Amazon Chargebacks: Everything You Need To Know

Amazon is the eCommerce platform of choice for many merchants. As the world’s largest online retailer, Amazon provides helpful digital seller services and unparalleled access to a global audience through its online marketplace. Thanks to its software solutions, the mega-technology company has significantly lowered the entry barriers to eCommerce. What started as an online bookstore has changed the retail landscape for merchants.

But while Amazon allows sellers to reap the benefits of eCommerce, it also exposes vendors to the chargeback process. Amazon chargebacks are a nasty surprise, as customer-disputed transactions can result in sale reversals, chargeback fees, and additional labor. If you plan to sell on the Amazon marketplace, chargebacks are a direct risk to your business revenues.

Luckily, Amazon offers different types of payment protections for its users. Let’s explore Amazon's approach to buyer disputes, that way you are best prepared to limit Amazon chargebacks.

Chargebacks vs Amazon seller protections

The chargeback process allows consumers to use their credit cards. A shopper can always contact their card issuing bank and dispute a fraudulent or incorrect charge. By limiting the possible financial damage of fraud or payment mistakes, consumers can trust the payments ecosystem.

But for merchants, the chargeback process is an expensive headache. Sellers must take on the costs of sale fund reversals, including chargeback fees for each chargeback. In addition, buyers can take advantage of consumer protections for personal gain, committing friendly fraud that leads to revenue losses.

To help resolve any possible disputes between buyers and sellers, Amazon provides chargeback protection through three avenues:

• Buyer disputes: Amazon wants to limit official issuer-based chargebacks, so it requests that buyers first lodge a complaint with the platform itself. Any customer can contact Amazon and ask for a resolution under its Amazon Pay Buyers Dispute Program. Amazon mediates all decisions, but it gives you a chance to fix any issues directly with your customers (e.g. issue a refund, solve delivery mishaps, etc.). 
• A-to-Z guarantees: Amazon also gives its buyers A-to-Z guarantees, an Amazon payment protection policy designed to boost consumer confidence towards third-party sellers that use Amazon and its services. Buyers can receive a refund for eligible payment disputes if they first contact the merchant to find an acceptable resolution. Once again, A-to-Z guarantees are Amazon's attempt to limit chargebacks, especially disputes related to customer dissatisfaction, buyer’s remorse, or errors related to third-party sales on the Amazon marketplace. 
• Chargeback support: If the customer files a chargeback with their issuer, you can dispute a false claim and have Amazon fight the case on your behalf. You must pay a disputed chargeback fee of $20 and provide evidence against the claim, but Amazon will help you compile the evidence and make a strong case in representment. 

What is Amazon Pay?

Amazon Pay is Amazon's official payment processor, and the merchant service facilitates all elements connected to your merchant account and Seller Central, including checkouts, bank transfers, and sale transactions. Amazon Pay mediates all Amazon payment protections (chargeback programs, buyer disputes, and A-to-Z guarantees).

It is through Amazon Pay that you will receive chargeback alerts and dispute communications. When a chargeback is filed against your Amazon seller account, you have three options: choose to provide a refund, accept the chargeback, or dispute the chargeback with Amazon Pay’s assistance.

Amazon pay chargebacks and payment protection policies

Amazon Pay does introduce some additional seller protections.

Of note, Amazon is the merchant of record for transactions on its marketplace. Since Amazon facilitates the credit card payment and makes the sale, the issuer first contacts Amazon for any disputes, not you or your online store. As a result, Amazon can offer payment protections with zero chargeback fees nor any liability for a chargeback, as outlined in Amazon’s Pay Protection Policy.

Unfortunately, Amazon payment protection policies only apply for Amazon chargebacks related to unauthorized transactions (typically, that refers to instances of fraud). Amazon does not extend its seller protections to service-related chargebacks, or customer disputes connected to a seller's failure to meet the rules outlined in Amazon customer agreements. Examples of service chargebacks include product description misrepresentation, shipment failures, damaged items, and incorrect charge amounts.

Amazon will still represent you if you dispute service-related chargebacks. But if you fight a service chargeback through Amazon Pay and the issuer upholds its decision in favor of the customer, Amazon will subtract all fees from your merchant account.

Merchant responsibilities with Amazon Pay

All sellers who wish to refute an Amazon buyer dispute, A-to-Z guarantee claim, or an official chargeback need to provide ample evidence associated with the transaction.

Amazon requests such robust evidence to better represent its sellers and Amazon Pay users when disputing a chargeback. Amazon also uses the data to make judgments on platform-based disputes. Lastly, it uses the information to determine if you are liable for chargeback fees or if you earn reimbursement coverage under seller protections. If you can prove that you operated in good faith and completed the transaction according to customer agreements, you have a high chance of winning a dispute or receiving financial compensation from Amazon for fees.

Amazon requires that responses to chargebacks, including the evidence against the cardholder’s claim, be provided with 11 calendar days of notification. If evidence is submitted after 11 days’ time, Amazon will debit the seller’s account the chargeback amount.

Supplement your Amazon seller protections

Amazon clearly takes active and beneficial steps to protect its buyers and sellers. The Amazon marketplace provides in-house buyer complaint resolution, purchase guarantees, and fraud-related chargeback programs to create a secure payment ecosystem.

Still, Amazon does not offer 100% complete protection. For example, merchants must invest their own time and resources to compile evidence and resolve false claims. And while fraud-related chargebacks through Amazon Pay receive coverage, all other service chargebacks (a significant portion of customer disputes related to friendly fraud) are ineligible, leaving you exposed to the financial damage (and all fees).

For truly comprehensive protection, it is in your best interest to supplement your Amazon seller protections. You can add a chargeback mitigation solution to the chargeback programs Amazon offers, an easy way to protect against different types of chargebacks. That's why the experts at Justt create custom solutions that better defend against all chargebacks, including false claims and service chargebacks. In addition, we manage the entire chargeback lifecycle with success-based fees, that way you don’t have to spend resources fighting disputes you are unlikely to recoup. Instead, you only pay when you win. It is the ideal method to boost your Amazon payment protections and defend your business from Amazon chargebacks.

Want to learn more about Justt and chargeback mitigation solutions?

Contact us to learn more about how you can limit your Amazon Chargeback volume.