In Your Pocket Again: Chargebacks

In Your Pocket Again: Property Preservation Chargebacks

Vendor Chargebacks

Every time I read a service company’s “Property Preservation Contractors’ Manual”, regardless of what company it is, I realize just how badly most companies take advantage of contractors.

Every time you read a company manual, when you read something like “it may be necessary to charge the work back to the contractor”, you might as well interpret that as “you will be charged back.”

Be smart.  Pay attention.  If you seem to get more chargebacks than you feel is justified, you might very well be working for a company that uses the chargeback excuse to add to their bottom line.  Another hint to keep in mind is that you need to log chargebacks by date.  Review prior months and see if you spot any trends like more chargebacks towards the end of the month or end of the quarter.  You may find that the company has a habit of adjusting chargebacks to bring their real world gross receipts more in line with their previously forecasted income statements.

Ever heard the saying “where there’s smoke there’s fire?”.  How about the more scholarly statement “Some old wives’ tales have their foundation in reality.” I’m sure you have heard these and I’m sure you understand what they mean. So with that I want to pass on some comments about chargebacks picked from property preservation groups at Google, Yahoo and others:

“Has any been seeing more chargebacks? We are being charged back for the order being reassigned to another vendor, then being asked to rebid what the other vendor was supposed to take care of. ”

“That company is far more known for its charge backs over all other companies. Sure other companies charge back. However not to the same degree.”

“Think about how tough they are with photo requirements in the first place. If you don’t have the correct photos you don’t get paid so how can they justify charge backs?”

“They tried to charge me back last month on a work order completed in 2009. Hell this is 2011. The work order was to secure a garage. They said we did not have photo documentation of the lock change on the door locks. I went back and found the photos and submitted them. A battle erupted and they ended up reversing it. The unreal factor hear is they still fought it.”

“I think they have a back office that goes through photos and work orders to find  mistakes when they need to increase their bottom line. Contractors have no recourse due to statue of limitations or sale of property. Those back end people probably get paid a percentage of all the work that is charged back. That is how they are paid I am sure. That is why it is a major battle all the time.”

Now in all fairness, the complete scholarly statement is “Some old wives’ tales have their foundation in reality, others not so much.” So you will just have to wait and see but I’m guessing you’re going to be joining other contractors that see the property preservation chargeback system as a scam designed to get into your pocket.

Okay, that’s the dark side of chargebacks.  Now let’s talk about legitimate chargebacks.  Let’s face it – there are contractors that do crappy work and there are contractors that don’t know their front pocket from a hammer.  And hey, guess what, there are contractors that are out-and-out crooks.  So, I guess chargebacks have their place.  Here are a few examples of legitimate chargebacks:

  • If your work in any way causes additional charges or non-payment to the service company
  • If you fail to perform work that causes additional charges or non-payment to the service company
  • Your late work causes additional charges to the servicer, non-payment to the servicer or results in a code violation to the property

Any way you look at it, chargebacks are bad news.  All you have to do is know your job and know your companies and you will come out okay… but keep count of chargebacks and when they occur.  Drop the companies that take advantage of you.