For years, selling directly to Amazon through Vendor Central was considered a coveted privilege. But for many brands, the platform has become less attractive. Rising chargeback risks and shrinking profitability have prompted more vendors to adopt hybrid 1P/3P models, or even fully embrace a 3P strategy, to maintain control and protect their margins.
One of the biggest challenges of Vendor Central is managing Amazon chargebacks. These penalties are tied to strict operational requirements, and failure to comply almost always results in added costs. For many brands, chargebacks are the silent killer of profitability on Vendor Central.
To protect your margins, it’s essential to understand:
- The different types of chargebacks Amazon issues
- The operational metrics that trigger them
- How to prevent, dispute, or recover lost dollars
Amazon won’t proactively reach out to help you resolve chargebacks—if you’re not monitoring and addressing them, you’re leaving money on the table. By taking a proactive approach, you can reduce unnecessary costs, dispute invalid penalties, and strengthen your account’s overall health.
That’s why we’ve created this comprehensive guide: a Vendor Chargebacks 101 that breaks down the most common chargebacks, provides actionable prevention strategies, and shares insights from our team’s experience managing brands on Vendor Central.
Why Chargebacks Matter?
Chargebacks directly erode profitability. For some vendors, they represent the difference between a healthy Amazon business and one that constantly struggles to break even.
Understanding chargebacks helps you:
- Identify the true impact on your margins
- Pinpoint operational bottlenecks affecting performance
- Recover funds from disputes when penalties are unfair
- Build processes that prevent recurring issues
In short, managing chargebacks effectively is one of the fastest ways to improve your Amazon profitability.
Summary
1) Advance Shipment Notification (ASN) Chargebacks
2) Receive Process Chargebacks
3) Purchase Orders (PO) Chargebacks
4) Preparation Chargebacks
5) Packaging Chargebacks
6) Transportation Chargebacks
7) Direct Fulfillment Chargebacks
Update: Smart Aggregation Dashboard for Chargebacks
Amazon rolled out a redesigned Operational Performance dashboard in Vendor Central called Smart Aggregation. This update aims to simplify the chargeback management process by introducing:
- A new transactions page
- Grouped chargebacks based on the most granular attribute
- A simplified "Dispute by Data" workflow
Currently, this new dashboard is only available for PO On-Time Accuracy chargebacks, but Amazon plans to migrate other chargeback types as well, with advance notice before each migration.
Key Features:
- Chargebacks grouped by type (e.g., PO-ASIN or PO-shipment level)
- Duplicate chargebacks removed
- Displays only confirmed amounts
- Includes a Processing tab for previewing unconfirmed, projected chargebacks (updated every 7 days)
Dispute Options in the Smart Aggregation Dashboard:
- Dispute by Data: Input a core data point (like PRO) to get a near-real-time response.
- External Events Exception: For cases like severe weather or global events.
- Non-Data-Related Problems: For other issues not linked to chargeback data.
- Legacy Disputes: Use this for chargebacks not yet included in the Smart Aggregation system.
Access the new dashboard via: Vendor Central → Reports → Operational Performance. (If eligible, a banner will appear linking to the Smart Aggregation dashboard.)
As of April 30, 2024, Amazon also provides 30 days’ notice before invoicing PO On-Time Accuracy chargebacks.
1) Advance Shipment Notification (ASN) Chargebacks
An ASN is a means of communicating shipment content and carrier tracking between vendors and Amazon.
Amazon now provides real-time ASN status feedback under Operational Performance in Vendor Central, helping vendors resolve compliance gaps faster.
ASN chargebacks will appear in your account when there’s missing or incorrect information in the Advance Shipment Notification, or when Amazon doesn’t receive an ASN before receiving your shipment at a fulfillment center.
The amount of this chargeback varies from 1 to 6% of product cost, depending on the specific ASN issue and your compliance rate (the lower the rate, the higher the fee).
HOW TO AVOID THEM
If you think that avoiding this chargeback is easier said than done, you’re right on the money (no pun intended). You need to make sure Amazon receives what’s stated in the ASN and that all information in the ASN matches the actual shipment.
There are many details that can be missed, though.
Once a shipment has been prepared, vendors need to double-check that the number of units in the shipment reflects what’s on the ASN and that all tracking numbers match up (ARN – Amazon Reference Number, PRO – Progressive tracking number, and BOL – Bill of Lading).
If you’re selling products that have an expiration date, this information must be included as well.
Finally, after the carrier picks up the shipment, it is the vendor’s obligation to submit the ASN so Amazon is informed of the incoming shipment before it checks in at their warehouse.
2) Receive Process Chargebacks
After your shipment has been picked up by the carrier and delivered to an Amazon warehouse, it’s time for the second performance test: Amazon warehouse processing.
If, for any reason, this process is not as smooth (automated) as Amazon expects, vendors are bound to get chargebacks.
Amazon now includes photo proof for many receive-related chargebacks, and vendors can view these images within the chargeback detail page.
HOW TO AVOID THEM
There are many subtypes of this chargeback, so the table below contains the most relevant info:
3) Purchase Orders (PO) Chargebacks
Amazon issues PO chargebacks when vendors do not comply with what was stated in the purchase orders Amazon sent.
Amazon expects that vendors only ship what was agreed upon, in the exact amount stated, and within the time frame specified.
There are three types of PO chargebacks:
- Overage PO Units
- Unconfirmed PO Units
- PO On-Time Accuracy
A) Overage PO Units Chargebacks
This type of PO chargeback will happen if a vendor sends more units than what was confirmed in a PO. The chargeback amount is tiered based on the overage percentage:
- 10% of product cost for overage up to 40%
- 50% of product cost for overage of 41-90%
- 80% of product cost for overage above 91%
Category-specific thresholds:
- Baby, Health and Personal Care, Apparel, Beauty, Shoes, Luggage, Grocery, Pantry, or Luxury Beauty products are charged 30% of product cost for overages up to 40%.
- Amazon Fresh products are charged 100% of the product cost for any overage units.
HOW TO AVOID THEM
Double-check that prepared shipments match the confirmed PO quantities before sending to Amazon.
B) Unconfirmed PO Units Chargebacks
This one is simple. Unconfirmed PO units chargebacks happen when vendors send products to Amazon that were never confirmed on a PO.
The amount for this chargeback is 10% of the cost of the product.
HOW TO AVOID THEM
Preventing this chargeback is all about ensuring your shipments only contain products and quantities confirmed in the PO.
C) PO On-Time Accuracy Chargebacks
PO On-Time Accuracy chargebacks occur when confirmed products fail to arrive at Amazon within the purchase order window.
- For Prepaid shipping, this metric is measured against the Carrier Requested Delivery Date (CRDD).
- For Collect shipping, it is measured against the Freight Ready Date (FRD).
Amazon will waive this chargeback if the trailing four weeks have an average on-time rate greater than 90%. Otherwise, the following penalties apply:
- 3% of product cost if shipments are late or if confirmed units are reduced five days after the start of the ship/delivery window.
- 10% of product cost if shipments are not delivered by the PO cancellation date.
HOW TO AVOID THEM
To meet Amazon’s on-time requirements, vendors should:
- Ensure warehouse teams have enough time to prepare shipments (POs typically arrive Mondays).
- Verify inventory levels before confirming PO items.
- Opt in to Amazon’s automated performance alerts in Vendor Central Notification Preferences. These alerts notify vendors if their performance on On-Time Accuracy or Fill Rate is trending poorly—giving them time to take corrective action before chargebacks occur.
4) Preparation Chargebacks
Preparation chargebacks occur when vendors fail to prep and pack products according to Amazon’s requirements when shipping to its warehouses. Depending on the product category, Amazon may require items to be bagged, bubble-wrapped, or taped.
Amazon fulfillment centers now use AI-based imaging to assess compliance, which has made enforcement more consistent across sites. However, this also means disputes are harder to win unless vendors can provide clear photographic evidence showing compliance.
Additionally, barcodes must be visible through the packaging or placed on the outside of the product to be accepted as compliant.
HOW TO AVOID THEM
Prep requirements exist to ensure products avoid damage during transportation and handling. Vendors should:
- Follow Amazon’s prep requirements by product type (e.g., bagging, bubble-wrapping, taping).
- Ensure barcodes are always scannable and visible without opening packaging.
- Document prep processes with photos in case proof is needed to dispute chargebacks.
5) Packaging Chargebacks
Ships in Product Packaging (SIPP) Chargeback
The Ships in Product Packaging (SIPP) program (formerly known as Frustration-Free Packaging or SIOC) allows vendors to ship eligible products to Amazon in custom-branded, recyclable, and easy-to-open packaging, without Amazon adding extra material.
While certification isn't mandatory for all products, Amazon requires SIPP certification for items over 18 x 14 x 8 inches or 20 lb, unless they fall into certain excluded categories (e.g., hazmat, Amazon Fresh, Media).
Note: Products over 50 lb (actual or dimensional weight) are excluded.
HOW TO AVOID THEM
To avoid these fees, eligible ASINs must be certified as Tier 1 (Frustration-Free Packaging) or Tier 2 (Ships in Own Container) by completing one of the following:
- Self-testing for non-fragile products <50 lb
- Third-party testing via an ISTA-certified lab
- Amazon Packaging Lab testing for fragile items
- Submit your results and enrollment form via Vendor Central under Amazon Packaging Certification > Enroll and Certify ASINs
Certification Exclusions Include:
- Hazmat products (e.g., lithium-ion batteries)
- ASINs in Prime Pantry, Amazon Fresh, or Media
- Very small ASINs (under 6x0.375x4 in)
- ASINs with <100 units shipped in the past 12 months and >24 months old (updated Jan 2025)
- Nested/interlocking items (e.g., trash cans)
SIPP Certification: Key Steps & Requirements
To certify ASINs in the Ships in Product Packaging (SIPP) program (Tier 1 FFP or Tier 2 SIOC), follow these core steps:
1. Review Eligibility
- Packaging must meet minimum dimensions of 6 x 4 x 0.375 inches
- Smaller packaging only qualifies for Tier 3 (Prep-Free Packaging) and requires over-boxing
2. Design Your Packaging
- Follow size, weight, and construction guidelines on the Amazon Packaging website
- Use the Packaging Solutions Library to find compliant packaging examples
- Review common packaging failure modes to improve your design
3. Test Your Packaging
Choose one of the following methods:
- Self-testing: For non-fragile products <50 lb using Amazon's drop test templates
- Amazon Packaging Lab: For fragile or complex products
- ISTA-Certified Lab: Submit ISTA 6-Amazon.com test report (via APASS or other labs)
4. Enroll & Certify ASINs
- Complete the Amazon vendor enrollment template
- Submit test results and forms through Vendor Central → Contact Us → Amazon Packaging Certification
- Amazon will confirm enrollment and certification via case communication
6) Transportation Chargebacks
The least frequent chargebacks vendors face are those related to transportation issues, but there are a few types that are important for you to know about.
A) Pickup Accuracy Chargebacks
Pickup Accuracy chargebacks occur when you don’t provide freight when the carrier arrives to collect or when your collect shipments miss the scheduled pickup date.
Amazon now charges fees for missed or inaccurate pickups:
- $200 per LTL shipment
- $500 per TL shipment
It’s still in both Amazon’s and vendors’ interests to ship inventory as scheduled, since delays with inventory arrival can negatively impact sales when products go out of stock.
HOW TO AVOID THEM
- Have shipments ready at 8 a.m. on pickup day.
- Enter the correct freight-ready date in the routing request.
- Use the reply-all option when responding to pickup confirmation emails so all stakeholders know whether the freight is ready or needs rescheduling.
B) No Show Chargebacks
No-show chargebacks happen when the carrier doesn’t arrive at Amazon’s warehouse within the agreed delivery slot, and either the carrier or the vendor fails to notify Amazon in advance about cancellation or rescheduling.
Current Fees:
- $90 per LTL shipment
- $250 per TL shipment
HOW TO AVOID THEM
- This chargeback applies only to prepaid shipments.
- Ensure carriers follow the assigned delivery schedule.
- If rescheduling is needed, carriers must notify Amazon in advance.
- Vendors using collect shipments with Amazon’s preferred carriers are not impacted.
C) Transportation Chargebacks – Import Vendors Only
In 2023, Amazon centralized import shipment tracking. All bookings and documentation must now be submitted via Carrier Central or VendorFlow — not email.
There are three import-specific chargebacks:
1) Import PO On-Time Non-Compliance: shipment delivery date is outside the purchase order shipping window.
2) Import Shipment Late Booking: Vendor fails to book with Amazon 13 days before the earliest ship date in the PO.
3) Import Documents Late Delivery: trade documents are not delivered by the estimated vessel departure date.
Fine Structure:
- Import PO On-Time Non-Compliance and Late Booking: 3% of product cost.
- Late Document Delivery: $150 per document if late 1–3 days, plus $50 per additional day after that.
- Note: Amazon has shortened the SLA for submitting late documents to 2 business days in some regions.
Disputes:
- Vendors must now submit screenshots from VMS (Vendor Management System) as booking and document proof.
- Using Carrier Central or Routing Central provides better visibility into appointments and can help prevent disputes.
HOW TO AVOID THEM
- Complete all tasks within Amazon’s required timeframe.
- Use Carrier Central or Routing Central for scheduling and visibility.
- Keep documentation proof (screenshots, submission receipts) in case a dispute is required.
7) Direct Fulfillment Chargebacks
Last but not least on our list of chargeback groups are chargebacks that only apply to vendors that use direct fulfillment method (shipping orders directly to the end customer through their Vendor Central account and not sending the product to an Amazon warehouse).
A) Cancellation Rate Chargebacks
Cancellation rate chargebacks occur when vendors deny incoming orders or cancel those that have already been accepted.
HOW TO AVOID THEM
Each cancellation will cost vendors $15, so you’ll want to ensure that to regularly update your product availability in order to avoid customer orders for products that cannot be sent.
Reminder: Direct Fulfillment chargebacks can add up quickly when cancellations and shipping mismatches occur together. Beyond the immediate fees, repeated non-compliance can jeopardize a vendor’s ability to participate in the Direct Fulfillment program altogether.
B) Ship Method Mismatch Chargebacks
Ship method mismatch chargebacks occur when vendors use a different ship method, carrier, or shipping account number than what was specified in the order.
Amazon has rolled out stricter enforcement in the EU marketplaces. Vendors must not only align the carrier and method but also use the exact account-level shipping ID assigned by Amazon. Failing to meet any of these requirements will trigger the chargeback.
HOW TO AVOID THEM
Amazon will charge $10 per issue. The only way to avoid this chargeback is to:
- Follow each shipping instruction exactly as provided in the order.
- Verify that the correct carrier, method, and shipping account number are used.
- Pay special attention in EU marketplaces, where enforcement is tighter.
Best Practices, Tips, and Tricks for Amazon Vendor Chargebacks
Acadia has been providing services to Amazon vendors for years, so we’ve been able to identify the most common mistakes they make when it comes to operational performance chargebacks.
Here are five things vendors can do to avoid or reduce the amount of their chargebacks.
Tip #1 – Keep Neat Documentation for Each Shipment
Oftentimes, vendors are charged fees for mistakes they didn’t make.
In order to dispute this, proper documentation is needed.
It is also important to have an organized way of keeping this documentation in one place.
This can be as simple as having a shared folder dated on PO arrival and accessible to all team members involved in PO processing. From there, each team member can upload the documentation they collected, such as BOLs, ASN, photos of the shipment, carrier documents, and so on.
Having all of these available and in one place will increase your chances of properly disputing Amazon chargebacks if and when they come. The documentation you collect will also be useful when reviewing your own work or trying to find data on an older shipment.
Tip #2 – Track Chargebacks Weekly
Amazon only gives 30 days for vendors to dispute chargebacks, so it’s very important to catch new chargebacks as they come in.
When vendors have a time scheduled to check new chargebacks on a weekly basis, they’re ensuring no chargebacks go without notice, and they’re not being charged without an opportunity to dispute and get reimbursed.
Checking the chargeback page takes 1-2 minutes and can help with your profit margins significantly when you spot chargebacks that can be disputed. Schedule a recurring appointment right into your calendar to make sure you make time for this to happen.
Tip #3 – Learn From Your Mistakes
This one might seem obvious, but it is often overlooked when it comes to vendor chargebacks.
Depending on the amount of chargebacks vendors receive on a monthly basis, it is recommended to do a monthly or quarterly analysis of all chargebacks received and identify patterns.
Based on chargeback reports, vendors can be proactive and work on possible improvements in their shipment processes to avoid future issues entirely.
Tip # 4 – Have an Amazon Person on Your Team
While multiple team members will be working on Amazon purchase orders to complete tasks such as processing, packing, fulfillment, shipping, etc., it is strongly recommended that you have one person who oversees all of these tasks.
People from different departments normally work on only their portion of Amazon’s order, and this can result in unsynced data at the end. Unsynced data in a PO translates to chargebacks and paying needless fees to Amazon.
Having a designated person on the team to do an overall check will help vendors avoid many issues with Amazon.
It will also save time in the long run, because vendors will reduce the amount of revisions that need to be done if and when things go wrong.
Tip #5 – Dispute Multiple Chargebacks at Once
This is a neat little hack that can save a lot of time: Chargebacks that are of the same type and within the same PO can be selected and disputed all at once.
Instead of selecting each chargeback individually, writing about your claim, and uploading relevant documentation, you can do this only once for all related chargebacks.
Before hitting the dispute button, ensure you’ve marked all checkboxes next to chargebacks that relate to the same issue in a specific PO.
This is a neat little hack that can save a lot of time: chargebacks that are of the same type and within the same PO can be selected and disputed all at once.
Instead of selecting each chargeback individually, writing out your claim, and uploading documentation one by one, you can do this once for all related chargebacks.
Amazon has introduced the Smart Aggregation UI, which makes bulk disputes even easier. Vendors can now group related chargebacks and submit disputes in a streamlined workflow, saving significant time and reducing duplicate effort.
How to do it:
- Mark all the checkboxes next to chargebacks that relate to the same issue in a specific PO.
- Use the Smart Aggregation interface to file one dispute for all selected chargebacks at once.
Solving Your Chargeback Issues Is Both Possible and Important
The world of Amazon is complex, and its requirements for vendors are many. Dealing with chargebacks that come as a result of operational noncompliance is not an easy task (otherwise, this article would have been much shorter!).
But it’s not impossible.
Vendors just need to have a strategic and proactive approach when it comes to identifying issues at their core and working internally to find solutions.
Analyzing the whole process, from PO receipt to shipment delivery, and tweaking some of the steps as I showed you in this article, can go a long way.
Acadia has helped many vendors be more profitable on Amazon by fixing their operational issues and disputing chargebacks. You can download our more comprehensive guide to Understanding Amazon Vendor Chargebacks and Their Impact on Your Profit Margins if you would like to take care of this yourself, or if you would prefer some expert help, contact us today.