Customers purchased more than 2 billion products from Amazon in 2015, and the company boasts more than 310 million active customer accounts. But with big companies and big sales often come increased risk exposure. Amazon has taken several steps to protect its third-party merchants from fraud, but is it enough? And if it isn’t, what should these merchants to be doing to protect themselves against rising fraudulent transactions and false claims?
Amazon has implemented two policies that help them evaluate and resolve transactional disputes involving customers and third-party merchants. Even better, these policies can help merchants defend themselves against fraudulent claims.
Amazon’s A-to-z Guarantee was established to promote confidence and trust among buyers shopping from Amazon’s many third-party merchants. For customers and merchants using Amazon Pay (Amazon’s integrated payment solution), the policy warranties the condition of the ordered item and its timely delivery, giving buyers the chance to receive a full refund or cancel an authorized payment if they’re unsatisfied with a purchase.
Amazon, however, encourages its customers to try to work out disagreements directly with the merchant first, before activating this guarantee. But if the issue does escalate and customers file an A-to-z Guarantee claim, Amazon will communicate with merchants to resolve the claim.
Rather than filing a complaint through the A-to-z Guarantee, some dissatisfied customers will instead file a chargeback directly with their credit card company. The credit card issuer then contacts Amazon Pay for transaction details, which filter down to the merchant. Merchants have the option of either accepting the chargeback or having Amazon Pay dispute it. If merchants select the latter, they’re assessed a $20 representation fee and Amazon Pay will build, present and maintain the merchant’s case with the credit card issuer.
If the chargeback is covered by the Payment Protection Policy, the representation fee isn’t charged, and Amazon Pay won’t deduct the chargeback amount from the merchant account. Merchants also won’t be held liable for fraud-related chargebacks if they and their transactions meet the Amazon Pay Customer Service Policy.
Note: If a customer files a chargeback with their credit card company, Amazon denies any A-to-z Guarantee claim the customer makes.
Despite Amazon’s protections, many of the its customers are still frequently perpetrating ecommerce fraud against Amazon itself and its merchants. For example, an Indiana couple recently pled guilty to stealing more than $1.2 million in electronics from Amazon. After creating hundreds of false identities, they made purchases from the retailer, reported the products didn’t work and requested free replacements. They then sold the merchandise to a reseller for approximately $725,000.
Another common scenario is for fraudsters to ostensibly return the merchandise and request a refund, claiming the merchandise received was materially different from what was ordered. Unfortunately for the seller, what the buyer returns isn’t what the seller actually sent: Sometimes the fraudster exchanges new electronics for older, defective models; sometimes they send a completely different (and worthless) product altogether. And many merchants find that in a dispute, Amazon’s loyalties lay with the customer, not the merchant.
Although it may not be easy for a merchant to win a transaction dispute, here are seven ways merchants can increase the odds of a dispute being resolved in their favor.
With even the biggest online retailers falling victim to today’s savvy fraudsters, it’s clear that merchants of all sizes must be vigilant about protecting their reputation and their revenue.
Amazon fraud protection is just one facet of growing your business. Download our free “The ecommerce technology trends that will shape 2019” white paper today to help you plan your ecommerce strategy and improve the online customer experience.