Prevent chargebacks at your beauty business by setting clear policies, keeping thorough records, and spotting signs of fraud

If you run a beauty business, you work hard to help your clients look and feel their best. You deserve to be paid fairly for every session — but that may not happen if you have to deal with frequent chargebacks. To protect your revenue, your reputation, and your peace of mind, you’ll want to set up a few proactive chargeback prevention strategies.

As a refresher, a chargeback is when a client pays you for a service, but later asks their credit card company to cancel the transaction. If you can’t prove that you provided exactly what the client agreed to pay for, you can expect to lose your money and may even have to pay a hefty chargeback fee, too. Here are seven solid techniques to help you stop chargebacks from digging into your bottom line.

Chargebacks demystified

To illustrate exactly what a chargeback is, imagine that a client books a haircut through your salon software suite. They don’t show up for the appointment and don’t respond when you text or email them. Per your standard policy, you charge them a no-show fee, but the client thinks that’s unfair. At this point, they have two options:

• The client comes to you and explains the situation. Maybe there was an unavoidable traffic jam or a sudden family emergency. You might decide to give them their money back. That’s a refund, since it comes directly from your business.

• The client decides that since you charged their credit card, the credit card provider might be able to resolve the issue. They explain the situation to their credit card company. A company representative investigates the issue, then cancels the transaction. This is a chargeback, since it comes from the credit card provider.

Clients typically initiate a chargeback for one of the following reasons:

• If a client didn’t understand what they agreed to, like a membership fee that renews automatically.

• A client might be unhappy with the service they got and believe they therefore shouldn’t have to pay for it. 

• In a worst-case scenario, a client might try to defraud you. Petty criminals can recoup quite a bit of money doing this on a regular basis.

The important thing to remember about chargebacks is that they don’t happen automatically. A real person from a credit card company has to investigate and determine that the client did not get what they agreed to pay for. If you follow a few simple best practices, you’ll be able to make a strong case every time.

7 chargeback prevention strategies

1. Detailed service agreements

Whenever a client books an appointment with you, they should know exactly what they’re paying for. That’s good business in general, but it’s also a great way to protect yourself from chargebacks. On your website, make it crystal clear what each service includes. Explain your rescheduling policies and how each different membership tier works. Clients should be able to find and understand this information with minimal effort. A clear, concise “Policies” link at the top of your website is much better than a tiny, impenetrable “Terms of Service” link at the bottom.

2. Secure payment systems

Ultimately, a chargeback is between your business and a credit card provider. Your payment processing company doesn’t decide who wins a dispute. Still, your payment system can be a valuable resource for merchant chargeback protection. You can use payment processing records to prove when and where a transaction took place, and with which card. You can also see if you’ve had to flag any of a client’s previous payments. 

3. Thorough records

During a chargeback investigation, information is your most powerful tool. When a client requests a chargeback, they are essentially claiming that you didn’t honor a financial agreement you made. If you can prove that you did your due diligence, you could win the dispute. Client profiles, appointment schedules, and communications records can help you build a strong case, especially if you can provide these details quickly. If everything is in an easy-to-read digital format managed by your salon management software, so much the better.

4. Clear refund policies

If it’s absolutely impossible to get a refund through your beauty business, then a chargeback is the only option for a client who wants their money back. That means you should develop a smart, consistent refund policy and make sure that clients see it before they book appointments. A clear refund policy can save you and your clients a lot of confusion and frustration later.

5. Red flag awareness

For some small-time criminals, credit card chargeback fraud is a thriving industry. Fraudsters go to a business they’ve never patronized before, run up a big tab, then ask their credit card company to cancel the transaction. They can usually get away with this a few times before the card companies get wise — and after that, they can just try again with a new provider.

For chargeback fraud prevention, the best thing you can do is ask for identification and credit cards from new clients as soon as they come in. If the name on the ID and card don’t match, that’s an instant red flag. If you know how to check for a fake ID, that can be a valuable skill, too.

6. Friendly fraud prevention

Friendly fraud sometimes overlaps with chargeback fraud, but it can also have a slightly different definition. Suppose a client books an appointment with you, enjoys it, and pays for it. But when they get their credit card bill, they see a charge from an unfamiliar source — maybe an individual stylist or a holdings company rather than your salon’s name. Or maybe a family member uses a parent’s credit card to pay for an appointment without asking first. These are legitimate transactions, but because they seem suspicious, a client might request a chargeback. You can prevent these by cross-checking IDs and credit cards, and by having your salon’s name show up on credit card statements.

7. Dispute mediation plans

Statistically speaking, your beauty business is going to deal with a chargeback at some point. If and when that happens, you should have a plan ready to go. When you speak with the credit card company investigator, be polite and authoritative. Show them your policies and how you communicated those policies to the client. Have payment records and past schedules ready to support your case. You can’t guarantee that a credit card company will ultimately take your side, but organization and professionalism can go a long way.

A lot of chargeback prevention comes down to common sense. Tell clients their payment responsibilities in clear, understandable terms. Craft a reasonable refund policy that gives everyone some flexibility. Keep an eye out for fraudsters and send them away before they cause trouble. Your clients will get the great service they’ve come to expect, and you’ll get to keep your hard-earned money.