How to Protect Your Auto Repair Shop from Chargebacks

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Always Get Your Guests’ Consent Before Doing Work

When your service advisors take guests through the repair order, they should listen carefully to what the client wants; service advisors can never be too careful.

If that means spending some extra time to review the repair order with the guest, it’s time well spent.

A little more time spent on the front-end can save you a lot more time on the back-end. Once the RO is thoroughly reviewed, you can get either written or verbal consent for the work and the cost. It’s worth keeping in mind that it’s easier to document written consent.

Shop Tip: Use the Courtesy Inspection to Guide the Approval Process.

Using a shop management system like Tekmetric where the guest can see the courtesy inspection and click through and select the work they want and the work they want to put on hold can set clearer guidelines for both the guest and the service advisor.

Establish a Transparent Relationship with Your Guests

Providing excellent customer service is good practice for any auto repair shop, but it also goes a long way toward preventing chargebacks.

Let your guests know that you’re committed and dedicated to fixing their problem, even if that means taking their vehicle back into the shop if the guest is not 100% satisfied.

If you make it clear to your guests that they can come back to you about any concerns, they are far less likely to go to their bank or credit card company first. And it’s better to do a little extra work to ease the mind of your guest than it is to give away an entire repair order for free or go through legal hassles.

Shop Tip: Set a Clear and Easy Return Policy.

If your shop doesn’t already have one, consider establishing a clear and easy return policy and make it visible to guests via signage or with messaging on repair orders.

Simple policies such as “If you’re not satisfied, call us, and we’ll make it right” can go a long way in terms of letting guests know they should go straight to you if there’s something wrong.

Use an Address Verification System (AVS)

Sometimes, chargebacks happen because a guest used someone else's card or because of a clerical error. Times like these are when safe-checks built into your payment process come in handy.

If you’re processing payments over the phone, be sure to use an address verification system. An AVS ensures that the cardholder on the other end is who they say they are. Address verifications are crucial to dispute claims with a bank or credit card company when you’re unable to acquire an in-person signature.

Tekmetric’s payment processing platform, Tekmerchant, supports AVS, and we recommend using it to secure all over-the-phone payments.

Keep a Record of All Transactions

In order to protect yourself from any unreasonable chargebacks, keep a record of all approved work, signatures, and work completed, with images if possible.

Shop Tip: Use a Software Management Tool that Automatically Tracks Transactions.

Tekmetric makes record keeping and retrieval easy because it stores all repair orders and completed jobs within the system and allows for easy search of completed work. Technicians and service advisors can even upload images of repair work to track all completed repairs.

Other Best Practices When Processing Payments

Along with AVS, there are several other useful practices that can help your shop avoid chargebacks due to minor payment processing errors:

If you call for authorization, record the authorization code, date, time, credit representative’s name, and transaction dollar amount authorized.
Always enter the exact agreed-upon amount. Do not round up or down. Leave no discrepancies whatsoever on price between you and your guests. If the price must change due to parts, labor, or additional work that was not found during the inspection process, always get documented consent from the guest before adding more work and changing the price.
If a transaction is entered incorrectly, make sure that it is completely voided prior to reprocessing. This will help to avoid duplicate transactions.
When submitting sales receipts to your bank, only submit one copy. Don’t send a copy to two different banks. Multiple copies of sales receipts can result in duplicate billing and chargebacks.
For card-not-present transactions, collect the CVV or CV2 card verification numbers (the three to four-digit security code on the back or front of your guest’s card).

Avoiding Chargebacks Takes a Holistic Approach

Mistakes happen, even at the best shops. Building a relationship with guests is key to avoiding chargebacks.

If your guests trust that you care and something does go sideways, they'll talk to you about it, and you will have an opportunity to work it out.

Auto repair shops also benefit from having solid shop management and payment processing system that make it easy to prevent chargebacks long before the sale.

👉 Ready to grow your automotive business? [Book a personalized Tekmetric Demo Here]

FAQ

Whether you’ve worked in the industry for years as a technician or are considering moving into the automotive industry for the first time, owning an auto repair shop can be a very rewarding experience.

In collaboration with PartsTech, we reached out to our customer, Eric Reich, who purchased his auto shop in 2021, to learn about his experience and share it with you.

Before becoming an auto repair shop owner, Eric worked for about ten years in the aerospace MRO (Maintenance, Repair & Overhaul) sector and about ten years in the electrical distribution sector. Looking for a change, Eric ultimately jumped into the auto repair industry by purchasing Bennet’s Automotive — a six-bay shop that services all domestic and Asian-manufactured vehicles.

The Dream: Owning his own business

For Eric, working at large corporations for 20 years became too predictably bureaucratic. He felt buried by meetings, paperwork, and slow decision-making. “After spending nearly two decades at corporate companies, I was looking for something I could call my own,” said Eric. “My goal was to be an independent business owner and not rely on large corporations whose only goal was to maximize profits at all costs. I found that independence when I purchased Bennett's Automotive, which has been in business since 1991.”

The Good: Success and positive outcomes

Taking the time to find the right shop

Eric didn’t want just to purchase the first shop for sale that came across his path, “You can’t rush or predetermine anything. If the shop you are evaluating is not a good candidate, then you have to walk away,” said Eric. During his patient search, Eric found that he very much enjoyed the process of evaluating prospective shops and identifying if they were a good potential candidate to achieve his business goals.

A dedicated, expert team

From our conversation with Eric, it is clear that he values his team, which stayed on through the change of ownership when he purchased the shop. “I have been consistently impressed and proud of my team's dedication and technical expertise. During the transition of ownership, they did not allow the uncertainty of the situation to impact the quality of their work,” said Eric. Having the right people in place is critical to a successful shop. “I was so lucky to purchase a shop with such a solid existing team.”

The Bad: Challenges and setbacks

A small team naturally results in staffing issues

Eric credits his team with minimizing the level of operational challenges he faced as a first-time shop owner: “Thankfully, I had a great core team when I took over the shop. Without them, the transition would have been much more difficult. You are only as good as your team.”

Though his team is awesome, he quickly discovered that his most significant operational challenge would be staffing: “As a smaller shop, the risk is in quality manpower. If we have a guy out or are operating a guy short, it adds additional strain to the rest of the team.”

The Unexpected: The things that caught Eric off guard

Time is incredibly precious, and everyone wants a piece of it

“As a shop owner, you have to be careful about your time,” says Eric, “and one of the biggest surprises I encountered was the number of unsolicited calls from random companies trying to sell or sign me up for something.”

There is a ton of paperwork.

“I did not realize how much paperwork would come with purchasing and owning a shop,” said Eric, “There is a lot!”

Tips from Eric for anyone interested in purchasing an existing auto shop

First things first

Before jumping into the deep end of purchasing a shop, Eric recommends you consider the following first:

Be very honest with yourself regarding your goals. Do you want to work in the shop? Be more hands-off? Etc.
Be willing to walk away from a bad deal. Don't get attached to any one shop/location. If the numbers don't make sense, don't move forward.
Ensure you have enough operating cash. You must have enough cash to handle normal ebbs and flows and an emergency. Not having enough cash is the fastest way to run into problems. (Eric likes to have at least three months of overhead.)
Be very thoughtful about overhead. You have to ensure that each overhead line item has a specific and defined purpose.
Take training in basic financial acumen. To be set up for success when starting the journey of purchasing a shop, Eric advises aspiring shop owners to have a strong understanding of business finances such as P&Ls, pricing strategies, and cash flows to evaluate the shop's health. This is important so you know whether or not you should walk away from a deal. If necessary, Eric encourages taking a financial training course first.

It’s not just about the physical tools and equipment.

When purchasing an existing shop that already had a lot of the necessary physical tools and equipment, Eric focused on the software he wanted to implement. He encourages shop owners to evaluate the current software and make necessary changes early in their ownership journey.

Choose software that drives efficiency and organization and is user-friendly for employees. Also, select software that enhances customer engagement and provides a positive experience.

“Generally, you must streamline your operations and communicate effectively with customers. We use Tekmetric as our shop management software for efficient workflow and customer communication. It also integrates with software such as PartsTech, which allows us to quickly source, price, and order parts from multiple vendors. This efficiency helps our small shop operate as lean as possible, speeding up vehicle repairs.”

Put a big focus on building trust with customers

One of the big reasons Eric wanted to upgrade the shop's software when he purchased it was to have better tools to help build customer trust. “We transitioned to Tekmetric from an older legacy program that made communicating via text/electronically almost impossible. We get consistent customer feedback that they like our new system and communication method with our ability to send inspections, images, videos, estimates, and invoices digitally.”

Closing

Purchasing an auto repair shop is a significant step that requires careful planning, honesty about your goals, and a strong understanding of the business's financial and operational aspects.

As Eric's journey demonstrates, having the right team, investing in efficient software, and being prepared for unexpected challenges are crucial for success. If you're considering this path, take the time to evaluate your options thoroughly, seek out the necessary training, and build a solid foundation for your new venture. With dedication and the right approach, owning an auto repair shop can be an incredibly rewarding experience.