Amazon Pay & Amazon Seller Chargebacks
Table of Contents
- What are Amazon seller chargebacks?
- How do you respond to Amazon seller chargebacks?
- How can Amazon sellers avoid chargebacks?
- What are Amazon Pay chargebacks?
- How can I avoid Amazon Pay chargebacks?
- What's the difference between an Amazon chargeback and a refund?
- With chargebacks, knowing is half the battle
- How long do you have to respond to an Amazon chargeback?
- How long do you have to respond to an Amazon Pay chargeback?
- Are merchants liable for Amazon chargebacks?
- Are merchants liable for Amazon Pay chargebacks?
It’s not easy succeeding in eCommerce, but the barriers to becoming an online merchant have never been lower. Thanks to the many eCommerce platforms and software solutions on the market today, anyone with a great product can get their operations up and running quickly without having to build a site from the ground up.
Amazon is the solution of choice for many merchants, either with their seller program or through Amazon Pay. While they make getting started easier, one drawback to using these platforms is that doing so drags Amazon into your chargeback process. What do merchants need to know about getting hit with Amazon chargebacks?
Amazon’s seller services and Amazon Pay are two very different things. The seller program allows merchants to operate a storefront within Amazon, listing items for sale that shoppers can find when they search the Amazon site. The customer places the order through Amazon, the merchant fulfills it, and Amazon sends the merchant a remittance check of their earnings — with Amazon’s fees deducted, of course.
Amazon Pay is a service for merchants who operate their own eCommerce sites. It allows customers to pay by logging into their Amazon account and using whatever payment credentials are stored there. The process is similar to PayPal checkout, which many merchants are already familiar with. Amazon transfers the funds to the merchant’s account, and the customer never has to provide their credit card information to the merchant.
What happens when a cardholder disputes a charge placed via one of these services? The chargeback will hit Amazon’s account and they’ll get the notification, but they of course will know exactly which merchant the transaction is related to. You’ll have to work with Amazon if you want to fight the chargeback. If you accept the chargeback or it's upheld by the issuing bank, Amazon will deduct the cost — including fees — from your funds or earnings.
Merchant services like those provided by Amazon can solve a lot of problems for merchants, but they don’t make chargebacks go away. If you’re going to sell or accept payments through Amazon, you need to understand how their chargeback process works and what you can do to prevent Amazon chargebacks in the first place.
What are Amazon seller chargebacks?
To see your Amazon chargebacks, you can log into the Seller Central site and pull up Chargeback Claims on the performance menu.
How do you respond to Amazon seller chargebacks?
- Resolve the dispute by issuing a refund.
- Instruct Amazon to represent the charge and provide them with information about the transaction.
- Accept the chargeback (or do nothing, in which case this is the default action).
The first option is a good one for merchants in most situations. The opportunity to avoid a chargeback by providing a refund instead isn’t always possible when you receive the chargeback directly, unless you’re paying for chargeback alerts. With Amazon seller chargebacks you should always have the chance to opt to give a refund instead, and this will always be less costly than the third option.
However, if you refund all chargebacks by default, that decision can come back to bite you.
Friendly fraudsters who file chargebacks for selfish or malicious reasons will keep coming back to you with more fraudulent chargebacks if they realize they can get a refund and keep the product every time they dispute your charges.
That’s why it’s important to fight back with chargeback representment — which brings us to option number two.
You can fight Amazon Seller chargebacks either by selecting “Represent your case” from Chargeback Claims in Seller Central or by replying to the notification email.
Your chargeback notification will include detailed information about the chargeback, including the chargeback reason code. If the reason code does not fit the facts of the transaction, the chargeback is probably friendly fraud, and you can fight and beat it if you have documentation that supports your version of events. Chargebacks that are the result of true fraud or merchant error can’t be fought.
When you submit documentation to represent an Amazon chargeback, an Amazon investigator reviews your evidence. None of the documentation or comments you submit are visible to the buyer. As a general guideline, Amazon encourages sellers to submit the following information:
- Shipping date
- Shipping method
- Tracking information
- Product information
- Correspondence with the buyer
If the Amazon investigator finds your evidence sufficient, they will then use it to create the documentation that ultimately gets submitted to the issuing bank for an official decision.
If the issuing bank decides in your favor, the chargeback will not be deducted from your Amazon funds. If the bank decides for the cardholder, your response is insufficient, or you are found to be in violation of your seller agreement with Amazon, Amazon will charge you for the amount of the chargeback plus any associated fees.
How can Amazon sellers avoid chargebacks?
These issues may include things like missing labels, insufficient packaging, and various problems related to the timing and routing of shipments. Any chargebacks with details that specifically relate to Amazon Seller procedures should be preventable in the future if you take steps to correct the issues that caused them.
What are Amazon Pay chargebacks?
Merchants can use Amazon Pay to process online payments without having to directly handle customers’ payment card information. Since many eCommerce shoppers have an active Amazon account, this provides merchants with a third-party payment solution that most of their customers will already have signed up for.
Amazon Pay puts chargebacks in one of two categories: unauthorized transaction chargebacks and service chargebacks. Unauthorized transaction chargebacks typically result from third-party fraud, and under the Amazon Pay Purchase Protection Policy, merchants won’t necessarily be liable for all of them. The details of this policy are spelled out in the Customer Agreement.
Service chargebacks are those that occur when the dispute relates to the product itself, delivery and fulfillment, or the merchant’s failure to uphold their agreement with the customer. Merchants are liable for these types of chargebacks by default, but those based on false claims are considered friendly fraud and can be fought and beaten.
Amazon Pay will send you a notification email when you get a chargeback, which will include details such as the order number and reason code. Once you receive this notification, you have 11 days to submit a response.
If you choose to fight the chargeback, Amazon Pay will charge you a $20 Disputed Chargeback Fee. You’ll submit your evidence and explanation to Amazon Pay, and they will create the documentation for representment and submit it to the issuing bank.
If the issuing bank decides to reverse the chargeback, you keep your money. If you accept the chargeback, fail to respond by the deadline, or if the bank upholds the chargeback, Amazon Pay will deduct the chargeback amount and all fees — both theirs and those charged by the banks — from your account.
How can I avoid Amazon Pay chargebacks?
Merchants should also take care to protect themselves by using shipping services that provide tracking numbers, and by making sure they always ship to the address the customer provided to Amazon Pay.
It’s a common tactic of fraudsters to change a shipping address after an order has been placed, and you will lose your protection from fraud liability if you change the shipping address after receiving an order through Amazon Pay.
What's the difference between an Amazon chargeback and a refund?
Broadly speaking, the latter is a better approach for merchants. Refunds can typically solve the customer's issue without a major loss of goodwill. More importantly, the merchant will avoid chargeback fees and an increase in their chargeback ratio, which could result in grave consequences for their merchant account.
Amazon gives merchants the tools they need to provide refunds with very little hassle. While cardholders can still process chargebacks on Amazon purchases, merchants should pay attention to any complaints from customers. If you can avoid a chargeback by issuing a refund, it's often correct to do so, unless you're sure you can fight the chargeback that might result successfully.
With chargebacks, knowing is half the battle
It’s great to give customers new and easier ways to purchase and pay for your goods, but unfortunately, all these wonderful new solutions come with new varieties of chargebacks to worry about. The good news is that the best practices for avoiding chargebacks are pretty universal, so if you’re doing a good job at preventing chargebacks in general, the overall rate shouldn’t go up much when you expand your payment options.
However, because Amazon chargebacks can result from some specific compliance problems, it’s important to review these chargebacks carefully so you can identify those issues as early as possible. You should also take advantage of the opportunity Amazon gives sellers to deflect chargebacks by refunding the customer.
Amazon makes it very simple to manage refunds in Seller Central, so use these tools to prevent disputes from becoming chargebacks whenever you can.
For many merchants, Amazon is just one sales channel among many, and protecting themselves from Amazon chargebacks must be looked at as part of an overall chargeback defense strategy. When chargeback management gets so complex that it’s taking you away from the essential functions of your business, it may be time to call in the experts. When you have the right team with the right analytics on your side, you can zero in on the root causes of your chargebacks and determine the actions needed to fix them — no matter what channels they’re coming from.