Amazon’s New Policies on Defective Products & Its Impact on Sellers

Amazon has changed their approach to defective products, reimbursement and seller insurance. Here’s what you need to know.

Defective products can be a challenge for sellers, especially when those products inadvertently cause property damage or personal injury. As of September 1, 2021, Amazon has changed its policies around defective products and it’s important that sellers know about these changes and how they affect their selling on the platform.

Note that we are talking about defective items that have resulted in the damaging of personal property or personal injury, since these products require a different process than products that are defective and need a more standard return.

Let’s run through the changes, how they affect sellers and what it means for your business.

What are the Changes?

As per the announcement, Amazon is making three changes:

  • Expand the A-to-Z Guarantee into a more efficient process for both parties to resolve claims.
  • Pay valid claims less than $1,000 and not seek reimbursement from sellers who have valid insurance.
  • Make it easier for sellers to buy insurance at competitive rates through Amazon Insurance Accelerator.

So, what do these each mean for sellers on Amazon? Let’s break it down.

The first change relates to changing the process to resolve defective item claims by expanding the A-to-Z Guarantee program. This program was created to help facilitate product returns and other issues occurring between third-party sellers and Amazon customers. Prior to September 1, 2021, all defective claims were handled between sellers and customers. Now, “Amazon will facilitate resolution of property damage and personal injury claims between the customer, the seller, and their insurance provider.”

What this means is that customers can contact Amazon directly and Amazon will notify the seller. In the event that a seller doesn’t respond, Amazon will resolve the issue for the customer and pursue the seller on their own.

The second part is about compensation. Using the updated policy of dealing directly with clients, Amazon will compensate customers up to $1,000 related to a defective product that results in property damage or personal injury. What’s more, so long as the seller abides by their policies and has sufficient insurance, “Amazon will bear these costs and not seek reimbursement from sellers.” It’s important to note that these will not affect your order defect rate and you will be communicated with about defective products so that you can take appropriate action on your end.

Finally, there is the insurance and Amazon’s Insurance Accelerator program. Previously, Amazon required “that sellers obtain product liability insurance and name Amazon as an additional insured once they reach $10,000 in sales for three consecutive months on Amazon.” Now, the time has been reduced to one month.

To help sellers get insurance, Amazon has partnered with a broker to offer lots of insurance options. These are accessible through the program, which you can find through the seller portal.

What should you do now?

Now that we’ve broken down the changes, let’s get into what this means for you, the Amazon seller.

Essentially, this means you will still be responsible for keeping up with defective orders and being properly insured, but you will not have to be responsible for claims of under $1,000. Bear in mind that continuing the sell defective products will negatively impact your rankings on Amazon and potentially lead to other disciplinary actions. This program is designed to expedite the claims process between Amazon and customers.

Learn more with Wizards of Ecom

Are you an online seller that wants to understand all the intricacies of running online sales on Amazon and other platforms? Then Wizards of Ecom is here to help. We offer a wide range of seminars, classes and platforms to help you learn everything you need to know about selling, profiting and growing. Check back with us frequently for more tips and to check out our many classes put on by experienced Ecom experts. Click here to learn more.

Carlos Alvarez

"A bit about " Carlos Alvarez " in his own words: "Alvarez sums up his mission to help online sellers with a quote he heard early on in his career. “New sellers constantly compare their Chapter 1 to another seller’s Chapter 20. They see what other veteran sellers are doing and they judge their success and failures by this benchmark.” His goal is to show sellers a realistic path to success, and how they can enjoy every chapter of their own, unique journey."

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