Operations: Avoiding Bank Chargebacks
We all got involved in the fitness business to make a difference in people’s lives and do something we are passionate about. However, at the end of the day, it’s still a business and we need to make money.
One of the biggest things I had to learn the hard way was about chargebacks. A chargeback is when a member disputes a charge on their account with the bank, so the bank refunds the money back to the member — and then gives you only five days to file a rebuttal. Banks can be very strict with the information they request in order to transfer the money back into your account. You can literally submit the correct information, but because of something silly, they will still side with the consumer. Here are a few things you can do to avoid losing out on revenue due to chargebacks:
- Clearly explain everything to the customer at the time of sign up. Make sure they are fully aware of how they need to cancel their membership. The easiest way to beat a chargeback is to avoid it altogether.
- Bullet point and initial multiple parts of the contract. Just about every line item must be initialed. If the member only signed the contract at the bottom or the top the banks can still rule against you in some states. We went totally paperless and unfortunately, because we didn’t have a section where the customer initialed next to the cancellation policy, we lost the chargeback, even though they signed literally right above the cancellation policy. At the very least, have them initial next to the cancelation policy or anything else that could result in a chargeback.
- If you use multiple pages for a contract, make sure each page is initialed and dated.
- Save all written communication with the member. I have emails from clients asking to cancel their membership and my response stating that cancellations can only be done in the facility. If you have this you can submit it to the payment processing company as well for further documentation.
At the end of the day we would rather not be so “corporate,” but we do need to protect ourselves and our livelihoods. You can’t make everybody happy and people will hate you when they don’t get their way. The best you can do is be upfront, fair and adhere to the policies put into place.
I hope this helps you avoid any future headaches.
Don Suarez is the manager of The HitFit Gym. Email him at email@example.com.