. Accept the agreement’s terms and move on; it’s the marketplace’s job to police these transactions. If something goes wrong, it’s on them to make it right.
B.    Double-check the agreement to make sure the financial numbers are fair and then accept.
C.   Go through the agreement with a fine-tooth comb, to the point of memorization.
D.   Find a lawyer to help you decipher the terms and conditions of the agreement.
The correct answer is C. There are some refund or cancellation policies that are fairly significant and may get you into trouble if you ignore them. For example, many agreements have a 30-day cancellation policy, where the renter receives all their money back if they cancel 30 days before the date they are scheduled to arrive at the vacation home.  However, these policies tend to overlook a common scenario: The renter secures the home only a couple of weeks before the scheduled arrival and then cancels the following week. Because the reservation was originally made inside the 30-day cancellation window, it is impossible for the renter to adhere to the cancellation policy. While you did not force the customer to book their stay at the last minute, you are still at risk of losing the amount your renter paid. This is because the card associations (ie Visa, MasterCard) hold the merchant responsible for making sure their cancellation policies are clear. This renter that both booked and cancelled their stay with you could dispute the charge with their credit card company, which will result in a “chargeback,” or a forced refund back to your renter.

With answer A, it’s important to note that these agreements, at best, tend to be written in a simple fashion that doesn’t get very specific in order to meet the basic requirements of all marketplace users. This can leave you at risk of falling victim to loopholes. At worst, these provided agreements seek to minimize the website’s responsibility if something goes wrong. Read through the agreement you use with a Devil’s Advocate point of view. Play out the worst possible scenarios when looking over your rental policy to understand where the risks are.

2. You receive an online request from a prospective renter. The renter seems to be credible and provides a credit card for payment. What is your next step?

A. Accept the payment. You listed this property to make money, not to care where the money comes from.
B. Perform a background check. You want to cover all of your bases.
C. Ask a couple smart follow-up questions to make sure this person is a good fit. Remember, a renter has a lot of options, so you don’t want to blow a transaction by taking up too much time deciding on them.
D. Request an interview in person or via Skype before renting. You want to make sure your renters are who they say they are.
The correct answer is B. It’s a good idea to have a checklist of verification steps and complete them for each renter to protect yourself and your property from nefarious renters seeking benefits at someone else’s expense. Ask questions to get to know them, and get their contact information. Conduct a Google search of the renter’s name to make sure they’re a real person. Chances are, he or she will have a social media page or may be listed on a company website. Have they made any statements that are inconsistent with what you find in your Google search? Use the white pages, or Spokeo, to conduct a reverse look up of their phone number, email and address. Does the contact information belong to your renter or are there unexplainable discrepancies? If you are satisfied that your renter is legitimate, have them send a picture of him/herself with their ID card. These simple and easy checks will help you prevent losing money from a fraud chargeback (your renter using a stolen credit card and the true cardholder disputing the charge with their card issuer) and, quite possibly, damage to your property.

3. You’ve accepted the renter’s payment, and they are set to arrive at your vacation rental home. What is your next step?

A. Leave the key under the mat and leave them to it.
B. Give them your contact info and tell them to check in with you when they’ve arrived.
C. Pop by and meet them.
D. Ask for further proof of identity.
Sorry, this one is a trick question: It’s C and D. Definitely do a face-to-face check-in, and when you do, ask to see their ID again and the card they used to pay the rent. Make sure it’s the one from the picture they sent. Also, ask to see the card they used and verify that the last four digits of the credit card match the online transaction. If it’s different, there may be something fishy going on.

4. Everything checks out. Then:

A. It’s OK to spend the money they gave you right away. You did your due diligence.
B. Check your cash reserves and expenses before deciding what to do with the money.
C. You’re free to spend that money once you’ve checked over the place after their stay and nothing is damaged.
D. Wait six months before spending the money.
While C makes sense, go with B to be safe. As previously mentioned, there may be language in your agreement that allows a renter to file a dispute. Timeframes can vary, but a renter may have 90 days or more after their stay to file a dispute. Make sure that you hang onto that money until you’ve passed that window of time. Better to make sure that you’re prepared for a dispute than having to dip into your savings to cover any refunds. I myself am a landlord, and my strategy is to try and keep one month’s rent in my bank account to cover the unexpected (renter tears up the carpet, breaks something, etc). Keeping the money in the bank for a period of time prevents me from suffering NSF fees or not being able to cover the monthly expenses for the rentals I have.

So, there you have it. While we property owners more frequently hear about renters being victimized (i.e., the renter being defrauded by a fake listing), it can happen to the property owner too. Be sure to thoroughly read your rental agreement and ask questions about anything that is unclear. On the renter side of things, make sure you take the steps available to confirm their identity and payment prior to them staying in your home.


For more information on Chargebacks, visit: http://vacationrentpayment.com/chargeback-best-practices