Chargebacks are written policy fees that are part of the Independent Contractor Agreement, regardless of what a particular inspection pays.

A charge-back is a penalty for not performing to a certain agreed-upon standard according to the Independent Contractor Agreement. Charge-backs include those from the bank or Mortgage company level and are assessed to our clients, the “Nationals”. Our clients then pass these charge-backs down to the Regional company (like NMFS). We, in turn, pass these charge-backs down to the individual inspector. 

Not all charge-backs are passed down. While our clients may receive a $1,000 charge-back, they usually charge us only a portion of that penalty. In turn, NMFS only back-charges a portion of the penalties inflicted upon us.  Many of our clients have created their own charge-back system for several different circumstances.  We agreed to these penalties when we signed our contract with them, just as our inspectors agreed to penalties created by NMFS.

Most Regional companies assess a “No-Pay” policy for being even one day late.  NMFS does this as well, but only after the inspector has had the inspection for at least 3 days. This seems fair to us since we are constantly reassigning past due inspections. It would not be fair to mark $0 pay on a past due inspection that the inspector just received the day before.

How Does a Charge-Back Penalty Work?

Many contractors misunderstand the charge-back process. Some seem to think that the charge-back is assessed against a particular inspection, and wonder how the charge-back can be for more than the inspection itself. We understand this process very well when we receive a $121 charge-back on an inspection that only paid us $8 bucks. That’s over $100 that we no longer have to pay inspectors with.

Charge-Backs do not deduct from a particular inspection. Rather, it is an accounting process that is totaled before payments are made, and taken from the total of the next deposit. For example, a charge-back of $20 is deducted from the total amount a deposit is marked for payment.  If a deposit totals $100, and there is a charge-back last week for $20, then that $20 is deducted first from the very next deposit which is about to be made.  No matter when the charge-back is created, it automatically deducts from the next bank deposit.  If you are getting paid for inspections you completed several months ago, but there is a new charge-back, it gets deducted first. 

Make sure you fully understand our Charge-Back Policies.