This article will guide you through understanding some of the top reasons for customer chargebacks. This will show possible reasons why customer is disputing the charge, the documentation needed/used to send back to the bank, and a brief explanation of what the card companies are looking for and why.

Reasons For Chargebacks

4. Card Not Present - Potential Fraud / Fraudulent Transaction - No Cardholder Authorization

Most Common Reasons:

Member does not recognize the charge
Member believes the membership is cancelled
Member used another person's card to purchase membership (spouse, parent or significant other is primary cardholder)
Member is unaware of recurring billing
A change in the billing description on the CC statement, due to a change in billing services
Fraud
Cardholder's information from the club does NOT match the bank's information

Documentation proving the club was authorized to take payment:

Signed agreement
Check In History and/or Booking Log
Club notes showing communication between staff and member
Email correspondence

NOTES:

Since the payments for the membership are automatically drafted, this is considered a Card Not Present transaction.
It is easy for members to consider this fraudulent, because they weren't present when payment was deducted.
It is more difficult for the club to win the dispute as well, since the member can maintain revocation, meaning they did not approve the charge, regardless of the contract policies.
Make sure the member is the cardholder or an authorized user, and that personal information is correct and verified.
This reason code requires more communication documented, to disprove fraud. Good club notes and a well written contract are key to winning the chargeback.

5. Credit Not Processed

Most Common Reasons:

Member is expecting a refund/credit but it is not reflected on CC statement
Member believes the agreement was cancelled
Amount of the charge is incorrect, or member was expecting a credit for the difference
Agreement was previously frozen and reinstated without the member's knowledge
Member did not properly follow cancellation policy

Documentation needed to show why credit is not due:

Signed agreement
Check In History and Booking Log
Signed cancellation (or freeze, if applicable) form
Email correspondence between club and member regarding cancellation
Rescission letter and certified tracking information, and a copy of the dated post mark
Club notes showing member and club communication regarding cancellation reasons and terms
Medical or relocation documentation, and date of receipt

NOTES:

This reason code is very similar to Cancelled Recurring Transaction, but it implies the member is aware of charge and has attempted to reconcile with the club, with no result
The dispute rights are more relaxed than Cancelled Recurring Transaction, but is still difficult to win without proper documentation. The more often policies are discussed and communication is in writing, the better our chances to win.
Check In History and Booking Logs are the best documentation, and show the member used the services.
Emails and club notes are good ways to show the merchant was actively advising member of policies, and attempting resolution to issues.

6. Not As Described Or Defective Merchandise / Quality Of Goods And Services Dispute

Most Common Reasons:

Member was not satisfied with the club's amenities
Personal Training sessions or Classes were unsatisfactory
Member did not agree with policies in membership
Terms and policies in contract were not sufficiently explained at time of purchase
Billing terms were not adequately explained

Documentation needed to defend merchandise / goods and services:

Signed agreement
Signed cancellation and/or freeze forms
Email documentation showing communication, explaining the services provided and/or terms of the membership
Club notes documenting verbal and/or face to face communication with member, advising of policies in contract; or attempting to resolve issues with goods and services (PT sessions or classes)

NOTES:

Even though the policy is disclosed in the contract, members often misunderstand it is their responsibility to schedule the classes and they are charged regardless of whether or not they use the services.
Showing the CC company proof of usage and/or that the member signed off on the policy is important to prove they are responsible for the charge.
Documentation is important to prove the club attempted to clear up any confusion to the terms of the membership, as well as take step to improve any problems with services provided.