“Returnless” Refund and Automatic Return Approval: Should Sellers Embrace Them?

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Online retailers were in an uproar back in 2017 after e-commerce giant Amazon unveiled its “returnless refunds” policy. The policy allowed customers to claim a refund for products purchased through the site without the need to ship the goods back.

Participation among sellers was optional. Still, many speculated that it set a bad precedent. They said it would lead people to expect returnless refunds as a new baseline, just as Amazon had trained shoppers to expect free two-day shipping. Add to that the frustration about automatic return authorizations, as all products without a specific exemption provided by Amazon were eligible for returns.

Now that some time has passed, we should ask: what were these policies? What impact did they really have, and did they turn out to be the doomsday prophecy retailers predicted?

What are the Policies?

To clarify, returnless refunds have been offered on orders fulfilled by Amazon for years. However, returnless refunds are now an “opt-in” practice for Amazon third-party sellers, too.

Amazon sellers have the option to allow for returnless refunds on all products or only on select items. If a customer requests a refund on a product, and returnless refunds are available for that product, then Amazon will automatically authorize the refund on the seller’s behalf. Customers can initiate the process directly through Amazon without contacting the seller.

At the same time, Amazon facilitates automatic return approvals through their Marketplace. This is not an option for sellers. Exemptions are only granted by Amazon for specific SKUs.

Why Were Marketplace Sellers Upset?

Many retailers would normally attempt to communicate with the customer and work out a solution to avoid a return. With returnless refunds, though, any customer can simply log in to Amazon and print a return label without first contacting the seller. They can even keep the goods to boot. This eliminates the possibility of working out a mutually agreeable alternative to avoid a return.

Sellers have no way of knowing about an inbound return until it happens. However, they’re still forced to process these returns, and do so as quickly as possible.

This isn’t a problem for Amazon, which has the infrastructure to process returns quickly and can absorb the associated costs. Smaller merchants, however, could chafe under strict return handling operation guidelines.

I can see a scenario in which customer abuse becomes a serious problem. If buyers can complete a purchase, then request a refund with the click of a button and keep the goods ordered, that could create a high risk for abuse.

Maybe It’s NOT the End of the World

Is the danger overblown? Probably.

On one hand, returnless refunds and automatic return approval place higher expectations and responsibilities on third-party retailers. However, the practice is intended primarily for merchandise that is too difficult or costly to ship or resell. The goal is to make returns as customer-friendly as possible, with minimal impact on sellers.

Buyers will find a way to get their money back if they want it. Customers who can’t get standard refunds, or who find the process too demanding or time-consuming, often use chargebacks as shortcuts (a process known as friendly fraud).

Friendly fraud costs sellers much more per dollar than a standard refund. The merchant loses sales revenue and merchandise, and is also subject to punitive chargeback fees and higher overhead. They also suffer longer-term damage that can jeopardize their right to process transactions. The acquirer may simply terminate the seller’s account if their chargeback-to-transaction ratio gets too high.

Six in 10 chargebacks filed by cardholders may be friendly fraud. It’s a fast-growing problem because customers simply don’t understand the ramifications.

Customer-Friendly Policies are the Best Friendly Fraud Defense

This new Amazon policy is, in fact, what retailers should have been working toward anyway.

ALL online merchants—not just those in the Amazon Marketplace—need to look at simplifying customer-facing processes like returns. An easier return process means happier customers, reduced friction, and fewer chargebacks.

Of course, optimal service practices are vital at every stage. Here are a few more ways merchants can improve customer satisfaction, streamline returns, and prevent friendly fraud chargebacks:

·       Provide 24/7 customer service: Online markets don’t operate on business hours in any single time zone. Merchants need live representatives ready to help customers at all hours.

·       Get positive affirmation from the customer: Is the customer satisfied? Never assume that a matter is resolved unless the customer confirms that they’re happy with the outcome.

·       Answer calls before the third ring: Customers are likely to hang up if their calls aren’t answered by the third ring. The probability of a hang up increases substantially with each subsequent ring.

·       Be active on social media: This should be obvious by now, but it’s essential that retailers have an active presence on all major social media platforms.

·       Identify room for improvement: Regularly review policies and practice with an eye to where improvements can be made. Consult employees and customers as part of this process.

·       Build relationships with customers: Engage customers on a personal level by offering special incentives to regular shoppers. This will build positive feelings toward your brand.

·       Value customer service representatives: These people represent the business to customers. Make sure they’re happy. Take care of them to ensure they perform to the best of their abilities.

·       Keep up with contingency plans: Have a detailed plan of attack ready to implement in the event of a natural disaster or other emergency that threatens to disrupt service.

Two key challenges we see for Amazon merchants include not having time to answer dispute requests, and having difficulty combining relevant chargeback stats for analysis. By adopting a new strategy with more emphasis on customer support, though, sellers can make Amazon’s new rules work in their favor.

Great service can mean more sales, better customer interactions, and long-term sustainability, all without contributing to increased returns. Believe me: that’s far better than the alternative.

Monica Eaton-Cardone is the COO and Co-Founder of Chargebacks911.