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How to avoid tenant disputes and reversals

How to avoid tenant disputes and reversals

When credit authority is given to either a managing agent or third party payment processor for collecting a tenant’s rent payments, it is important to understand both how disputes, reversals and chargebacks are handled as well as ways to avoid them.

First, it must be made clear that a bank account or a credit card holder can dispute a transaction up to one year after the transaction date if they suspect the transaction is unauthorised or fraudulent. In the event of a disputed transaction, the banks adhere to industry standard procedures, where they request proof of documentation from the agent or payment processor showing authorisation from the customer raising the dispute.

Capture8There are no hard and fast rules in these investigations; a disputed transaction will typically be deemed as unauthorised, fraudulent and subsequently charged back when there is not enough evidence provided to the bank to show it was legitimate. Where this situation occurs, the agent will be required to cover the disputed amount, as the onus is on the agent to hold the relevant authority to collect these payments. There are variations to this, but this is the most common scenario.

The procedure for any dispute or chargeback is the same regardless of whether it is a direct credit authority through the managing agent or through a third party payment processor.

So it is important to ask yourself these few simple questions when dealing with your tenants:

  • Do you follow all standard procedures and protocols when processing a tenant’s lease application?
  • Are you cross checking the tenant’s bank statement to ensure bank details provided for a direct credit are correct?
  • Have you verified the tenant’s signature?
  • Have you checked the account name matches the application?
  • Have you checked if you’ve acquired two signatures for a joint account?

The above may sound like a lot, but it is these simple extra steps that make a difference. If you take the initiative to check the above as part of the lease application process, you can avoid the time and cost impacts of chargebacks and reversals on your office.

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