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Updates to Amazon Return and Refund Policy

Updates to Amazon Return, Refund, and Reimbursement Policy

Update 08/24/2023: Currently in invite-only beta, Amazon introduced a new feature that allows some select sellers to disable the evaluation of returns, giving them more control over the return process. This means sellers no longer have to rely on Amazon’s evaluation of a returned product’s condition, which is not always accurate. 

🚩 Imagine a customer receiving a damaged or counterfeit product because an Amazon associate did not carefully check the returned item. An upset customer may choose to leave a negative review that will not only dent your reputation and Amazon order defect rate but also profits – Amazon does not reimburse customer-damaged units.

👌 By disabling returns evaluation, Amazon will automatically mark returned products as “unfulfillable,” instead of putting them back to your available inventory to be sold again. You may then create a removal order so that Amazon can return the items to your warehouse. From there, inspect the returned products yourself and decide whether to resell or dispose of them.

Note: Think twice before opting to have Amazon automatically get rid of returned orders for you. Some sellers lack confidence in the retailer’s ability to properly dispose of unwanted or damaged goods, saying that these items will somehow find their way onto pallets and be auctioned off on an inventory liquidation site or sold at a flea market.

Preserving the integrity of your brand, especially higher-end products, is crucial. The thought of these damaged goods re-entering the market troubles artisan sellers that they would rather cover the removal fees, recover whatever is salvageable, and recycle what they can.

How to disable evaluation of returns?

  • Log in to your Seller Account > FBA Inventory Evaluation Settings > Click Disable
  • Choose Disable Returns for All ASINs or Disable Returns for Select ASINs
  • Click Update

Visit FBA Inventory Evaluation Settings or read the Terms and Conditions for Disabling Returns Evaluation for more details.
Related: Claim Reimbursement for Losses Caused by Amazon

Update 06/15/2023: In an email, Amazon announced they’re introducing a revised reimbursement policy for Multi-Channel Fulfillment (MCF) in the US.

Effective from July 15, 2023, the maximum reimbursement limit for eligible units lost or damaged during the fulfillment process will be set at $300 per item. This adjustment ensures that MCF’s reimbursement policy remains consistent with prevailing practices within the industry.

You may file your claim for reimbursement on eligible MCF orders no more than 90 days after the promised or estimated delivery date. You can monitor the status of your existing claims by going to your Amazon Fulfilled Inventory report or the Payments dashboard.

Amazon has not shared the formula for calculating a product’s reimbursement value, but per company policy, the goal is to provide a (cash) reimbursement amount that aligns with the estimated proceeds (minus MCF fees) you would receive from selling your item.

Note: In the event that Amazon stumbles upon your lost units one day, they may nullify the cash reimbursement by deducting it from your forthcoming deposit. They will also reinstate your lost units into your inventory, thereby granting you the opportunity to sell said items once again.

In cases where Amazon lacks sufficient data to calculate the estimated sale price using multiple price indicators, they will assign an approximate value based on the price of a similar product. Occasionally, an Amazon rep might also request additional information or documentation from you to assist them in determining the reimbursement value accurately.

If the value of your item exceeds the max reimbursement amount, Amazon recommends purchasing third-party insurance for additional coverage. But if Amazon frequently loses your inventory, it may be worth taking your fulfillment needs elsewhere, especially if you sell a lot of high-value items. For instance, you may want to consider fulfilling luxury goods through a different 3PL provider with better reimbursement coverage and only leave products below $300 up to Amazon MCF or FBA. 
Be sure to read this blog post to learn how to minimize lost or damaged inventory.

Update 12/15/2022: 😩 Another fee will take a bite out of your profits in 2023! Starting January 14, Amazon will no longer cover carrier shipping correction charges on seller-fulfilled returns with “incorrect return label information.”

Correction charges can be applied when:

  • The return address label is invalid – for example, text is illegible or part of the address is incorrect or missing. According to Amazon, the carrier will charge $18 per undeliverable package. 
  • The package weight or dimensions do not match the information you provided. You will be responsible for the difference in cost between the initial label you paid for and the label correction cost. Fortunately, you may also be credited for any overpayment made due to these factors.

This update has drawn the ire of many FBM sellers, arguing that they don’t have control over how customers return unwanted products. A customer may return a small item in a box 5x to 10x its size, for instance. 

Some sellers call on Amazon to instead push these correction charges on shoppers who use unnecessarily large boxes when shipping items back, as they rarely receive returns in the original packaging anyway.

But considering Amazon’s customer-centric policies, that’s very unlikely to happen. So the only paths forward sellers seem to have are to either, as per usual, suck it up and just cross fingers that the majority of customer returns come back without additional charges, or to switch to FBA. Otherwise, they’ll be paying the price as another line item to add to the profit and loss. 🤔
Go to Shipping Correction Charges for Seller-Fulfilled Returns to learn more.

Update 11/11/2022: 📢 Amazon just updated their Reimbursement Policy! Effective November 11, 2022, eligible unfillable units “will be reimbursed at a discounted rate to reflect the actual fair value of the item” rather than their regular retail price.

Unfillable items are returns from customers that can’t be sold as “New” on Amazon. If an unfillable item is lost or sent back in damaged condition, Amazon will reimburse you at a discount on the regular price. 😦

This could impact a lot of sellers that get a lot of returns in Q4. Profit is less in case a customer returns a heavily worn item (and thus unsellable) or Amazon loses them.

👉 Be sure to read on to learn more about the latest on Amazon’s Return and Refund Policy, as well as some pro tips for reducing unnecessary returns and abusive claims.

Amazon has updated its Return and Refund policies in preparation for Q4! 🚚

Extended Returns Window

For US sellers, the eCommerce giant is temporarily extending the standard returns window for early holiday shoppers.

Amazon recently confirmed that it will hold a 2nd Prime Day sale on October 11-12 to give (inflation-weary) consumers a head start on finding and shopping the best deals online.

Most orders have a 30-day return window, but for products bought between October 7 and December 31, 2022, customers can return them until January 31, 2023. That’s a 3 to 4-month extension, which is good for buyers, but some sellers don’t see the benefit of this update.

It could allow unscrupulous individuals to use their products for free for 3 months and return them in January when they’re “no longer wanted or needed”’ – for example, buying Christmas decor in November and then sending it back after the holidays. 🤦‍♀️

But do note that the returns eligibility remains unchanged for all orders, so not all returns will be accepted.

Refund at First Scan (RFS) for Seller-Fulfilled Returns

Amazon is postponing the release of RFS for seller-fulfilled returns in the UK until October 24, 2022. It was supposed to take effect on September 30th.

Initially introduced on May 4th, RFS is part of the Prepaid Return Label program that allows a shopper to receive a refund after their designated carrier has successfully scanned their returned item using the prepaid return label issued by Amazon.

During the scanning stage, sellers have no way of inspecting the item themselves, so the risk of receiving a knock-off version (or worse, a brick!) instead of the original item is high. 😓

If the product is received in damaged condition, sellers can file a SAFE-T claim on their Seller Central account within 60 days of the refund charge. However, this means Amazon may still deny your claim and you will bear some losses. It also means much more manual oversight.

To minimize unnecessary returns, consider employing tactics like having highly detailed product descriptions, images, and product sizes and dimensions or offering live chat support to address customer concerns immediately. 

You can also try to reduce abusive claims by establishing some oversight mechanisms such as manual inspection of returned items, documenting each order (before and after photos), or using signature confirmation on premium products.

⚠️ Proper documentation of orders, from preparation to order tracking to delivery (e.g., signature confirmation on high-value items), is highly recommended to have a solid SAFE-T claim. 

Sellers should be aware of these refund and returns changes and factor these into your cost of doing business this holiday season.

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