Finance / Management / Payment Security

How to Defend Your Salon Against Fraudulent Chargebacks

5 min

How to Defend Your Salon Against Fraudulent Chargebacks

Chargeback fraud is one of the most common forms of fraud experienced by salons. We aim to empower salons to prevent fraud and outline steps that you can take to protect your revenue in the event of chargeback fraud.

What is Chargeback Fraud?

Chargeback fraud exploits the standard protocol banks have in place to protect cardholders. It occurs when an individual knowingly pays for a service using their credit card but later disputes the transaction with their bank, which can be for a number of reasons.

When this happens, the bank will automatically refund the amount to the individual and deduct the same amount plus a processing fee from the merchant’s account (your salon).

After successfully making their chargeback claim, the individual essentially receives a free service at your expense. 

Someone may also make a chargeback claim innocently, otherwise known as ‘friendly fraud,’ if they genuinely don’t remember or recognize the transaction in their bank account, even though they made it. 

Additionally, sometimes, a disgruntled client may claim a chargeback if they disagree with being charged for a cancellation or no-show.

How Chargeback Fraud Can Negatively Impact Your Salon

Fraud of any kind can have a profound financial and emotional impact, especially on small businesses. Several short-term and long-term effects can occur.

The most obvious impact is the financial loss. You are losing both revenue and valuable time out of your schedule. Chargeback fraud can be especially tough on small businesses that are already working within tight margins.

Defending a chargeback can also be a very stressful, time-consuming process for salons. Making a case with your bank about chargeback fraud is tricky and requires gathering solid evidence that the transaction was genuine.

The burden of dealing with chargeback fraud can continue to impact your customer service and availability for other appointments, resulting in longer-lasting revenue damage.

Additionally, a card acquirer (Visa, Mastercard, etc.) might not be willing to onboard a salon associated with high rates of chargebacks.

Steps You Can Take to Protect Your Business

Rest assured that there are steps you can take to better protect your business against chargeback fraud. While we hope you don’t need to use these, the Phorest team has simplified the process for you so you can react quickly and confidently should the situation arise. 

Communicate Your Cancellation and No-Show Policies

Having clear cancellation and no-show policies is essential. Still, you should also send clients a digital copy of your terms and conditions and ask them to agree before their appointment. Getting new clients to agree to your policies is particularly important, as they can be a higher risk than your regulars. Phorest Digital Consultation Forms make this easy. You can schedule your forms to be sent to clients ahead of their scheduled appointments automatically and guarantee you receive a  timestamped record of the agreement. This will be effective evidence if you need to respond to chargeback claims made by people who were no-shows or last-minute cancellations who believe they shouldn’t be charged. 

Update Client Records

Always confirm that clients are checked in to their appointments. Phorest holds these records securely for you. Navigate to Clients on the sidebar, search the client’s name, and click  Appointment History to find them. From this screen, you can see the price paid or if an appointment was a cancellation or a no-show. You can also access any notes taken in relation to the appointment. If the customer attends the appointment as normal, consider making a note describing the service provided or adding a photo of the finished service to their client card in PhorestGo. Up-to-date client records will make your life easier if you ever need to make a claim against a chargeback. You will have plenty of evidence at your fingertips to help you defend your case.

Send Follow Up Communications to Clients

Send post-appointment review requests via SMS or email. This can act as additional proof that the customer attended the salon and received one of your services. Similarly, for online purchases, getting a signature on delivery is a way to confirm delivery and defend a fraudulent chargeback. This should help you to prove that the purchases were legitimate as either a service or product was received.

Keep an eye out for unusual purchases

Multiple orders in quick succession or of a high quantity are suspicious and can result in fraudulent chargebacks. In organized retail fraud, large quantities of items are purchased with the intent of requesting a chargeback illegitimately while also reselling the purchased goods. This results in a massive profit for the perpetrator.

Someone has made a fraudulent chargeback against me; what now?

Contact the customer

Be sure to rule out cases of ‘friendly fraud’ first. Contact the customer after their appointment to discuss the situation. You can frame this as ‘post-appointment check-in’. If you are satisfied that the chargeback was fraudulent, then you should proceed to the subsequent steps outlined below.

However, we recommend keeping a copy of this communication to safeguard against a customer forgetting or lying about cancelling the chargeback claim. If a customer realizes they have filed a chargeback claim by mistake after you speak to them, It’s best practice to still submit all evidence (including a record of this communication, where possible) to Phorest to ensure the best possible chance of the funds returning to your account.

Gather evidence

The first step is to gather as much evidence as possible that the customer did, in fact, receive a product or service from your business.

In your Phorest system, there are several places where you can retrieve adequate proof:

  1. Proof that they checked in. Go to the Clients screen, choose a client and continue to Appointment History.
  2. Appointment details. You can also access this through the appointment history. If you made notes about the appointment or service, you can use this as evidence of attendance.
  3. Consultation Forms. Details from completed consultation forms prove that the customer was engaged with your salon leading up to the appointment.
  4. Having a paper trail of communications. Go to the Clients screen, choose a client and continue to Communication. This will show a list of all emails and SMS sent to the client and the delivery status of each. This is a great way to prove that the customer was aware of the appointment and was receiving communication regularly. ‘Review Request’ SMS is particularly solid proof that a customer successfully checked in and out of an appointment.
  5. Digital agreement to no-show/cancellation policy. In instances of ‘friendly fraud’ where a customer doesn’t want to pay for a cancellation or no-show, you need to prove that you have clearly stated your cancellation/no-show policy on your online booking page. This can be found and edited by going to Manager > Settings > Online > Disclaimer. If the customer was charged for a cancellation or no-show, keep evidence that you tried to contact the client to discuss the reason.
  6. Proof of shipping a product. If the client purchased a product online, keep evidence that the product was shipped to them, like a delivery docket or receipt from the courier. 

How do I defend a chargeback?

Phorest can help simplify this process for you significantly. We will automatically notify you any chargeback(s) by email and allow you to submit evidence to us to contest the chargeback if you wish. We have set up a process that will allow you to upload all your gathered evidence to one secure place. This evidence will then be submitted directly to the customer’s bank for adjudication on your behalf. 

It is important to note that each transaction is treated as a separate dispute, so you must submit evidence for each dispute. For example, if a customer pays a deposit for an appointment and then pays the remaining at the salon, these are two separate transactions, so must be treated as two separate disputes.

Make sure you have all evidence ready, as you must upload all gathered evidence in one go. Once you submit the claim, the bank will not accept any additional information.

To make a claim:

1. Follow the link in the e-mail from Phorest

2. Follow all the instructions

3. Upload evidence – JPG, PDF, and PNG are all acceptable files

4. Submit

Phorest will then contact the issuing bank and make the claim using all evidence you have provided.

We will follow up with you directly via email once we hear from the bank in question regarding the outcome of your claim.

We understand that chargeback fraud is a serious issue for businesses. With this guide, we hope you feel better prepared to deal with it should it happen to you. We hope that this guide will help you feel better prepared to deal with it if it arises. Rest assured that Phorest is with you every step of the way.

If you have any questions, check out our FAQ.


Inline Feedbacks
View all comments

Keep reading