How to Protect Your Auto Repair Shop from Chargebacks
Chargebacks are something that no shop owner wants to deal with. Your business relies on big-ticket sales, and chargebacks on those sales can squeeze your margins. When a guest goes through their bank or credit card company to get a refund, whether it’s because they were unhappy with the repair or not, it can leave shop owners in a bind where they might have to eat the cost of the labor, parts, and profit.
There are some cases where business owners can make a case against the chargeback, but it can be a lengthy process and most banks and credit card companies will side with the cardholder who’s making the complaint.
Protecting your business from chargebacks doesn’t start when the payment is processed, nor does it end with being reimbursed for a single chargeback. The best way to protect your business from chargebacks is to establish clear, open communication with your guests and adhere to a consistent and secure payment process.
Always Get Your Guests’ Consent Before Doing Work
When your service advisors take guests through the repair order, they should listen carefully to what the client wants; service advisors can never be too careful. If that means spending some extra time to review the repair order with the guest, it’s time well spent. A little more time spent on the front-end can save you a lot more time on the back-end. Once the RO is thoroughly reviewed, you can get either written or verbal consent for the work and the cost. It’s worth keeping in mind that it’s easier to document written consent.
Pro-tip: Use the Courtesy Inspection to Guide the Approval Process
Using a shop management system like Tekmetric where the guest can see the courtesy inspection and click through and select the work they want and the work they want to put on hold can set clearer guidelines for both the guest and the service advisor.
Establish a Transparent Relationship with Your Guests
Providing excellent customer service is good practice for any auto repair shop, but it also goes a long way toward preventing chargebacks. Let your guests know that you’re committed and dedicated to fixing their problem, even if that means taking their vehicle back into the shop if the guest is not 100% satisfied. If you make it clear to your guests that they can come back to you about any concerns, they are far less likely to go to their bank or credit card company first. And it’s better to do a little extra work to ease the mind of your guest than it is to give away an entire repair order for free or go through legal hassles.
Pro-tip: Set a Clear & Easy Return Policy
If your shop doesn’t already have one, consider establishing a clear and easy return policy and make it visible to guests via signage or with messaging on repair orders. Simple policies such as “If you’re not satisfied, call us, and we’ll make it right” can go a long way in terms of letting guests know they should go straight to you if there’s something wrong.
Use an Address Verification System (AVS)
Sometimes, chargebacks happen because a guest used someone else's card or because of a clerical error. Times like these are when safe-checks built into your payment process come in handy. If you’re processing payments over the phone, be sure to use an address verification system. An AVS ensures that the cardholder on the other end is who they say they are. Address verifications are crucial to dispute claims with a bank or credit card company when you’re unable to acquire an in-person signature.
Tekmetric’s payment processing platform, Tekmerchant, supports AVS, and we recommend using it to secure all over-the-phone payments.
Keep a Record of All Transactions
In order to protect yourself from any unreasonable chargebacks, keep a record of all approved work, signatures, and work completed, with images if possible.
Pro-Tip: Use a Software Management Tool that Automatically Tracks Transactions
Tekmetric makes record keeping and retrieval easy because it stores all repair orders and completed jobs within the system and allows for easy search of completed work. Technicians and service advisors can even upload images of repair work to track all completed repairs.
Other Best Practices When Processing Payments
Along with AVS, there are several other useful practices that can help your shop avoid chargebacks due to minor payment processing errors:
If you call for authorization, record the authorization code, date, time, credit representative’s name, and transaction dollar amount authorized.
Always enter the exact agreed-upon amount. Do not round up or down. Leave no discrepancies whatsoever on price between you and your guests. If the price must change due to parts, labor, or additional work that was not found during the inspection process, always get documented consent from the guest before adding more work and changing the price.
If a transaction is entered incorrectly, make sure that it is completely voided prior to reprocessing. This will help to avoid duplicate transactions.
When submitting sales receipts to your bank, only submit one copy. Don’t send a copy to two different banks. Multiple copies of sales receipts can result in duplicate billing and chargebacks.
For card-not-present transactions, collect the CVV or CV2 card verification numbers (the three to four-digit security code on the back or front of your guest’s card).
Avoiding Chargebacks Takes a Holistic Approach
Mistakes happen, even at the best shops. Building a relationship with guests is key to avoiding chargebacks. If your guests trust that you care and something does go sideways, they'll talk to you about it, and you will have an opportunity to work it out. Auto repair shops also benefit from having solid shop management and payment processing system that make it easy to prevent chargebacks long before the sale.
Want to track your business and establish clear communication with guests?
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Address Verification System to secure over-the-phone payments
Seamless integration with Tekmetric, which allows you keep a searchable record of all transaction