Property management security: how to prevent fraud and minimise risk
Posted by admin on October 23, 2020 · Guest Post
This is a guest post by Hamid Matin Rad, Zeevou‘s Chief Evangelist. Zeevou is a Property Management System and Channel Manager that automates your short term rental business.
Preventing fraud and the use of stolen IDs or credit cards is a concern for any online business, and with no exception, for vacation rental businesses.
Both the seller and the customer should be cautious that their details do not fall into the hands of a scammer.
The renters have the legitimate fear of arriving at an empty or non-existent rental and want to safeguard themselves against such a situation.
Therefore, owners should think of strategies when it comes to their property management security to prevent fraudulent schemes.
When it comes to security, what are the red flags?
If this is your first experience running an online business, watch out for the scammers hiding behind nicely written emails and enquiries.
When you get an enquiry to rent your vacation rental or serviced apartment, there is always the possibility that the information you are receiving might be fake or from a stolen credit card.
This could end up in chargebacks and therefore a loss of income.
However, from a vacation rental owner’s point of view, there are certain signs one can look out for that will prevent you from becoming another victim of fraud or a scam.
We’ve listed below some of the signs we’ve come across, so if you do as well, you take a moment to evaluate the situation before proceeding with the booking.
Vague or inaccurate description of your property
A vague or inaccurate description is a sign that it could be an email sent to lots of different people, with the scammer waiting for someone to respond.
If the email is referring to a room while you offer a full house or vice versa, and you are dubious about their real intent, then it’s best not to respond to their booking request.
Never click on any links included in this kind of message, and make sure you keep all of your communication within the platform’s official messaging service.
The person trying to rent seems too good to be true
If it seems too good to be true, it more often than not unfortunately is. You should consider the possibility that the person behind the messages is crafting a story that suits what you are looking for.
Another red flag is if the person is telling you stories related to why you should rent them the property for a special rate or discount.
Although this might be legitimate, do not automatically assume that this is the case.
If the person enquiring gives you a lot of unnecessary information about who they are or excessive information about how they will get to your property, be cautious.
Last-minute bookings and one night stays
Last-minute bookings and one night stays might be for legitimate reasons but are also a very common tactic for individuals to scam hosts.
This usually takes the form of huge parties and can ruin both your property and your relationship with your neighbours (if you have any!).
That’s where we step in. We created SUPERHOG, our ID verification tool, to help hosts gather information about their guests before a booking begins so that we can help prevent reckless guests booking and therefore prevent parties and damage from happening in the first place.
Asking for Other Ways of Payment
Do not change your current payment method as you know that this is safe. If someone asks you to use other ways such as cash, cheque, wire transfer, etc. then they will be trying to scam you.
Property management security: the hassle of the security deposit
While you as a vacation rental manager may prefer to take security deposits to prevent the destruction of your property by problematic guests, not all channels offer payment security.
In addition, taking security deposits remotely always increases the risk of fraud and chargebacks.
Fraudulent chargebacks happen when a guest claims that someone else has used their stolen credit cards or data.
This claim ultimately ends in a refund regardless of the reason behind the case unless you can show that the card owner consented to the transaction.
You might consider meeting your guest upon arrival to take the deposit by cash or debit card, using a chip and pin machine.
However, this requires a lot of time and planning which makes it almost impossible to consider, especially during COVID-19.
We’ve removed the hassle of asking guests for a deposit, by backing bookings between SUPERHOG members with a virtual security deposit.
That means you can attract more guests and you’ll also rest easy knowing that we’ve got a deposit in place for you just in case.
Property management security: How to prevent chargebacks
- State your cancellation and refund policy clearly.
- Ask for guests’ IDs. SUPERHOG can do this for you.
- Get your terms and conditions signed.
- Upload full descriptions, as well as proper photos for all your listings.
- Although it is not that convenient for you and your guests, use chip and PIN methods on arrival.
- You can also use 3D-secure ‘payment’ links which require the verification of the card from the guest.
- Be aware that security deposit pre-authorisation expires after 7 days if you use Stripe payment processor.
How can a PMS provide property management security?
Keeping an eye on every single booking request might not be the best strategy to take care of your property management security, considering the associated workload of operating a vacation rental or a serviced apartment.
Here is where Property Management Systems (PMS’s) step in. A PMS should provide you with the necessary tools to combat security issues.
Property Management Systems facilitate the payment process for vacation rental managers and every other short term rental owner.
One way is to integrate the PMS you use with a payment gateway.
For online payments, a payment gateway transmits card payment data to the payment processing network and then returns the response to the website, showing whether it is approved or declined, to authorise the transfer.
Using a payment processor means keeping a guest’s card data out of the PMS, which in turn keeps you on the safe side as a vacation rental manager in the case of a system breach.
To prevent getting stolen credit cards, you might find 3-D Secure Links useful.
This is the safest way to take card payments since the identity of the person who is paying has to be the same as the cardholder. Using these links helps prevent unauthorised card use, preventing fraudulent chargebacks.
For the first time in the vacation rental industry, you can set the security deposit pre-authorisation period yourself. For example, from two days before arrival till one week after departure.
Zeevou has made this possible through its Automated Booking Processing.