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How the Amazon Chargeback System Works: Fees, Fraud and All

Published on Nov. 08, 2016

Last updated on Feb. 26, 2020
5 min read

The basics of Amazon chargeback policy are laid out here. However, all the fine print is hidden in legalese on other pages. We believe in saving Amazon sellers from pointless clicking around, so here’s how it all works on one page:

Last updated 9/27/2018.

What’s a Chargeback?

Dealing with Chargebacks

Amazon does not perform chargebacks. The bank—or whoever else gave the buyer their card—does it instead. These guys are called the “card issuer.”

An Amazon chargeback happens when a buyer decides to go through the card issuer (not Amazon) to get their money back. Many customers will try asking you or Amazon for a refund first, but some go straight to their banks.

The card issuer decides whether the customer gets their money or not. They might take it from Amazon or from you, but either way, they take away your power to decide whether you have to provide a refund.

Chargebacks are a pretty bad deal all around. They can take months to settle, and if Amazon or the bank decides you’re to blame, you’ll have to pay a hefty fee.

What’s the Amazon Chargeback Fee?

When it comes to the fees for a chargeback, Amazon doesn’t offer nearly as much protection as the PayPal/eBay chargeback system. The Amazon Services Business Solutions Agreement states that you have to cover all fees the card issuer charges if you lose.

In most cases, these fees can go anywhere from $20–$100 per transaction. That’s in addition to the cost of refunding the customer.

What about Amazon Fraud Protection?


Amazon fraud protection can save you in a few circumstances. If it’s determined that someone stole the customer’s payment card details to make the purchase, then Amazon might absorb the fees.

I say “might” because Amazon’s still going to ask for a lot of info from you. If you can’t provide them with things like proof of delivery (if you provide your own shipping), then you will lose their protection and pay the fees anyway.

What Info Do I Need to Qualify for Amazon Fraud Protection?

According to the Amazon Services Business Solutions Agreement, you need the following to qualify for Amazon fraud protection:

  • Proof that you made the delivery (if you aren’t using Fulfillment by Amazon).
  • The order identification number.
  • A description of the item sold.
  • The terms of the sale as displayed on Amazon when the customer made the purchase, whether those were Amazon default terms or your own terms.

If you can’t provide that info, you won’t qualify for protection.

What Chargebacks Does That Protect Against?

Leaking Bucket

The only type of fraud that Amazon protects sellers from is third-party fraud. That is, fraud caused by someone stealing a card and using it without the owner’s permission.

Unfortunately, it doesn’t protect you against “friendly fraud”: chargebacks from customers who meant to buy the item and abuse the chargeback system to get if for free. This cost retailers nearly $12 billion in 2012. If a bank decides to put through a friendly fraud chargeback, Amazon will leave you at their mercy.

There’s not much sellers can do about this situation. It’s unjust, but it’s one of the risks of doing business.

Does Amazon Protect against Any Other Chargebacks?

If a chargeback arises because Amazon made a mistake providing order information, and you’re able to provide all the applicable info mentioned above, then Amazon won’t require you to cover the cost of the chargeback.

What Do I Have to Pay If I Lose a Chargeback Claim?

Amazon Chargeback

If Amazon fraud protection policy doesn't cover you and the card issuer decides to go through with the chargeback, it can cost a lot of money. You’ll have to cover:

  1. The purchase price.
  2. Shipping and handling.
  3. Taxes.
  4. Payment processing fees.
  5. Bank or credit card association fees.
  6. Any fees for Amazon representing you to the card issuer.
  7. Any other fees or penalties involved.

But not:

  1. The cost of any referral fees Amazon took out of the price (though Amazon doesn’t have to refund these to you).

With all those losses—plus the fact that the customer may get to keep the item if they’ve already received it—it’s no surprise chargebacks generally cost 240% the amount the customer originally paid you.

How Do I Fight a Chargeback Amazon Won’t Protect Me From?

Amazon will give you two options when a chargeback claim is filed against you: refund the customer, or represent your case. Choose to represent your case if you want to fight the chargeback. (Note: It’s often better to just provide the refund if you’re missing important info about the order or believe the customer’s right.)

If you decide to fight, Amazon will tell you all the info they need. This generally includes details about the order, shipping, delivery, and sometimes the item itself. They might also ask for copies of any emails or messages between you and the customer.

Your only hope at this point is that you have all that information available. Then all you can do is send it in with a polite and detailed explanation of the situation and hope the card issuer decides in your favor.

Since you need all that info to fight chargebacks, you should always prepare for them ahead of time.

How Can I Prepare for Future Amazon Chargeback Claims?

Prepared for a Storm

  1. Keep careful track of all shipping.
  2. Use tracking numbers on every package you ship.
  3. Keep records of conversations with customers.
  4. Require signature confirmation for expensive items.
  5. Keep money on hand to pay for lost chargeback claims.

How Can I Avoid Chargebacks in the First Place?

Amazon recommends the following:

  1. Never change the shipping address for an item. This applies even if the customer requests it. The customer should cancel the order and place a new one if they need to change the address.
  2. Make sure you have valid tracking numbers for all shipping.
  3. Require customer signatures for delivery confirmation on all high-value items.
  4. Keep records of shipping and tracking info for a minimum of 6 months after each transaction.

We also recommend that you:

  1. Answer messages as quickly as possible. Customers expect fast replies, and when they don’t hear back from the seller, many panic and jump straight to filing a chargeback. Consider using an Amazon messaging service to speed up your replies.
  2. Be generous with Amazon refunds. Rather than arguing with customers until they get desperate enough to file a chargeback, give refunds easily whenever you can afford to. You should be even more relaxed with your return policy for Amazon.
  3. Take the time to really learn what great customer service means and use it to turn angry buyers into loyal customers.

Great support doesn’t just help prevent chargebacks. It’s also crucial to any Amazon SEO strategy and can help you make more sales while you avoid these losses. Learn how to connect Amazon to a helpdesk and get better results from your customer service.


Customer Service

Each Amazon chargeback sent your way will hurt your business. Manage Amazon support like a pro so customers don’t have a reason to file chargebacks in the first place, and keep careful records of each sale and delivery so you can fight the ones they do file effectively. Everyone loses to the occasional chargeback claim, but you can prevent most and face the rest standing tall.