Q: Are Amazon FBA Sellers Responsible for Refunds? A: Not Always.

Refund Notifications from Amazon are a Bummer

Amazon FBA sellers get notifications from time-to-time that a customer refund has been issued. It’s a bummer, but it happens. However, it’s not always a cost that the seller should eat. The trick is knowing when to  chalk it up to the cost of running your business (which is usually the case) and when to push back.
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Amazon FBA Seller Refunds | www.PrivateLabelPreneur.com

FBM vs FBA Returns

Before we dive in, it’s best to clarify the difference in process between FBA returns and FBM returns.

FBM (Fulfillment by Merchant)

When you fulfill your own orders, you have more control over the return process. That can be both a good and bad thing.

It’s good because you can set some parameters in the Return Settings found in your seller account. Here you can indicate whether you want to personally authorize returns or let Amazon handle them among other things.

The bad part is that you have to deal with the physical inventory.

FBA (Fulfillment by Amazon)

When your inventory is stored at Amazon’s warehouses and they fulfill your orders, they have complete control over the return process. You can read their return policies here.

This is great when you want to be a free spirit and roam about without the burden of managing inventory (this is my preference!).

The bad part is that Amazon is making the determination about when you should take the hit for the return. And, sometimes they get it wrong.

Now that we have that distinction cleared up, let’s get back to an actual example that recently happened to me to help illustrate how Amazon can make mistakes and charge you for the refund when it isn’t your cost to bear.

The Amazon FBA Sellers Refund Notice

When Amazon authorizes a refund for an FBA order, they will send you an email to let you know. Often times there is very little information about why the customer is returning the item.

Here’s a notice I received from Amazon recently about a refund they authorized on an FBA order.

Amazon FBA Seller Refunds | www.PrivateLabelPreneur.com

It’s not always easy to know when you should push back to see if you can be credited for the refund. When the refund is for the full purchase price, I let it go because the customer is required to return the order within 30 days (or longer over the holidays). If they don’t, Amazon is supposed to reimburse you for the lost inventory.

Luckily I don’t get very many returns so keeping a close eye on whether Amazon credits me back is not on the top of my priority list.

If you are selling high-return or high-priced items, you can use the FBA Customer Returns report in the Business Reports area of your Seller Central account to track the disposition of returns.

Stephen Smotherman over at Fulltime FBA wrote a detailed post on how he monitors returns and the process he uses to stay on top of them. It’s a post worth reading.

Okay, so while most returns require waiting to see if you’ll be eligible for a reimbursement, there are times when something triggers immediate action on my part.

2 Clues That Should Prompt Immediate Action

Below are two clues that I look for to help me determine whether I should immediately pursue a reimbursement from Amazon on FBA orders.

  1. A partial refund. In my example, that specific product has never sold for $9.50 so I knew this was a partial refund. If the product was going to be returned to my inventory, Amazon would have given a full refund.
  2. General Adjustment as the Refund Reason. Amazon shouldn’t be willy nilly making the decision to give a customer a general adjustment and let them keep the product. For example, if the product was defective it should have been a full refund with the requirement that the customer return the product so that it can be verified as defective and destroyed.

You’ll notice that both of these clues are evident in my recent example…

Amazon FBA Seller Refunds | www.PrivateLabelPreneur.com

In this situation, I opened a case with Seller Central and asked politely for additional information. Here’s what I said:

Amazon FBA Seller Refunds | www.PrivateLabelPreneur.com

In this case I was successful in getting credited back for the refund. Here is what Amazon had to say:

Amazon FBA Seller Refunds | www.PrivateLabelPreneur.com

So the moral of the story is to never assume that Amazon is always right!

Bonus Strategy

Sometimes, you’ll hear directly from customers and have a chance to correct a problem without involving Amazon in the process. This happens through unsolicited and solicited email communication. Let me explain.

Unsolicited Emails

Sometimes a customer reaches out to you to complain about something. Often this is a complaint about a missing package or one that arrived late. When this is tied to an FBA order, you can offer to refund the customer and then open a case in Seller Central to request a reimbursement from Amazon.

Solicited Emails

I use Feedback Genius to connect with buyers after the sale for the purpose of growing my seller feedback and product reviews. Sometimes a customer will reply to one of these emails to let me know they are unsatisfied. When the complaint is due to a damaged product, late or no delivery, you can offer a full or partial refund and request reimbursement from Amazon if it was an FBA order.

Here’s an example of an actual email string with one of my buyers.

Amazon FBA Seller Refunds | www.PrivateLabelPreneur.com

Immediately after processing the buyer’s refund, I opened a case with Amazon and received this confirmation that they would be crediting me back for the amount I gave back to the customer.

Amazon FBA Seller Refunds | www.PrivateLabelPreneur.com

Moral of the story? Don’t be afraid to ask Amazon for a credit because you just might get what you ask for!

I have found that using Feedback Genius to connect with buyers to be invaluable. Not only can you build up your seller feedback and product reviews, but you have a unique opportunity to head off negative feedback and/or reviews before they happen. You can turn an unhappy customer into a raving fan!

If you don’t know how to write a great email campaign without risking breaking Amazon’s rules, I highly recommend Karon Thackston’s newest book: Review Advantage Email Strategies for Getting Product Reviews (Legally)

Call to Action

Do you have other tips for making sure you are not getting stuck with unnecessary charges? If so, I’d love to hear about them in the comments.

Now back to work for me!

Ree Short Sig

Want to follow along on my journey?

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  1. Reply
    Diana Poisson May 9, 2017 at 8:36 PM

    Hi Ree,

    I was just chatting with another friend and she was in the process of submitting reimbursement request letters to Amazon. Then you write this. What timing!

    I hate to admit that I’ve been slacking off on reimbursement requests and I’m glad that both of you gave me a good reminder to get busy with that again.

    I didn’t know that Amazon will reimburse you if you refund the customer due to an FBA issue. Thank you for mentioning that. There’s always something new to learn.

    Also, your t-shirts look great! I hope you see lots of sales!


    • Reply
      Ree Klein May 9, 2017 at 8:43 PM

      Hi Diana,

      That is funny! You’ll have to come back and let us know if you uncovered any gold 🙂

      I’m glad my post was timely and that there was a tidbit of new information even for a seasoned seller such as yourself.

      Thanks for leaving a comment and for the feedback on the shirts (I hope they sell, too) ~


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