Understanding Chargeback Fees & Shortage Claims on Amazon

If you’ve ever wondered ‘what is shipping chargeback fee in Amazon?’ or how Amazon ASN accuracy chargebacks work, for example, then keep reading this article – as we explain chargeback fees in Amazon in a very easy-to-digest and straightforward way.

Every Amazon vendor knows that they need to follow a set of guidelines and restrictions in order to continue selling on Amazon and, hopefully, start making profits. So, when you don’t follow these rules and restrictions, chances are you will get penalised for not complying and that means some kind of fee. Essentially, this is what we refer to as a vendor chargeback.

amazon chargebacks

Amazon chargebacks are something every seller needs to know, at least at the basic level, as it can affect your business very negatively and cut deep into your profit margins.

Amazon chargeback fee explained

An Amazon chargeback is a fee or penalty that Amazon charges if they come across a mistake made by a vendor while purchasing stock. Since it is each vendor’s sole responsibility to comply with Amazon’s vendor T&C, the eCommerce giant reserves the right to levy a fine if these T&C are not followed.

There are several types of chargebacks such as Amazon ASN accuracy chargebacks and Amazon buyer chargeback, to name a few. In this article, at least, we’re going to familiarise you with 4 of the most common Amazon chargebacks vendors are typically affected by and some ways of avoiding them.

4 common types of Amazon chargebacks

What is an Amazon buyer chargeback?

An Amazon buyer chargeback or purchase order chargeback is when there are errors on the purchase order. For instance, you don’t confirm the purchase order in a prompt manner and, as a result, miss out on your Amazon shipment window or send the incorrect number of units for verification to Amazon.

What is shipping chargeback fee in Amazon?

Received shipment chargebacks have to do with compliance violations made at the Amazon Fulfilment Centre once the shipment has been taken in. A few common mistakes in this regard include missing information, incorrect or missing barcodes and issues around package content accuracy.

What are Amazon ASN accuracy chargebacks?

Amazon ASN accuracy chargebacks are applied if you fail to send the Advanced Shipment Notice accurately from your EDI trading partner or account. So, unless you send the ASN in no more than 2 weeks of Shipment Receipt and ensure there are no errors in transmitting the EDI, you will have to deal with Amazon ASN accuracy chargebacks.

What are preparation related chargebacks?

You may find yourself dealing with this kind of Amazon chargeback if you do not enclose your products properly prior to shipment, as per Amazon’s guidelines. So, for example, you might have to pay a fee or fine for not bagging items properly in their respective boxes or not correctly taping them shut. Furthermore, if your boxes or cartons are not FFP-optimised, you may have to pay a chargeback fee.

How can I avoid Amazon chargeback fees?

Now that you’re familiar with ‘what is shipping chargeback fee in Amazon?’ or how Amazon buyer chargeback works, for example, let’s discuss some ways of avoiding these chargeback fees:

How to avoid Amazon ASN accuracy chargebacks

Well, the name says it all: Advanced Shipment Notice. So as long as you send it before your shipment gets scanned into the respective Amazon FC, you’re golden. Also, once your products are shipped off, you need to manually send an ASN without delays.

How to avoid Amazon buyer chargeback

All you need to do is go through with the purchase order in Vendor Central in less than 12 hours after it arrives. You must also indicate the units you want to ship within the allotted shipment window.

How to avoid shipping chargeback fee in Amazon

Simple: print your shipment labels well ahead of time and ensure that each unit has been labelled accurately. Additionally, keep the contents of each box easy to scan so that the chances of any human error at Amazon is minimal. Double check everything before shipping.

How to avoid preparation related chargebacks

It always pays to familiarise yourself with Amazon’s Packaging Certification Guidelines. Also, ensure that you are FFP optimised.

Shortage Claims

Invoice Shortage Claims

Amazon will charge you for any discrepancy in the vendor PO (purchase order) process, including commonly Invoice shortages, if your invoice doesnt contain the right information or Amazon BELIEVES it isnt.

This can be frustrating but we highly recommend if this happens to you, open and reopen cases regarding shortages, provide evidence and documentation, provide detailed information for your BOL (bill of lading), packing slip documentations and invoice information, structure your paperwork so there can be little in the way of dispute, even if your using Amazons preferred carrier options, if you have tried and repeatedly failed through this route, we strongly recommend you speak to your vendor account manager

Additional tips

We’ve covered a good deal on ‘what is shipping chargeback fee in Amazon?’ as well as some of the other common fees such as Amazon buyer chargeback and Amazon ASN accuracy chargebacks. To further ensure that you remain as “Amazon chargeback-free” as possible, consider the following:

Pick the right payment processor

Always go with a payment processor who’s willing to offer advanced protection features. This includes fraud detection & monitoring services which go well beyond than just your general fraud detection features (which every payment processor offers by default). So, AVS (address verification services), dispute management through seller payment platform, order reviews as and when needed, and chargeback loss coverage up to a certain degree, should all be a part of the ‘package’.

Make a few operational changes

The Vendor Operational Performance dash lets you see all the chargebacks you need to take care of. You can certainly make some internal changes to counter the effect they are having on your operations. But if you need extra insight to help deal with any shipping or logistical challenges, a reputable Amazon marketing agency can certainly help.

Pick your battles

It can be tempting to launch a dispute against every chargeback levied against you, but this may do more harm than good, especially in the long run. Chargeback disputes can be a very cumbersome and time-consuming process – you have to ensure that all the paperwork is in order but more importantly, your payment processor will track the number of chargebacks filed against you; they can penalise your account if they deem it too ‘high risk’.

Closing thoughts

Chargebacks can be a nagging thorn in your side, and they may require urgent attention, in some cases. Don’t ever fall victim to Amazon chargebacks by gaining Amazon expert insights from Chris and his team.

Chris is the managing director of Ecommerce Intelligence, a full service Amazon agency. He has over 13 years experience selling on Amazon and other marketplaces. Follow Chris on LinkedIn for daily tips and advice.

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