Chargeback Management

Property Management Chargebacks

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For many people, housing costs are their largest and most important monthly expense. To make it easier for renters to make their payments on time, many landlords and property managers allow various payment options, including credit cards. This can be a convenient solution for cash-strapped tenants, but it comes with a big risk.

Credit card payments can always be disputed and reversed through the chargeback process, and even when dispute claims are based on false or flimsy pretexts, it can be challenging to fight back and reclaim your revenue. What are property management chargebacks, and how can they be prevented?

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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.

According to recent statistics, about 6 million renters—15% of all households in the United States—are behind on their rent. 

Landlords and property managers, many of whom saw their revenue come to a standstill during the pandemic-era eviction prohibitions that have only recently been lifted, can make tenancy more accessible to renters and applicants by accepting credit card payments.

The problem is that 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. 

Before we go any further, it’s important to note the distinction between property management chargebacks and “tenant chargebacks." The latter term doesn’t actually have anything to do with credit cards. It refers to situations where a property owner pays for repairs that the tenant was liable for, and has to seek reimbursement after the fact. 

What are Property Management Chargebacks? 

Property management chargebacks are payment reversals tied to rent payments, application fees, and other transactions associated with housing expenses. When a chargeback is filed, the banks take the disputed funds out of the recipient’s account and return them to the cardholder. 

By law, any credit card transaction can be charged back if it is fraudulent or erroneous.

This is rarely the case with rent payments, but cardholders will make up false claims to get their bank to give them their money back, and sometimes chargebacks arise out of honest mistakes.

Whatever the reason, rent chargebacks can have a huge impact on property owners. It’s not like in retail, where less than one out of a hundred transactions might end in a chargeback. For landlords with smaller rental portfolios, even a single illegitimate chargeback can cause significant harm. 

Why Do Tenants and Applicants File Chargebacks? 

Current and potential renters may file chargebacks for any number of reasons. Valid chargebacks usually result from true fraud or merchant fraud, which are rarely applicable to housing-related payments. Property management chargebacks tend to 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. Here are some of the more common reasons why renters file these chargebacks: 

  • Their application was rejected. Most property managers 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. The revenue lost to these chargebacks is not significant, but the associated chargeback fees can be costly. 
  • They’re freeloading. 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. 
  • A cohousing situation is ending. Roommates and romantic partners who share housing don’t always end their shared tenancy on good terms. One party might use the other party’s credit card to make a rent payment, or the party who is being asked to move out might file a chargeback against a rent payment that they previously made. 
  • The tenant used somebody else’s credit card. Some tenants make their rent payments with credit cards that belong to a parent or other family member. If the cardholder doesn’t recognize the charge—or if they didn’t agree to cover the payment in the first place—they may file a chargeback. Unauthorized payments made by family members who were given access to the card are generally not considered “true fraud,” and should not be eligible for chargebacks. 

How Can Property Managers Fight Illegitimate Chargebacks? 

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


In the fight against fraudulent chargebacks, documents are your best friend. It starts with your application form, which should include a “no refunds” policy. Your rental agreement should be signed by every person who will be residing at the property, and every tenant should be made to provide written authorization for any electronic rent payments they might be making. 

What are the Best Ways to Prevent Property Management Chargebacks? 

It’s important to screen prospective tenants carefully before letting them sign a rental agreement, but you can never tell with perfect certainty who will or won’t end up filing chargebacks against you. 

One thing that can help is to maintain good communication with your renters, and work with them to whatever extent you are able when they find themselves having financial difficulties.

Granting an extension or waiving a late fee will usually cost you less than dealing with a rent chargeback.

Being diligent about obtaining signed agreements will not only help you with chargeback representment (if it comes to that), it can also serve as a deterrent against friendly fraud chargebacks, because the tenant will know that you aren’t leaving any obvious loopholes open. 


Property management can be a tough business, especially when you have to worry about rent payments suddenly vanishing out of your account. If you find yourself dealing with a high volume of chargebacks, it may be time to review your screening procedures and rental agreements, but that’s not all you can do. 

Sometimes, the best move is to work with a chargeback management company that knows your industry and has years of experience dealing with all types of chargebacks. The right company can help you come up with an effective chargeback defense strategy that will prevent avoidable disputes ahead of time and give you the knowledge and resources to fight back against fraudulent claims. 

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