Preventing and Fighting Property Management Chargebacks

Chargebacks are a growing concern for many property management companies. Whether you're running a residential rental portfolio or managing hotels, credit card disputes can undermine your revenue and introduce serious operational challenges.

Credit cards have long been used in hotels, but they’re increasingly used for rent payments and application fees as well. Regardless of the setting, these card-based transactions are vulnerable to chargebacks. Disputes may arise from fraud, miscommunication, or buyer’s remorse—but even in cases where the business has done everything right, reclaiming lost revenue can be difficult.

Let’s examine the risks, causes, and solutions associated with chargebacks for property management companies.

Both Rentals and Hotels Face Growing Risks

The past few years have been difficult for tenants as well as the property owners they rent from. The rising cost of housing, along with across-the-board inflation, has made it harder for people to afford their rent payments.

The most recent statistics, from November 2024, showed that 14% of U.S. renters had incurred a late fee sometime in the last 12 months.

Many landlords and property managers have chosen to make payments more accessible to renters and applicants by accepting credit cards, which increases exposure to chargebacks.

On the hospitality side, travel and lodging companies are navigating a different set of challenges. While consumer demand has largely rebounded, hotel operators and short-term rental hosts are seeing increased fraud attempts and disputes over incidental charges—especially when guests book through third-party platforms that make it harder to verify customer identity or enforce cancellation policies.

Whether you're managing apartments or hotel rooms, the problem is the same: with credit card transactions, there’s always the danger that desperation, confusion, or malice might lead someone to file a chargeback against a legitimate payment. 

Why Do Tenants and Guests File Chargebacks?

Current and potential renters or guests may file chargebacks for a number of reasons. Valid chargebacks usually result from true fraud or merchant error, but most property management chargebacks fall under the category of “friendly fraud.” 

Friendly fraud, also known as first-party misuse, is when a cardholder files an illegitimate chargeback based on a false or mistaken claim. Some common examples include:

Rentals

• Rejected applications. Most landlords charge an application fee to cover the costs of checking an applicant’s background and credit history. These fees are usually relatively inexpensive, but renters will sometimes try to get their money back with a chargeback, especially if their application was rejected.
• Financial difficulties. Tenants may dispute a rent payment if they decide to move out abruptly, or if they want to buy themselves some time before it becomes known that they can no longer afford to rent the property.
• Cohousing disputes. Roommates and romantic partners who share housing don’t always end their shared tenancy on good terms. A former occupant might dispute a previous rent payment out of spite.
• Credit card sharing. Some renters may pay with cards belonging to a parent or relative. If the cardholder doesn’t recognize the charge, they may dispute it, even if the card was used with permission.

Hotels

• Guest dissatisfaction. In hotels, a guest may have completed their stay but file a chargeback afterward, claiming that the room was dirty, amenities were unavailable, or the listing was misleading.
• Nonrefundable bookings. Travelers who don’t understand the cancellation policy or who are frustrated by last-minute fees sometimes turn to chargebacks to undo a nonrefundable booking.
• Incidental charges. Customers who object to additional charges for minibar purchases, smoking fees, etc. may file chargebacks, even when those charges are legitimate.

How Can Property Management Companies Fight Illegitimate Chargebacks?

The one good thing about friendly fraud chargebacks is that businesses have the right to challenge them. The process for doing so is called chargeback representment, and it requires that you submit compelling evidence to prove the chargeback was invalid.

In the fight against fraudulent chargebacks, documentation is your best friend. This starts with application forms (for rentals) or booking confirmations (for hotels) that clearly disclose refund and cancellation policies.

Signed rental agreements and authorization forms are essential, and hotels should retain itemized invoices, timestamps of check-in and check-out, etc.

If a guest claims they never stayed at your property, records that confirm their presence—digital key logs, IP addresses, or email confirmations—can make or break your case.

What Are the Best Ways to Prevent Property Management Chargebacks?

It’s important to screen prospective tenants and verify hotel bookings carefully, but no method can guarantee full protection from chargebacks. That said, a few proactive steps can reduce your risk:

• Use clear, transparent agreements. Whether you're renting long-term or by the night, make sure your policies on refunds, fees, and damages are clearly disclosed and acknowledged by the customer.
• Maintain open communication. Renters and guests are less likely to dispute a charge if they feel their concerns are being heard and addressed.
• Require proper authorization. Make sure the name on the credit card matches the person staying at the property, and document any exceptions in writing.
• Verify bookings from third-party platforms. When guests book through third-party companies, make sure you receive complete contact details and verify the reservation terms align with your policies.

Being diligent about documentation and customer communication won’t eliminate chargebacks, but it will put you in a much stronger position to defend against them when they happen.

Conclusion

Property management can be a tough business. Credit card disputes can drain your revenue, disrupt your operations, and add significant administrative burdens. If you're facing an increasing number of chargebacks, it’s worth reviewing your documentation, customer service procedures, and payment workflows.

In many cases, partnering with a chargeback management company that understands your business model can help you prevent avoidable disputes and recover revenue lost to friendly fraud. The right partner can tailor a defense strategy to the unique needs of your company, giving you the tools you need to stay focused on your core business.