Amazon Refund Administration Fee for Sellers

What Is Amazon Refund Administration Fee?

Amazon refund administration fee is a charge applied by Amazon when sellers issue refunds to their customers. When a refund is processed, Amazon returns the referral fee that the seller initially paid for the item.

However, in exchange for handling the refund process, Amazon deducts the refund administration fee from the amount returned to the seller. The fee can vary depending on the product type category, such as a book, music, video, DVD, or another.

The refund administration fee is sometimes calculated as a percentage of the seller’s original referral fee. Sellers should be mindful of this fee when processing refunds, as it can affect their overall revenue and profitability on the platform.

For instance, imagine you sold an electronic device on Amazon and paid a $5 referral fee. Upon refunding the customer, Amazon may deduct a $1 refund administration fee and return you $4 of the referral fee. This fee contributes to the administrative costs on Amazon’s end when facilitating refunds.

Please note the refund administration fee is capped at specific amounts to avoid excessive deductions. This cap ensures a fair and reasonable charge when handling multiple refunds or high volumes of returned goods.

How Much Is The Amazon Refund Administration Fee?

The Amazon Refund Administration Fee depends on the product type and the refunded percentage of the item’s cost. This fee applies to FBA and FBM sellers and affects your overall revenue.

Product category	Refunded charges (%)	Refund administration fee
Book, music, video, and DVD products	100%	$0.00
	Less than 100%	Amazon retains the variable closing fee and credits you a proportional amount of the referral fee originally charged for the order, based on the percentage of the item price you refunded to the buyer.
All other product categories	100%	Lesser of $5 or 20% of referral fees

For book, music, video, and DVD products, the fee structure is different than for other product types. There is no refund administration fee if you refund 100% of the item’s price. However, when refunding less than 100%, Amazon retains the variable closing fee and credits you a proportional amount of the referral fee originally charged for the order based on the percentage refunded to the buyer.

For all other product types, the refund administration fee is calculated as follows:

• For a 100% refund, the fee is less than $5 or 20% of the referral fee.

When dealing with Amazon’s administration fees, keep in mind the following aspects that can affect your seller’s account and billing:

• Pricing updates: Always stay updated on the latest changes in Amazon’s fee structure to manage your account effectively.
• Account setup and registration: Ensure your account is set up correctly and has the necessary tax information to avoid discrepancies.
• Taxes: Be aware of applicable taxes, especially related to revenue from your sales and refunds.

As you navigate selling for Amazon, you must be aware of the impact of refund administration fees on your revenue. By understanding and incorporating this fee into your business strategy, you can make more informed refund choices and maintain a healthy account balance.

Examples Of Refund Fees

Let’s consider a few examples to understand how Amazon calculates its Refund Administration Fees in different scenarios involving refunds for individual items, multiple items, and multiple quantities of the same item.

Example 1: Refunding a Single Item

Suppose you sold two items at the following prices:

Item A: $500 with a shipping fee of $40 and a gift wrap fee of $5

Item B: $100 with a shipping fee of $5 and a gift wrap fee of $2

You must issue a refund for Item A, including shipping and gift wrap charges. If the referral fee for items in this category is 15%, the refund administration fee calculation would be:

1. First, calculate the sum of the amounts for Item A: $500 (the price of Item A) + $40 (shipping fee) + $5 (gift wrap fee) = $545
2. Next, calculate 15% of the total sum from step 1: 15% × $545 = 0.15 × $545 = $81.75
3. Finally, calculate 20% of the amount from step 2: 20% × $81.75 = 0.20 × $81.75 = $16.35

Refund Admin Fee = 20% × [15% × ($500 + $40 + $5)] = $16.35 (capped at $5)

Since the fee cannot exceed $5, it gets capped at $5. Taxes are not included in the fee calculation.

Example 2: Refunding Multiple Items

Using the same two-item order as before, suppose you need to refund the entire order, including shipping and gift wrap charges. The refund administration fee calculation would be as follows:

• Item A: 20% × [15% × ($500 + $40 + $5)] = 20% × [$81.75] = $16.35 (capped at $5)
• Item B: 20% × [15% × ($100 + $5 + $2)] = 20% × [$16.05] = $3.21

$5 + $3.21 = $8.21

Again, taxes are not included in the refund administration fee calculation.

Example 3: Refunding Multiple Quantities of the Same Item

Imagine an order with two units of Item A and one unit of Item B:

• Item A (2*$500): $1000 with shipping fee of 2*$40 and gift wrap fee of 2*$5
• Item B: $50 with shipping fee of $5 and gift wrap fee of $2

In this scenario, you need to refund both units of Item A, excluding shipping and gift wrap charges. Since there are multiple quantities of the same item and they make up a single line item, the calculation applies once for both units:

Refund Admin Fee = 20% × [15% × $1000] = 20% × [$150] = $30 (capped at $5)

The calculated refund administration fee exceeds $5, so we cap it at $5.

By comprehending these examples, you can better understand how Amazon seller fees, including FBA, closing, and referral fees, work in different refund situations. It’s important to remember these calculations as an Amazon seller to prepare for situations involving customer refunds.

Frequently Asked Questions

Do sellers get a refund for returned items on Amazon?

Yes, sellers get a refund for returned items on Amazon, but the amount is usually less than the refund administration fee. The actual refund amount may vary depending on the specific circumstances of the return, such as the product type and the reason for the return.

Are seller fees refunded when a product is returned on Amazon?

When a product is returned on Amazon, some seller fees, such as the referral fee, are refunded, but Amazon retains the refund administration fee. This fee is used to cover administrative costs associated with processing returns.

What is the process of returning an item on Amazon with FBM (Fulfillment By Merchant)?

Returning an item on Amazon with FBM involves the following steps:

1. The customer initiates the return request on Amazon.
2. The seller receives the return request and approves it.
3. The customer receives a return shipping label from the seller.
4. The customer ships the item back to the seller’s warehouse.
5. The seller confirms the receipt of the returned item and checks its condition.
6. The seller issues the refund to the customer’s selected payment method minus the refund administration fee.

Is there a restocking fee for returned items on Amazon?

Amazon does not generally charge a restocking fee for returned items. However, individual sellers may choose to apply restocking fees at their discretion. It’s essential to check the specific return policy of the seller you’re purchasing from to determine if any restocking fees apply.

How do I change my return settings on Amazon as a seller?

To change your return settings on Amazon as a seller, follow these steps:

1. Log in to your Seller Central account.
2. Go to the “Settings” menu in the top right corner and select “Return Settings.”
3. If applicable, you can adjust your return preferences, such as your return window, refund percentages, and restocking fees.
4. Save your changes to update your return settings.

Review your return settings periodically to ensure they align with your business policies and meet customer expectations.

How much is the maximum refund Administration fee?

Regarding Amazon’s refund administration fee, sellers should know that this fee applies when a refund is issued on a product the seller has already paid. The fee is calculated based on the original order-related fees but varies by specific factors.

To be precise, the maximum refund administration fee that Amazon charges you is $5.00 or 20% of the refunded charge, whichever is less. This fee is imposed to cover the costs associated with processing refunds, and sellers need to account for these fees when planning their finances.

It’s important to note that this fee structure applies only to non-book, Music, Video, and DVD (non-BMVD) products. For example, if a customer requests a refund on a $50 product and Amazon issues it, they will retain 20% of the original order-related fees, up to a maximum of $5. In this case, the refund administration fee would be $5, as it’s the lesser amount.