Chargebacks can be an unavoidable part of running a business, even when you follow best practices. Consumer protection laws allow customers to seek recourse with their financial providers if they’re dissatisfied with their buying experience. When a chargeback happens, you might want to know what your rights and responsibilities are, and how chargebacks could impact your operations.
In this post, we’ll cover what chargebacks are, how they work in the Amazon store, and measures you can take to help reduce them. Let’s dive in:
- What is a chargeback?
- What is a chargeback on Amazon?
- How can you view chargebacks in Seller Central?
- How do you respond to a chargeback on Amazon?
- How can you reduce chargebacks?
What is a chargeback?
A chargeback, or charge dispute, is a reversal of funds that occurs when a bank credits a cardholder’s account with funds to cover the amount of a disputed transaction. The customer initiates a chargeback by contacting their bank directly, rather than contacting the seller, as in the case of a refund, exchange, or other solution. Chargebacks typically take the form of a money transfer to the customer’s bank account, line of credit, or (most commonly) credit card.
Chargebacks can happen for a wide range of reasons. For example, customers might claim that they:
- Don’t recognize an order they were charged for
- Didn’t make a purchase (possibly because the card was lost, stolen, or used without the cardholder’s authorization, as in the case of fraudulent charges)
- Didn’t receive the product they ordered
- Received a product that was materially different from what they ordered
- Received a damaged or defective product
- Returned an item but didn’t receive a refund
- Were billed more than once (duplicate charges), or were billed the incorrect amount
The customer may or may not attempt to resolve the issue by communicating directly with the seller before initiating a chargeback.
How do chargebacks work?
A customer’s bank will generally mediate between the cardholder and seller as it investigates a chargeback claim. Here’s an overview of the steps in a chargeback:
- The customer contacts their bank to dispute a charge.
- The bank credits the customer’s account to cover the amount of the disputed transaction using funds deducted from the seller’s account.
- The bank contacts the seller to investigate the claim.
- The seller has an opportunity to provide evidence if they believe the transaction to be valid.
- The bank makes the final decision in favor of either the customer or the seller.
If the bank decides in favor of the customer, the credit remains in place permanently. If the bank decides in favor of the seller, the credit is reversed and the funds are returned to the seller.
What is a chargeback on Amazon?
When a customer contacts their bank to dispute a charge in the Amazon store, we work with the customer’s bank to investigate and help resolve the dispute.
We broadly categorize chargebacks as either fraud- or service-related:
- Fraud-related: We’re responsible for handling payment-related fraud chargebacks, like stolen credit cards or other payment fraud attempts. For example, if a customer’s card information is stolen, or the customer claims they didn’t make a purchase, the chargeback is likely fraud-related.
- Service-related: Amazon sellers are responsible if the chargeback is due to a service-related reason, like non-receipt of the product. In these cases, the customer acknowledges a purchase, but indicates that they experienced a problem related to the product or service they received.
Learn more about your chargeback responsibilities as an Amazon seller in our Amazon Services Business Solutions Agreement.
How a chargeback works in the Amazon store
- A customer initiates a claim with their bank disputing a transaction.
- The customer’s bank contacts Amazon for more information.
- Amazon notifies the seller involved in a service-related chargeback and requests information related to the order.
- The seller reviews the Amazon chargeback alert and has the opportunity to issue a refund or represent their case by providing evidence that the transaction was valid.
- The customer’s bank makes the final decision in favor of either the customer or the seller.
How long does the chargeback process take?
The length of the entire process can vary, with the final outcome potentially taking 90 days or longer from the date that the customer initiates the chargeback with their bank.
If you receive an Amazon chargeback alert by email, be sure to respond within seven calendar days of the email date. You should also reply to any additional requests for information within the timeframe stated in the request.
In some cases, a dissatisfied customer can file an A-to-z Guarantee claim without first contacting the seller. The customer might also file a chargeback with their bank without first contacting either the seller or Amazon.
How do chargebacks impact my Amazon selling account?
Service-related chargebacks for your seller-fulfilled orders can have a negative impact on your Amazon selling account.
In Seller Central, the Account Health page displays separate “Chargeback claim” percentages for your seller-fulfilled orders and Fulfillment by Amazon (FBA) orders. These percentages reflect the number of orders that have received a credit card chargeback divided by the number of orders in a 60-day period. You can view the percentages for your account anytime by selecting Performance from the Seller Central main menu, then selecting Account Health. Note that FBA orders don’t impact your shipping performance or overall account health—only seller-fulfilled orders do.
Credit card chargeback rate is one component of a seller’s order defect rate (ODR), which represents the percentage of orders with one or more indicators of poor customer service. We consider an order to have a “defect” if it results in negative customer feedback (reviews of less than three stars), an A-to-z Guarantee claim that isn’t denied, or a chargeback claim.
Your business could potentially lose selling privileges in the Amazon store if service-related chargebacks recur at a high rate. Your overall ODR target should be less than 1% of total orders during a given 60-day period. For example, if you received 300 orders over the past 60 days, you should aim to receive fewer than three one- or two-star ratings, A-to-z Guarantee claims, or chargeback claims.
Fraud-related chargebacks don’t count against your ODR. In the case of service-related chargebacks for your seller-fulfilled orders, if the customer’s bank decides in favor of the customer, it counts against your ODR.
ODR contributes to your overall customer service performance. From the Account Health page, select Order Defect Rate to view the Customer Service Performance page, which helps you measure how satisfied customers are with the products and service you provide. Check your account health regularly, and keep an eye on chargeback claims.
How do you view chargebacks in Seller Central?
To view chargebacks, log in to your selling account, hover over Payments in the main menu, then select Payments. This takes you to the Payments dashboard, where you can select the Transaction View tab to view a summary of different transaction types, including chargeback refunds. Use the “Transaction Type” drop-down menu to select Chargeback refund, or find a specific order using the search bar.
Once you locate the chargeback, select the amount in the “Total” column to see more details. For example, related refunds or adjustments will appear below the original transaction information on the Transaction Details page.
Go to the Transaction View page in Seller Central
How do you respond to a chargeback on Amazon?
You can review the information related to a chargeback claim either in the email notification that we send to you or in Seller Central, then decide if you want to respond in one of two ways:
- Issue a refund to the customer
- Represent your case to the credit card company through Amazon using our Chargebacks tool
If you don’t respond to the chargeback, we may refund the customer on your behalf and charge the amount to your selling account. Learn more about how refunds work—including how we issue refunds, and how you can dispute a refund.
Here are more details on how to issue a refund or represent your case:
Issue a refund
You can issue a refund for the disputed transaction by using the Manage Returns page in Seller Central. From the main menu of Seller Central, hover over Orders, then select Manage Returns. From the Manage Returns page, locate the appropriate order using the search bar or filters. You can also select the Pending Actions tab, then select Issue Refund for the appropriate order.
Issue a refund using Manage Returns in Seller Central
Represent your case
To represent your case and provide evidence that the transaction was valid, follow these steps:
- Hover over Performance in the main menu of Seller Central, then select Chargeback Claims. From the Chargebacks page, select Represent your case for the appropriate order. If you receive an Amazon chargeback alert, you also can represent your case by replying to the email.
- Complete the “Represent your case” section. Provide the shipping date, the shipping method used, and any tracking information, along with other relevant evidence you’d like to include. Supporting evidence could be:
- Any communications you might have had with the customer
- Shipping information, like proof of delivery
- Product information
- Select Continue to submit your response.
The customer won’t be able to see the information you provide. An Amazon investigator reviews the information, creates supporting documentation, and submits it to the customer’s bank on your behalf. We’ll contact you if further information is needed.
If you’re financially responsible for a chargeback, we’ll inform you of the outcome with an email. If you believe you’ve been debited for a chargeback in error, you can reply to the email. But the decision of the customer’s bank is typically final and can’t be appealed.
You can review the status of chargebacks, including those that have been resolved, by selecting the All tab on the Chargebacks page.
Represent your case in Seller Central
How can you reduce chargebacks?
By supporting a great customer experience throughout the shopping journey, it’s possible to reduce chargebacks. Here’s a set of best practices that can help:
- Accurately represent your offerings using clear images and descriptions.
- Provide accurate delivery estimates.
- Fulfill orders using appropriate packaging materials and methods.
- Use trackable shipping methods and delivery confirmation (signature required) for high-value orders.
- Keep a record of tracking information like the date the order was shipped and the shipping method.
- Use reliable shipping and logistics providers.
Many issues can be addressed before they escalate into a chargeback. For example, chargebacks can occur simply because a customer doesn’t know how to get in contact with a seller, or doesn’t receive a timely response. Look for preventable root causes of chargebacks, then introduce solutions like accessible communication methods, a clear returns process, and great customer service.
If you’re selling in the Amazon store, confirm your shipments in Seller Central as soon as you ship an order, and be sure to ship the order to the correct address that we provide to you. You can also familiarize yourself with our selling policies. For best results, follow best practices for selling online in general.
Check out our guide to selling online
Reduce chargebacks and improve your customer service metrics
By striking a balance between being proactive and responsive, you can keep chargebacks to a minimum, increase customer satisfaction, and avoid extra costs for your business.
If you want to sell in the Amazon store and fulfill orders yourself, you can benefit from our tools and automation for tasks like:
- Setting accurate delivery dates
- Managing inventory
- Adjusting stock levels
- Optimizing order processing across sales channels
- Accessing shipping options for fast, reliable delivery
Learn more about how to manage seller-fulfilled orders in the Amazon store.
The process of handling chargebacks can overlap with the returns process, especially in terms of issuing refunds. To learn more, check out our guide to managing customer returns.
Frequently Asked Questions
Chargeback vs refund: What’s the difference?
What’s an Amazon chargeback alert?
Does Amazon investigate chargebacks?
How do you dispute an Amazon chargeback?
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