What is a Chargeback?
A chargeback is when a tenant’s credit card payment is reversed by their bank. This typically happens when the cardholder claims:
The charge was unauthorized
They didn’t receive the product/service
They were due a refund that wasn’t issued
The bank pulls the funds back from your account and opens a dispute.
ACH Returns vs. Credit Card Chargebacks
ACH returns and credit card chargebacks follow different payment network rules.
Credit card payments can be disputed through the card networks, such as Visa or Mastercard. ACH payments, however, do not have a chargeback process. Instead, ACH returns are processed by the receiving bank according to the Nacha Operating Rules, which govern the ACH Network.
If a tenant's ACH payment is returned, such as for insufficient funds or a closed bank account, neither RentRedi nor our payment processor can dispute or reverse the return. Once the bank processes a valid ACH return under the Nacha Operating Rules, the return is final.
If payment is still owed, the tenant will need to submit a new payment or make alternative payment arrangements with the landlord.
Common Credit Card Chargeback Reasons
The Federal Trade Commission (FTC) and other regulatory bodies mandate a fair amount of protection to consumers using credit cards. Among other protections, cardholders have the right to accurate billing, protection from unauthorized charges, and the right to dispute charges for goods or services that are different from those described. In addition to regulatory protections, different banks and credit card issuers may provide additional rights and/or protections.
Most often, card issuers will issue chargebacks for one of the following reasons:
Fraud or unauthorized use — The Card was used without the cardholder's authorization
Goods or services were not as described — Goods or services provided were materially different from how they were described or agreed to
Goods or services not delivered — Paid for an item or service that was never received or provided
Return credit not processed — Item returned or canceled a service within a merchant’s policy, and never received credit
A recurring billing was not stopped — A subscription service continued to be billed after it was canceled
Incorrect amount — The amount charged was incorrect
Generally, chargeback abilities are limited to 120 days from the transaction date, but some institutions will consider disputes further back. The validity of a chargeback is at the sole discretion of the issuing bank.
What Happens When a Tenant Disputes a Payment?
If a tenant disputes a payment:
You’ll receive an email from RentRedi with the dispute details.
The disputed amount will be withdrawn from your payout balance.
You can submit evidence to contest the chargeback within 30 days.
How to File a Dispute and Submit Evidence
From your RentRedi dashboard, type Payment Accounts into the search bar.
Select Payment Accounts from the search results.
On the Payment Accounts page, click the payment account associated with the disputed transaction.
Click Reports, then select List Chargebacks.
Use the Take Action feature to dispute the chargeback.
You can also check the status of your disputed chargeback (Pending, Resolved in Favor of the Cardholder, etc.).
RentRedi’s payment processor, ProPay, will help review and submit the evidence you’ve shared as part of the dispute process. Please note that the final decision rests solely with the issuing bank.
Timelines and Expectations
The typical process of a credit card dispute is as follows
Payee contacts their bank and disputes a charge (generally limited to 120 days from the transaction date)
RentRedi will alert the account owner via email of the dispute within 1 business day
Funds are returned to the payee and withdrawn from the merchant, plus a $15 chargeback fee
Merchant contests the dispute (must be done within 30 days of the dispute)
The issuing bank makes a final decision on the dispute after considering the evidence (the review process can take up to 60 days)
The dispute is closed -- If the issuing bank decides in favor of the merchant, funds and the chargeback fee are returned
Note:
If you're processing payments through Stripe or the chargeback is related to a Stripe transaction, please refer to the steps outlined in this Help Article.