Selling on Amazon presents immense growth opportunities, but it also comes with its share of challenges—one of the most significant being Amazon chargebacks. Chargebacks are essentially penalties or fees imposed by Amazon for specific operational issues, often due to errors or non-compliance with Amazon’s strict guidelines. These penalties can add up, resulting in significant financial losses for sellers who fail to address them effectively.
Our detailed guide will inform you about everything you need to know about Amazon chargebacks: what they are, common reasons for their occurrence, how to respond, and most importantly, strategies for preventing and minimizing these chargebacks to protect your business's bottom line and keep your Amazon operations running smoothly.
What Are Amazon Chargebacks?
Amazon chargebacks are fines imposed on sellers when they fail to meet specific requirements set by Amazon. Chargebacks can happen for several reasons, such as errors in shipping, incorrect product labeling, and failure to provide accurate information. They serve as a means for Amazon to maintain quality standards and streamline its processes, ensuring that customers receive a consistent level of high-standard service. Amazon Seller chargebacks can affect profitability, and understanding the types, reasons, and associated fees is crucial for profitable Amazon operations.
Amazon Seller Chargebacks
If a chargeback is initiated through an Amazon Seller transaction, it is sent directly to Amazon, as they serve as the merchant of record for the purchase. When this happens, Amazon will alert you about the chargeback and ask how you would like to proceed.
In this blog, we have primarily concentrated on Amazon Seller chargebacks, and when using chargebacks from hereon, generally refer to seller chargebacks unless specifically mentioned otherwise.
Different Types and Common Reasons for Amazon Seller Chargebacks
Amazon chargebacks can result from a wide range of reasons, and each type corresponds to a particular error or failure on the seller’s part. Knowing these reasons is key to preventing future occurrences. Here are some of the most common causes of seller chargebacks:
1. ASN Accuracy Chargeback
Triggered when an Advance Shipment Notification (ASN) is not created by the time the shipment reaches an Amazon Fulfillment Center. This can lead to mismanagement of inventory and delays in processing.
2. Carton Content Accuracy Chargeback
This chargeback is imposed when there are discrepancies between the contents of a carton and the provided ASN details. Issues may include:
- Expected ASIN Not Received: The ASIN mapped to the carton in the ASN is missing.
- Unexpected ASIN Found: An ASIN not listed in the ASN is found in the carton.
- Unrecognizable Carton Content Labels: Carton labels are missing or unreadable by Amazon’s system.
- Missing Carton Level Information: No License Plate (LP) information was provided in the ASN.
- GTIN-14 Barcode Mapping Issues: GTIN-14 barcodes are not properly mapped.
3. No Carton Content Label Chargeback
This chargeback occurs when Amazon cannot recognize or scan a barcode on the carton. Issues may include:
- Unrecognizable Labels: Carton labels are missing or unreadable.
- Missing Carton Level Information: No LP information in the ASN.
- GTIN-14 Mapping Problems: GTIN-14 barcodes need proper mapping.
4. Overage Purchase Order (PO) Units Chargeback
Amazon issues this chargeback if the quantity of products received exceeds the amount specified in the Purchase Order (PO).
5. Oversized Carton Chargeback
This is triggered when a carton measures over 25 inches on any side, unless the saleable unit(s) itself is larger than 25 inches.
6. Overweight Carton Chargeback
This occurs when a carton with more than one saleable unit weighs over 50 pounds.
7. PO On-Time Accuracy Chargeback
This chargeback is applied when items are not shipped within the specified window or arrive after the PO cancellation date. Issues may include:
- Not on Time: Items were shipped outside the designated window.
- Not Filled: POs were not delivered before auto-cancellation.
- Down-Confirmed: Changes made to accepted quantities post carrier allocation.
8. Prep Chargeback
This chargeback occurs when prep instructions are not followed. Issues may include:
- Bagging: Required bags are missing or improperly applied.
- Bubble Wrap: Products are not bubble-wrapped as needed.
- Set Creation: Multi-unit products are not packaged as sets.
- Suffocation Warning: Bags are missing required suffocation warnings.
- Barcode Labeling: Products are missing or there are incorrectly labeled ASIN barcodes.
9. Frustration-Free Packaging/Ships in Own Container Chargeback
This is triggered when products with dimensions bigger than 18" x 14" x 8" or weight over 20 lbs are not certified by the Amazon SIOC/FFP program.
10. Unconfirmed PO Units Chargeback
Imposed when products are shipped without confirmation in a PO, resulting in inventory mismanagement on Amazon’s end.
Step-by-Step Guide: How to Respond to an Amazon Chargeback
Dealing with a chargeback from Amazon can be stressful, but a well-structured response can help you resolve the issue effectively. Here’s a step-by-step guide on how to respond to an Amazon chargeback:
- Identify the Chargeback Details
Review the Amazon Seller Central notification and understand the exact reason for the chargeback. This often includes details on the issue, such as an incorrect ASN or PO compliance issue. - Gather Documentation
Collect relevant documents related to the chargeback, including shipping records, product photos, ASNs, and tracking information. These will be useful when disputing the chargeback. - Contact Amazon Support
Use Amazon’s Seller Central portal to file a dispute. Provide clear, detailed information regarding the incident and why you believe the chargeback is unwarranted. - Submit Supporting Evidence
Upload your gathered documentation as proof that you have met the compliance requirements. This evidence can include timestamped ASNs, shipping logs, or proof of package integrity. - Follow Up
Amazon’s dispute resolution process can take time. Be persistent and follow up on your claim to make sure it is processed in a timely manner. This will help keep your account status healthy and reduce the risk of similar issues in the future.
Are you struggling with Amazon FBA reimbursement claims? Check out our detailed blog to understand how effectively handling them can greatly increase your overall profits.
Preventing Chargebacks on Amazon
To avoid the financial and operational impact of Amazon chargebacks, it’s essential to implement proactive measures to prevent them from occurring in the first place. Here’s a checklist to help reduce your risk:
- Accurate Advance Shipment Notifications (ASN)
Ensure that ASNs are created and submitted on time before shipments reach Amazon’s Fulfillment Center. - Detailed Carton Content Labels
Use clear, readable, and scannable labels on all cartons to prevent content accuracy chargebacks. This includes affixing GTIN-14 barcodes properly. - Adhere to Packaging Guidelines
Follow Amazon’s packaging requirements to avoid oversized or overweight carton chargebacks. Make sure to use Amazon-approved labeling techniques. - Maintain PO Accuracy
Ensure that shipments match the confirmed ASINs and quantities in each Purchase Order to prevent PO-related chargebacks. - Quality Control on Prep Instructions
Train your fulfillment team on Amazon’s prep requirements, such as bagging, bubble wrapping, and barcode labeling. - Establish Timely Shipping Practices
Ensure that shipments are made within Amazon’s designated timeframe to avoid late delivery or PO On-Time Accuracy chargebacks.
To learn more about how you can manage Amazon Chargebacks on Seller Central, watch this Youtube video from Amazon Pay University.
Final Thoughts
Navigating Amazon chargebacks can seem overwhelming and challenging, but understanding the various types, reasons, and preventive measures can help you avoid them and minimize financial losses. The key to success is proactive management, implementing best practices, and ensuring accuracy in every shipment to comply with Amazon’s standards.
As an Amazon agency, we specialize in simplifying chargeback management and minimizing the risks of selling on Amazon. With tailored solutions and expert guidance, we help businesses stay compliant, streamline operations, and proactively prevent future chargebacks. Partner with a team dedicated to ensuring your Amazon operations are efficient, chargeback-free, and profitable.
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About the Author
Meet Arjun Narayan, a Business Dynamo with two decades of conquering boardrooms and founding two companies that didn't just survive but thrived. When he's not navigating business strategies and delivery teams, you'll find him immersed in his love for cars and exploring new models, geeking out over tech trends, globe-trotting for new adventures, and occasionally pondering the mysteries of the universe over a good cup of coffee.
