The ultimate guide to managing Amazon Vendor chargeback fees
Running a successful Amazon business through Amazon Vendor Central has a lot of moving parts, and Amazon uses a range of different policies to keep their operations running smoothly and ensure their millions of customers have a positive experience.
If your own Amazon fulfilment violates these policies, accidentally or otherwise, you could be subject to chargeback fees, which can eat into your margins and undermine your ability to develop on Amazon.
Understanding how these fees can arise and the most practical ways to minimise their impact is essential for any brand looking to optimise their Amazon operations. Whether you are using Amazon Vendor Central or Seller Central Amazon in Europe, chargeback management should be a priority to prevent unnecessary costs.
In this guide, we’ll take a more detailed look at what Amazon vendor chargeback fees are, how they work, and what you can do to prevent chargebacks from having a detrimental effect on your Amazon margins.
What are Amazon Vendor chargeback fees?
Amazon vendor chargeback fees are the monetary penalties that Amazon will impose on vendors if you fail to comply with Amazon’s fulfilment policies, for example by packaging your products incorrectly or not delivering a carton within an agreed timeframe.
These charges are used to make up for lost efficiencies at Amazon’s fulfilment centres, and minimise the impact that policy violations can have on Amazon's wider supply chain.
When many vendors see an Amazon chargeback claim crop up on their account, their initial reaction is to assume that these charges are just another cost of doing business on Amazon they’ll have to account for. However, with so many moving parts in Amazon’s fulfilment operations, chargeback fees can often be issued by mistake.
This means that unchecked chargeback fees can quickly build up to a substantial, and more importantly, avoidable cost that can impact your Amazon profitability.
Why Amazon Vendor chargeback fees matter
Seeing the occasional chargeback deduction from your invoice payments may not feel especially alarming.
However, when you consider the wide variety of reasons that Amazon can cite for issuing chargeback fees, the impact on your bottom line can quickly grow into a serious cause for concern. In fact, according to cost transformation firm Vendigital, chargeback fees represent a loss of up to £5,000 for every £100,000 of revenue generated through Amazon, and a cost of £4.8 billion worldwide.
Aside from the potential monetary cost, chargeback fees can lead to major knock-on effects for your operational efficiency and costs that may be harder to quantify. If, for example, you’re being hit with repeated no show chargebacks due to your carrier failing to deliver goods in a designated time slot, this could drag down fulfilment efficiencies, leading to stock issues that hurt your brand’s reputation, and decrease your potential Amazon sales volume.
With these issues in mind, it’s crucial to understand the full impact that Amazon vendor chargeback fees can have on your overall performance, and come up with a proactive strategy for minimising it.
Worried about the impact of chargeback fees? Our dedicated recovery service ProfitGuard makes it easy to get a clearer picture of how much chargebacks are costing you and minimise their impact on your bottom line. Schedule your free audit!
The costs: Amazon Vendor chargeback list
Now that you have a general understanding of how chargebacks work and the impact they can have on your margins, you’re probably wondering exactly how much chargeback fees can impact your cash flow on Amazon.
To give you a better idea of the kinds of chargebacks that are most likely to affect your Amazon model, here’s a complete Amazon vendor chargeback list, and the current charges associated with them for European vendors.
ASN accuracy
Amazon ASN accuracy chargebacks are issued to vendors who submit Advanced Shipping Notifications (ASNs) that don’t accurately reflect the associated shipment, leading to operational inefficiencies on Amazon’s end.
The chargeback fee for this issue is 2-6% of CoGS. Though Amazon doesn’t publicise exactly how they calculate the chargeback fee for Amazon ASN accuracy chargebacks, it’s likely to be affected by how consistent and severe the issue is, as well as previous negotiations with Amazon.
Carton content accuracy
Carton content accuracy chargebacks are similar to ASN accuracy chargebacks, but deal specifically with instances when the quantity of products in a carton doesn’t match the amount cited in an ASN. This can often be the root cause of an Amazon shortage claim.
The associated fee is €0.22-€0.75 per unit, depending on similar factors to ASN accuracy.
Carton information compliance
Carton information compliance violations occur when you deliver cartons to an Amazon fulfilment centre with either incorrect labelling or inadequate labelling as per Amazon’s policies, making it harder for Amazon to identify and process the items at their warehouse.
Carton information compliance chargeback fees cost €0.14 per unit.
Import documents late delivery
Import document late delivery chargebacks are issued to vendors who deal with direct import shipments, and fail to deliver the required import documents within Amazon’s specified timeframe. This is an especially serious chargeback issue, as failure to deliver these documents can hold up shipments at international borders and lead to costly delays.
Import documents late delivery fees range from €50 to €150 per document per day late.
Import PO on-time non-compliance
Import PO on-time non-compliance chargebacks are caused by vendors providing estimated cargo delivery dates that don’t coincide with the shipping window provided on Amazon’s purchase order.
These chargeback fees cost 3% of CoGS.
Import shipment late booking
Import shipment late booking chargebacks are a risk for vendors whose supply chain depends on air and ocean freight. Vendors are required to submit shipment bookings a minimum of 14 days before their Ship Window Open Date for ocean freight, and three days before for air freight.
Import shipment late booking chargeback fees are 3% of CoGS.
No show
No show chargebacks are issued when a carrier fails to make a scheduled delivery without cancelling it in advance through the Carrier Appointment Request Portal. This takes Amazon’s resources away from other arrivals at their fulfilment centres unnecessarily and causes knock-on inefficiencies.
No show chargeback fees are €290 per shipment.
PO on-time accuracy
PO on-time accuracy chargebacks are made for shipments that are completed outside a PO shipping window that’s been confirmed through an Amazon PO.
These chargeback fees deduct 3-9% of CoGS, depending on the severity and consistency of the issue.
Oversized carton
Oversized carton chargebacks are imposed on vendors who send boxes to Amazon which exceed their specified dimension limits, though there are exceptions for this if the shipped products themselves already exceed these dimensions.
An oversized carton chargeback will cost €1.25 per box.
Overage PO units
Overage PO units chargebacks are caused by vendors shipping more products than the amount specified in an office PO.
The fee for this chargeback is €0.6 per unit.
Overweight carton
Similarly to the oversized carton chargeback, Amazon will issue chargebacks for cartons that exceed their specified weight limits, which is generally 23kg.
Overweight cartons charge a fee of €2.73 per box.
Paper invoice
A paper invoice chargeback is issued when a vendor sends either a paper invoice to Amazon, or a digital one through a channel outside the Create Invoice feature on Vendor Central.
The paper invoice chargeback fee is €5 per invoice.
Prep issues
A prep issues chargeback is issued to vendors delivering products to Amazon fulfilment centres with packaging problems, making it unsuitable for safe delivery to the end customer. Common prep issues that will incur a chargeback include bagging, bubble wrapping, and barcode labelling.
This type of chargeback fee ranges from €0.3 to €0.78 per unit, depending on the type of product being delivered and the adjustments to the packaging needed.
Rejected delivery
Rejected delivery chargebacks can be thought of as a more severe version of the prep issues chargeback, where a shipment’s issues with safety and compliance are bad enough that Amazon refuses delivery. Issues that lead to this kind of chargeback can include improperly secured items or unsafely stacked pallets.
Ships in own container (SIOC)
Ships in own container, or SIOC, are chargebacks applied when vendors ship containers that exceed Amazon’s dimension and weight limits, but haven’t been previously certified for shipping in its own container. Amazon maintains certain exemptions for this policy, for items such as advent calendars.
Ships in own container chargeback fees are €1.70 per unit.
How to check and manage chargeback fees
Like anything that can impact your sales performance, effectively managing Amazon vendor chargeback fees starts with effective monitoring.
You can check on your chargeback fees from Vendor Central by navigating to Reports, then Operational Performance. From there, you can filter your data to a given time period and see an overview of any chargebacks incurred in this date range.
Any outstanding chargebacks will be organised according to both their status and the type of policy violation they were caused by, for example prep issues, PO on-time delivery, or ship in own container.
If you click on one of these chargeback types, you’ll be able to see more detailed stats on the chargebacks incurred, including a list of the ASINs and specific POs that have been affected by chargeback fees.
This report will also show you the current status of different chargebacks, e.g “charged” or “waived amount”. A charged amount is the money deducted from your payments. Waived chargebacks, on the other hand, are fees that have been cancelled, either as part of a soft launch of a new chargeback type, or following a vendor successfully disputing a chargeback.
For a more detailed breakdown of each chargeback, simply click on any displayed chargeback amount. This will take you to a full report with details including transaction IDs, the relevant marketplace, the product ASIN, and the reason and amount for a given chargeback. This view can be exported to Excel, giving you more flexibility to filter through the data and find any important patterns or anomalies.
How to dispute Amazon chargebacks for Vendors
As Amazon vendor central experts, we often get asked about the process of disputing erroneous chargeback fees that are eating into vendors’ profit margins.
While Amazon doesn’t make it especially easy, there are ways to dispute unfair chargeback fees and repair a damaged bottom line.
If you’re planning to handle a chargeback dispute in-house, here’s a step by step guide of how to tackle chargeback fees for the best chance of success.
Phase 1: Research the relevant chargeback type
As Amazon currently maintains a dispute fee of £14 per raised dispute, it’s crucial to research the vendor chargeback fee you’re planning to dispute as thoroughly as possible before you take the issue any further.
This will help you determine whether the chargeback you’re planning to fight is, in fact, erroneous, and save you from wasting time and money chasing disputes which are less likely to get you a refund.
For any particular chargeback, first make sure that you’re clear on what Amazon considers a violation of its policies, and the information you’ll need to prove that a violation hasn’t taken place.
For most chargebacks, all the data you’ll need for this is accessible through Vendor Central’s Operational Performance dashboard, found under Reports.
Here’s some examples of the information you’ll need to gather for some of the most common Amazon vendor chargeback fees:
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PO on-time accuracy: Comparing the ship/delivery window end with actual date (yyyy-mm-dd).
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ASN accuracy: Checking for missing expiration date chargebacks if you’re a BPS vendor (expiration dates are not required), or a misreceive issue on the part of a fulfilment centre that’s never been a problem with previous shipments of the same products.
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Carton content accuracy: Auditing similar shipments to ensure barcodes are visible, whether the barcode is properly mapped to your ASIN catalogue, and your packing processes.
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Carton information compliance: Check provided carton images to determine why Amazon wouldn’t be able to scan it, the ASN data for the label, and your GTIN gold list to see whether a barcode is missing.
By understanding how Amazon defines the policy violations that result in chargebacks, and bringing up hard data to check each Amazon chargeback claim yourself, you’ll be in a much stronger position to present the relevant evidence and help your chances of a successful dispute.
Phase 2: Liaise with VCDM
All Amazon chargebacks for vendor disputes need to be initiated through the Vendor Chargeback Dispute Management (VCDM) team.
To contact the VCDM team, navigate to the Operational Performance Dashboard, click on the “View defect list” button, then the “Dispute” button. From here, you can select any chargeback fees that are marked as “charged”, then click “dispute” in the left-hand sidebar, provided that you’re within 30 days of the chargeback first appearing in Vendor Central.
In the next window, you’ll find a portal allowing you to attach your objection to the relevant chargeback with any supporting evidence. The VCDM team has to deal with a large volume of these support tickets, so it’s important to be as detailed as possible when outlining why you think the chargeback has been made erroneously, and the data you’re putting forward to back up this claim.
Once you’ve filed your dispute, VCDM will have 30 days to review the details of your dispute and come back to you with a resolution.
Phase 3 (if applicable): Second dispute
If VCDM rejects your dispute the first time, then you’ll have another 30-day window in which to dispute the same chargeback, using the same portal.
It’s common for these rejections to require further documentation so that the VCDM team can clarify whether or not the dispute is legitimate.
Phase 4 (if applicable): VCM dispute
If you make two attempts at a dispute through VCDM, and you’re still unsuccessful, your only remaining recourse will be raising the issue through the standard Vendor Case Management (VCM) channel.
To do this, you’ll need to open a new support ticket using the “I don’t understand why my dispute was denied” dropdown from your latest dispute resolution. While the Vendor Case Management support team aren’t authorised to resolve chargebacks or issue a payment for a chargeback, they can review the VCDM team’s decision and determine whether their rejections were legitimate.
If your VCM contact finds that your dispute was legitimate, they can escalate the ticket back to VCDM and prompt them to consider approving your dispute. If they uphold the chargeback, however, this will make the decision final and you’ll have no further recourse.
Staying on top of Vendor chargeback fees
Amazon chargebacks for vendors have the potential to be a major drain on any brand’s resources. However, by working to understand their root causes, effective preventative measures, and how to handle the dispute process, you can help to keep a cap on their impact and maintain a healthier bottom line.
For more support on managing your vendor chargeback fees, and a way to systematically tackle any erroneous chargebacks affecting your account, schedule your free ProfitGuard audit today!
