What responsibility does Even Hotels have regarding chargebacks associated with card transactions?
Even_Hotels Franchise · 2025 FDDAnswer from 2025 FDD Document
You are responsible for all Chargebacks and adjustments associated with the transactions that you submit for processing.
CHIP AND SIGNATURE AND CHIP AND PIN ARE KNOWN AS "CARD VERIFICATION METHODS," OR "CVMs." EACH ISSUED CREDIT CARD HAS A PREFERRED CVM.
IF THAT PREFERRED CVM IS NOT USED, THAT SPECIFIC TRANSACTION FALLS UNDER THE EMV LIABILITY SHIFT, MEANING IF THAT CONSUMER DISPUTES THE TRANSACTION THEN HOTEL MAY BE LIABLE FOR FRAUD OR CHARGEBACKS, EVEN THOUGH IT WAS AN EMV TRANSACTION.
FREEDOMPAY IS NOT LIABLE FOR ANY FRAUD OR CHARGEBACKS TO HOTEL IF A PIN KEY IS BE AVAILABLE FOR HOTEL'S IMPLEMENTATION.
HOTEL HEREBY ACKNOWLEDGES THAT IT HAS BEEN INFORMED AND FULLY UNDERSTANDS THAT ANY DISABLEMENT OF THE PREFERRED CVM
REQUIREMENTS FOR CHIP CARDS; OR OTHER SUPPRESSING OF PREFERRED CVM REQUIREMENTS, IS AT HOTEL'S SOLE RISK AND FREEDOMPAY SHALL HAVE NO LIABILITY TO HOTEL OR ANY THIRD PARTY FOR FRAUD CLAIMS OR CHARGEBACKS; A FRAUD CLAIM WILL RESULT IN A LOST CHARGEBACK TO HOTEL DESPITE THE IMPLEMENTATION OF EMV BY FREEDOMPAY IN HOTEL'S SYSTEM, AND THAT AS SUCH, HOTEL ASSUMES ALL RISK THAT DISABLING PREFERRED CVM REQUIREMENTS ENTAILS, INCLUDING LIABILITY FOR THE CHARGEBACKS.
You are responsible for all Chargebacks, Third Party Based Fees, Servicers Fees, and other amounts arising from fraudulent activity processed through your Merchant Systems and/or your Merchant Account (regardless of any AVS response that you receive).
All settlements to you for your transactions will be net of Credits, adjustments, Servicers Fees, Third Party Based Fees, Chargebacks, and any other amounts then due from you.
Source: Item 23 — RECEIPTS (FDD pages 99–438)
What This Means (2025 FDD)
According to Even Hotels' 2025 Franchise Disclosure Document, the franchisee is responsible for all chargebacks and adjustments associated with transactions they submit for processing. This means that if a customer disputes a charge, the Even Hotels franchisee is liable for the amount, even if the franchisee provided the goods or services and is legally entitled to payment. While the document states that attempts can be made to reverse a chargeback, success depends on the issuer's agreement or a formal appeal process.
Several factors can increase an Even Hotels franchisee's risk of chargebacks. If the hotel disables the preferred card verification method (CVM) for chip cards, or suppresses CVM requirements, the franchisee assumes all risks, including liability for chargebacks. Similarly, if a PIN key is unavailable and a customer uses chip and signature instead of chip and PIN, the franchisee may be liable for fraud or chargebacks if the customer disputes the transaction. FreedomPay is not liable for fraud or chargebacks if a PIN key is unavailable for the hotel's implementation.
The FDD also clarifies that FreedomPay is not liable for fraud or chargebacks if a PIN key is unavailable for the hotel's implementation. Additionally, if the Even Hotels franchisee or a merchant provider is determined to be the source of a data compromise event, the franchisee is responsible for all related expenses, claims, assessments, fines, losses, costs, penalties, and issuer reimbursements imposed by card organizations. All settlements to the franchisee for transactions will be net of credits, adjustments, service fees, third-party based fees, chargebacks, and any other amounts due from the franchisee.
In practical terms, an Even Hotels franchisee needs to implement robust fraud prevention measures and ensure proper card verification procedures are followed. They should also maintain strong data security practices to avoid data compromise events. Failure to do so can result in significant financial liabilities in the form of chargebacks and related expenses. Franchisees should also ensure they procure any necessary PIN keys and KSNs from their acquiring bank to allow pin-debit payment card transactions.