Industry · Contractors and home services
Contractor and home service chargebacks: deposits, unfinished jobs and change orders
Contractors, remodelers and home service companies get disputed over deposits for work not started, jobs the customer calls unfinished, quality complaints and bills that grew with changes. Sales made in the customer’s home can also carry a federal 3-business-day right to cancel, which turns some deposit disputes into easy losses.
Key takeaways
- Deposits and unfinished jobs lead. Money in before the work is done invites “not provided.”
- Changes need a signature. A verbal yes to extra work is weak when the bill arrives.
- In-home sales can carry a 3-day cancel right. Under the FTC’s Cooling-Off Rule.
- Future work means a long tail. A deposit for a job months away can be disputed long after.
Why contractors get disputed
Home projects run over weeks, change as they go and get judged by a customer standing in their own kitchen. You take a deposit to order materials and hold a slot; the customer sees money gone and no crew yet. The disputes we see most:
- Deposit for work not started. The customer cancelled or got tired of waiting.
- “The job isn’t finished.” A punch list, a missing trim piece, or a crew that left early.
- Quality complaints. The work doesn’t look or perform the way the customer expected.
- Bill higher than the quote. Changes and extras the customer says they didn’t approve.
- Emergency pricing. A big after-hours bill the customer regrets the next day.
Which reason codes contractors see
Two families carry most disputes. Not received or cancelled for deposits and unfinished work: Visa 13.1, Visa 13.7, Mastercard 4853 (legacy 4855) and Amex C08 or C05. Not as described for quality: Visa 13.3, Mastercard 4853 and Amex C31. Bills that grew come in as incorrect amount (Visa 12.5, Mastercard 4834), and a spouse’s card used without asking as fraud.
The insight: the 3-day cooling-off rule
If you sell at the customer’s home, a federal rule may sit underneath your contract. The FTC’s Cooling-Off Rule gives buyers until midnight of the third business day to cancel many sales made at their home for $25 or more (or $130 or more at other temporary locations). The seller must give a written notice of the right to cancel and refund within 10 business days of a valid cancellation.
The rule has exemptions that matter to trades. It doesn’t apply when the customer asked you to come to the home to do repairs or maintenance, although extra goods or services you sell during that visit, beyond the replacement parts used in the repair, aren’t covered by the exemption. And a buyer facing a genuine emergency can waive the 3 days in a separate, dated, handwritten and signed statement.
Not so fast on that non-refundable deposit. If a sale made at the kitchen table was cancelled inside the cooling-off window, your deposit terms may not hold, and the dispute will likely go the customer’s way.
Deadlines to watch
Customers usually have 120 days from the charge. For work scheduled later, Visa’s window can run 120 days from the date the work was expected, up to 540 days after the payment. A deposit taken in winter for a summer job can be disputed into the next year. Home improvement lenders run their own, often short, clocks. Your card response window is the date on your notice, usually 7 to 21 days.
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