Cancellation charges illegal?

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Well-known member
Jun 9, 2008
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I just spoke to another Innkeeper while in town, and we gotten onto the subject of cancellaton charges.
I told her that some charge for the whole period cancelled and others only one night.
This discussion was in this forum before, and many of you said they'd charge for the duration of the stay.
She said this was illegal, that she tried that once and the Credit Card Company called her, told her she could not do that and also threatened her to pull her account.
Anybody ever really checked into that?
There could be a fight or challenge. You could win or not. The more documentation you have the better!
Illegal and not-allowed by the cc company are not the same thing.
document everything - post policy on web site, in brochures or rack cards, in confirmation letters, when taking the reservation.... That is how you have a ghost of a chance of winning a protest of charges.
As stated, charging a cancellation fee is NOT illegal - at least NOT in our state (check your state). I do not know of a hotel chain that does not charge if you cancel within their cancellation period and each have their own rules just like B&B's do. The days of same day, 6pm cancellation are fading away as hotels are slowly starting to catch on to the way B&B's handle their business.
Winning a charge back challange is another. Some card companies are easier to deal with than others but IF you have the proper paper trail to state your case, you can win this challange. As GM stated, document everything and have your policy clearly stated in all forms - web, brochure, etc.
I have it clearly and boldly stated in my confirmation emails and require a reply agreeing to the terms (even if they book through Webervations which requires them to agree). When taking a reservation by phone, (I have my own form), I also ask how they found us, which also may be used in this matter.
I do not want to jinx anything by stating this, but even though I have only had 3 attempts in 10 years, I have won ALL, thanks to the paper trail. The bottom line, document it all, if you are notified of a chargeback request for documentation, provide a brief, business response with facts only, no fluff and attach your 'proof documents'.
Not that I had this happen, yet, but just trying to cover my back.
I do have it in all my policies, website, reistration forms, etc...the only place I do not have it is on my rack cards, but I have to make new ones anyways, so I make sure to put it in the "small print".
Thanks for everyones imput.
I was just reading a book and it stated that Amex is the that backs merchants more than any other card. It also said that Discover was beginning to follow suit. Visa and MC are still in their own little world, but may start to follow along soon.
The book is "How to Start and Run Your Own B&B Inn" by Ripley Hotch & Carl Glassman, 2nd Edition.
It is a very informative book. Having been in the position that I'm in for the past 19 months, I have started a list of what I plan to do and what I plan to not do. It'll probably all change once the reality of it hits!! :)
My understanding is that you can't make any un-approved charge to a credit card after the deposit. You can not hang onto the credit card number and run it as a charge (for no show or late cancellation) The best way to think of it is that you can not "hold" a card number like a string into the person's wallet and yank on it when you think you deserve money.
You can charge a deposit at the time of reservation and IF you have it written as part of your policy that you will only refund the money if A, B, and C conditions are met, and you can prove that the cardholder knew the policy then you are justified and allowed to keep the deposit.
So if you want ALL your money for the entire cancelled stay and you want it from the credit card, then you have to charge it ALL when the reservation is made.
Now that is just related to what the credit card company will support or stand behind in a chargeback. That doesn't mean you can't hold their reservation by taking a 1-night deposit at the time of reservation and then if they cancel without enough notice (specified by your written aggreement) then you can send them a bill. You just can't reach into the card for the money you think you are owed.
The way I understand it is that as long as you are following your written policies and they have been accepted by the card holder prior to the charge, you are within your rights to charge. The proof will be on you to prove you are charging the card for only previously agreed charges.
As an example of a non-approved charge: (a little off topic) Charging for room damages on a CC after departure. The only way to recoup this loss is by submitting a bill to guest in hopes they will pay or filing in small claims court.
Our Lodging Assoc. just had a topic on this at a recent meeting. What a lot of hotel chains are doing to combat the cancellation problems and chargebacks is to provide different room rates with different policies - an example (lowest rate 1st): 1)advance purchase: buy now, cancel/change 7+ days in advance for refund 2) discount purchase: reserve now, cancel 24 or 48 hours before check in or forfeit 1st night rate. 3) Reg. rate - same day cancel a X time or be charged 1st night rate. None of the hotels in our area are charging no-shows for complete stay (unless they advance purchased)
A bunch of great points have been brought up in this thread. Here are a few suggestions:
  1. Make sure you are actually set up with a "lodging" account for credit card processing. Many B&B's are incorrectly set up for retail. Retail setups will not support you in the event of a chargeback complaint.
  2. Make sure you run your policy by your credit card processing company and make sure that they will support it.

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