The Modern Hotelier #111: Reducing Hotel Chargebacks & Payment Fraud | with Theresa Ellsworth
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Steve Carran: Welcome to an episode of The Modern Hotelier, coming to you from the trade show floor of the Hospitality Show. We're joined with Theresa Ellsworth from Sertifi. How are you doing today, Theresa?

Theresa Ellsworth: Doing great. Busy, busy early in the morning. Love it.

Steve Carran: Love it. So, Theresa, before we dive in here, can you tell us a little about yourself? How did you get started in hospitality technology?

Theresa Ellsworth: I actually went to college for hospitality at SUNY Plattsburgh. We went to the International Hotel Motel Show at the Javits Center, and I ran into a booth, the Springer Miller booth. They said, "Oh, we'd love to hire people out of college," and that literally started my hospitality career. So I started as an installer going to four- and five-star resorts all over the country, and then just kind of grew from there.

David Millili: That's great. So, tell us more, for those who are watching, about Sertifi.

Theresa Ellsworth: Yeah, so Sertifi, our whole goal is to help your day go faster and easier, to make your job simpler. We do digital authorization, so your third-party credit card authorization forms, instead of an insecure paper process, we digitize that all for you. For your sales teams, we do digital signatures and digital payments, so you can make sure you're getting that revenue when you need it. We hear too many stories about people forgetting to take deposits. It's amazing. So, we're just helping you recognize revenue faster and making your day easier.

Steve Carran: Fantastic. One thing that we hear a lot on the podcast from hoteliers is that chargebacks are always a problem. We know Sertifi helps with that, but before we dive into that, how are hoteliers targeted for this?

Theresa Ellsworth: Yeah. It's unfortunate, and you're hearing it more and more; it's just becoming more common. First and foremost, I would say it's just criminal fraud, literal credit card numbers being stolen off the internet. They are tested at hotels, right? They create a booking at a hotel to make sure it's a valid card, and then they can go rampant with that credit card. The other two are kind of related. So we have friendly fraud and chargeback fraud. If I go to a hotel and decide I don’t want to pay for it, I’m going to call my credit card company and do a chargeback. A lot of times, the hotel is going to lose. As the merchant, they're going to lose that. Sometimes guests do it unintentionally. They thought, “I didn't actually buy that movie” or “I didn't go to the restaurant,” and they'll go and do a chargeback, when in reality, they're getting the entire stay comped off unintentionally, where they could have called the hotel to just let them know about the issue.

Steve Carran: Unreal.

David Millili: Are there some easy layups for hoteliers to prevent the criminal fraud? Some things that they can do besides using Sertifi?

Theresa Ellsworth: Yeah. Well, I think first and foremost, you need to take a look at that third-party credit card authorization process. Those forms are there for a reason. I could talk about this all day, but when they're manual, there are so many gaps, and there's a lot of room for human error. So that's what we do—you want to digitize that. But those forms themselves are important. Take a look at them. Look at the address on them. Make sure it's a valid address. Make sure the person's name and email address make sense. So, I would say that first and foremost. Then, you want to make sure you're getting the right information to prepare yourself in case you get a chargeback. The CVV number—if you're not collecting the CVV number, you really don't have much of a leg to stand on when it comes to fraud. The other thing we really do recommend and probably best practice is to take some sort of deposit. When you're doing that, you want to use 3DS. That's something we've used in Europe for a long time. We're starting to get traction with it here in the U.S. If you have an actual payment using 3DS (3D Secure), you’re always going to win that chargeback. It takes the onus off the hotel. The hotel, as the merchant, is not responsible for that. It's on the credit card company.

David Millili: That's great. Good advice.

Theresa Ellsworth: Yeah.

Steve Carran: So, AI-powered prevention tools are already built into Sertifi, which is awesome. Can you tell us a little bit more about how those fraud prevention tools work?

Theresa Ellsworth: Yeah, absolutely. We have what's called our advanced fraud tools, and they use machine learning—both supervised and unsupervised—to say, "Is this a credit card we really want to take?" It looks at over a hundred data points. We partner with a company named Count. It's an Equifax company, and they will give that credit card a score. That card might come back with an "F." What are you going to do with an "F" credit card? You're not going to accept that credit card. The score can be "A" through "F." If it's an "A," good to go. But if it's an "F," we encourage properties to have a process in place. What are your procedures to deal with this credit card? We’re going to tell you to go back and ask for a new card or decline that reservation.

David Millili: So, we talked about legitimate chargebacks, and it seems the trend is that they’re growing and there’s more and more of them. Why do you think that is, and what are some more tips around how to make sure that that doesn't happen?

Theresa Ellsworth: Yeah, I think first and foremost, have a conversation with your guests when you get a chargeback. You also want to make sure you're signed up for early alerts for your chargebacks. So, you want to know right away, “Hey, a chargeback is coming,” and how are you going to deal with that? I think a lot of hoteliers are busy or maybe don’t know better, but pick up the phone, talk to your guests. What was the issue? Can I resolve this with a partial refund on my own without dinging my chargeback percentage? The other thing is Sertifi. Like we mentioned, digital authorizations—we are PCI level one compliant software, so you don’t have to worry about that. When you go through your PCI audit, I'm sure you know about the fun PCI audits, you don’t have to worry about having those physical papers around—again, the room for human error. I mentioned taking payments. You can use Sertifi to take a deposit for your room reservation. We're actually working on some new features to help make that whole process easier as well.

Steve Carran: So, it sounds like the ultimate recommendation is to stop key-entering transactions into the PMS or the POS. What are the benefits of taking the deposit with a solution like Sertifi?

Theresa Ellsworth: Yeah, great question. When you use Sertifi, you're actually using an e-commerce MID (merchant ID). Hotels and restaurants—the fees on those charges are so high, especially if the card is not present. It’s the most insecure way to take a credit card. So, if you are using Sertifi or a similar solution, the merchant ID you're using is an e-commerce MID, so your rates are actually going to be lower on all of those credit card fees. That really adds up, especially in hotels—amazing large hotels that have huge events. You're really going to see a big savings year over year.

Steve Carran: Awesome.

David Millili: That's great. Alright, let people know how they can get in touch with you, get in touch with Sertifi. How can people connect?

Theresa Ellsworth: Yeah. We're on LinkedIn—Sertifi. I'm Theresa Ellsworth. You can find me on LinkedIn as well. And, of course, visit our website, Sertifi.com. We have a whole resource section that you can check out to make your day-to-day easier and more secure.

David Millili: Awesome.

Steve Carran: Thanks for stopping by, Theresa. It was great to catch up.

Theresa Ellsworth: Hear how things are going.

Steve Carran: Yeah, thanks so much.