Return Refunds & Credits Guide

1. Understanding Return Financial Responsibility

When a return occurs, multiple financial considerations come into play:

Your Responsibilities:

• Processing customer refunds through your sales channel
• Managing payment processor disputes and chargebacks
• Maintaining customer service relationships
• Absorbing costs of non-restockable returns
• Paying return shipping costs (if applicable)

EFS Responsibilities:

• Providing accurate inspection documentation
• Restocking eligible items at no additional charge (beyond standard fees)
• Documenting damaged items with photos
• Assisting with carrier claims when EFS shipped the original order
• Compensating for EFS service errors (within limits)

Shared Responsibilities:

• Identifying cause of damage (customer use vs. transit vs. defect)
• Determining appropriate resolution
• Maintaining clear communication throughout process

2. Customer Refund Processing

EFS does not process customer refunds directly. All refunds to your customers must be handled through your own systems.

Your Refund Process

Step 1: Customer Requests Return

• Customer contacts you requesting return
• You authorize return and provide return label/address
• You notify EFS via Return Initiation Process

Step 2: EFS Inspects Return

• EFS completes inspection within 2-3 business days
• You receive notification with classification (restockable/damaged)
• Photos provided if item is damaged

Step 3: You Process Refund

• Review inspection results
• Process refund through your sales channel (Shopify, Amazon, etc.)
• Apply your return policy terms (full refund, partial refund, store credit)
• Deduct return shipping if applicable per your policy

Important: Do not wait for EFS inspection to communicate with customer. Customer service is your responsibility and should be handled promptly.

Refund Timing Best Practices

Partial Refunds

You may choose to issue partial refunds in the following situations:

Common partial refund scenarios:

• Item returned without original packaging (deduct repackaging cost)
• Item shows minor wear but customer claims “unused”
• Return shipping costs deducted per your policy
• Restocking fee applied per your stated policy
• Missing accessories or components

EFS provides documentation to support your decision:

• Detailed inspection notes
• Multiple photos showing condition
• Comparison to original order photos (if available)
• Classification rationale

3. Payment Processor Disputes and Chargebacks

When customers dispute charges through their credit card company or payment processor:

Common Dispute Reasons

EFS Documentation for Disputes

EFS can provide the following to support your dispute response:

For “Item Not Received” Disputes:

• ✓ Tracking number and carrier confirmation
• ✓ Delivery signature (if signature service was used)
• ✓ Proof of shipment from EFS facility
• ✓ Order processing timestamps

For “Item Not As Described” Disputes:

• ✓ Photos of item before shipment (if taken)
• ✓ Packing slip showing what was shipped
• ✓ SKU documentation from your FCP
• ✓ Return inspection photos if item was returned

For “Defective/Damaged” Disputes:

• ✓ Packaging method used
• ✓ Photos of packaging integrity
• ✓ Return inspection photos showing actual condition

For “Return Not Refunded” Disputes:

• ✓ Return receipt date
• ✓ Inspection results and classification
• ✓ Photos showing condition received
• ✓ Timeline of notifications sent to you

Requesting Dispute Documentation

Submit a support ticket titled: “Dispute Documentation Request – Order #[number]”

Include:

• Order number (yours and EFS confirmation number)
• Dispute reason/type
• Documentation needed
• Deadline for submission (if applicable)
• Payment processor case number

EFS Response Time: 2-3 business days for standard requests, 24 hours for urgent disputes with confirmed deadlines.

4. Carrier Damage Claims

When an item is damaged during shipping, you may be eligible to file a claim with the carrier.

EFS-Shipped Orders

For orders shipped by EFS using our carrier accounts (USPS, FedEx, UPS, ePost):

Carrier Insurance Coverage:

• Included: Up to $100 per package at no additional charge
• Additional insurance: Must be purchased at time of shipment
• Coverage applies to: Transit damage, loss, or theft while in carrier possession

Who Files the Claim: EFS files carrier claims on your behalf for shipments we processed.

Process:

1. Customer reports damage or non-delivery
2. You notify EFS via support ticket
3. EFS gathers required documentation
4. EFS files claim with carrier
5. Carrier investigates (15-30 business days typical)
6. If approved: Carrier reimburses EFS
7. EFS credits your account for approved amount

Required from You:

• Customer complaint/report details
• Photos from customer if damage claim
• Confirmation you wish to file claim
• Customer contact information for carrier follow-up (if needed)

Timeline:

• Support ticket submission: Immediate
• EFS claim filing: Within 3 business days
• Carrier decision: 15-30 business days
• Credit applied: Within 1 week of carrier approval

Self-Purchased Insurance

If you purchased additional insurance at time of shipment:

$100-$5,000 Coverage:

• Claim filed by EFS on your behalf
• Reimbursement up to insured value
• Same process as above

Important: Insurance must be purchased before shipment. Retroactive insurance is not available.

Claims Requiring Customer Packaging Retention

For high-value claims (over $500), carriers often require:

• Original packaging materials
• Photos of damaged packaging
• Photos of damaged product
• Photos showing how product was packed

Best Practice: Include notice on your packing slips requesting customers retain packaging materials for 30 days for warranty/damage claim purposes.

Claim Denials

Carriers may deny claims for the following reasons:

Common denial reasons:

• Insufficient packaging (carrier determination)
• Damage not visible on exterior packaging
• Package contents not properly declared
• Prohibited items or materials
• Customer refused delivery
• Damage occurred after delivery

If claim is denied:

1. EFS provides you with carrier’s denial reason
2. You may request appeal if you disagree
3. EFS can submit additional documentation for appeal
4. Final carrier decision is binding

Your Options After Denial:

• Absorb the loss as cost of doing business
• Process customer refund and write off inventory
• Improve packaging for future shipments
• Purchase higher insurance levels

5. EFS Service Error Liability and Credits

EFS may be liable for certain service errors that occur during our fulfillment operations.

Covered Service Errors

EFS accepts liability for the following errors when fault is determined to be ours, we will first try and bring the order back to it’s original state, by reshipping the correct item and issuing a call tag for the incorrect item:

Important Limitations:

• Maximum reimbursement: $100 per claim
• Annual cap: $1,000 per client regardless of number/severity of claims
• Normal shrinkage (3-5% annually) is not covered
• Claims must be filed within 30 days of discovery
• All outstanding invoices must be current to receive credit

What Is NOT Covered

EFS is not liable for:

Customer-Related Issues:

• Customer fraud or dishonesty
• Customer refusing delivery
• Customer providing wrong address
• Customer claims without supporting evidence

Carrier-Related Issues:

• Transit delays beyond EFS control
• Carrier damage (file carrier claim instead)
• Lost packages after carrier pickup
• Delivery issues at customer location

Third-Party Issues:

• Shopping cart integration failures
• Payment processor issues
• Supplier/manufacturer defects
• Shipping address verification service errors

Force Majeure:

• Natural disasters
• Pandemic-related disruptions
• Labor strikes
• Government actions
• Utility failures

Filing a Service Error Claim

Submit a support ticket titled: “Service Error Claim – [Error Type]”

Required Information:

• Order number (yours and EFS confirmation number)
• Description of error
• Date error discovered
• Customer impact (complaint, refund issued, etc.)
• Supporting documentation (screenshots, customer emails, photos)
• Requested resolution

Documentation Required:

• Proof of error (order details, shipping confirmation, etc.)
• Evidence of your financial loss (refund issued, replacement shipped)
• Customer communication showing complaint
• Photos if applicable (wrong item, damage, etc.)

Claims Review Process:

1. Support ticket submitted with required documentation
2. EFS investigates within 5 business days
3. Warehouse records, photos, and system logs reviewed
4. Determination made on liability and amount
5. You receive written response with decision
6. If approved: Credit applied to next invoice
7. If denied: Explanation provided with reasoning

Appeal Process: If your claim is denied and you disagree:

1. Submit additional evidence via support ticket
2. Request supervisor review
3. EFS conducts secondary investigation
4. Final determination made within 5 business days
5. Decision is final

6. Credit Application and Tracking

How Credits Are Applied

When EFS approves a credit (carrier claim or service error):

Credit Process:

1. Credit is noted in your support ticket
2. Credit appears on your next weekly invoice as a line item
3. Credit reduces total amount due
4. Credit description includes ticket number and reason
5. You receive email notification when invoice is available

Example Invoice Line:

Credit – Carrier Claim Approved (Ticket #12345)     -$85.00

Credit – Pick Error Reimbursement (Ticket #12346)   -$50.00

Tracking Your Credits

Method 1: Weekly Invoices

• Review each invoice for credit line items
• Credits show negative amounts
• Match ticket numbers to your records

Method 2: Support Tickets

• All credits are documented in originating support ticket
• Ticket shows approval date and amount
• Ticket updated when credit applied to invoice

Method 3: Billing History

1. Log in to FCP
2. Go to Billing → View Invoices
3. Click View Details for specific invoice
4. Credits shown as individual line items

Credit Disputes

If you believe a credit is missing or incorrect:

Submit a support ticket titled: “Missing Credit Inquiry – [Original Ticket #]”

Include:

• Original support ticket number
• Approved credit amount
• Date credit was approved
• Invoice date where credit should appear
• Current status

Resolution Timeline: 3-5 business days

7. Return Shipping Cost Management

Who Pays for Return Shipping?

Customer Returns: You determine your return policy:

• Customer pays return shipping (most common)
• You provide prepaid return label
• Shared cost (customer pays discounted rate)
• Free returns (you pay all costs)

Merchant Returns (You Shipping to EFS):

• You always pay for inbound return shipping
• Use your own carrier account, or
• Use EFS inbound freight discount program (optional)

EFS Inbound Freight Discount Program

For shipments you’re sending to EFS:

Benefits:

• Access to EFS’s 70% carrier discount
• Freight charges passed through on your invoice
• No upfront payment required
• Simplified logistics

How to Use:

1. Contact Client Care Account Specialist for quote
2. Provide shipment details (weight, dimensions, origin)
3. Receive cost estimate
4. Approve shipping
5. EFS arranges pickup
6. Charges appear on your next invoice

When This Makes Sense:

• Returning hurt bin items from EFS to your location
• Large returns between your locations
• Consolidated return shipments
• International return shipments

8. Tax Considerations for Returns

Sales Tax Refunds

When you process customer refunds:

Sales Tax Handling:

• You are responsible for sales tax refunds to customers
• Process through your sales channel/accounting system
• Follow your state’s sales tax regulations
• EFS does not handle sales tax calculations or refunds

For Your Records:

• Returns Report shows returned items
• Use report for sales tax reconciliation
• Consult your accountant for proper treatment

Inventory Value Adjustments

For your accounting purposes:

Restocked Items:

• Inventory value returns to your books
• Cost of goods sold adjustment may be needed
• Consult your accountant for proper accounting treatment

Non-Restockable Items:

• Inventory write-off when item goes to hurt bin
• Loss recognized when item disposed or returned damaged
• Cost of goods sold adjustment

EFS Provides:

• Detailed returns documentation
• Inventory Activity Reports
• Classification records (restocked vs. damaged)

9. Common Refund Scenarios

Scenario 1: Item Damaged in Transit (Carrier’s Fault)

Situation: Customer receives damaged item. Packaging shows external damage. The carriers pay out on the wholesale cost, you need to provide an invoice from your supplier outlining this cost.

Financial Resolution:

1. You issue customer refund (maintain good customer service)
2. You submit carrier claim via EFS support ticket
3. EFS files claim with carrier
4. Carrier approves claim (15-30 days)
5. EFS credits your account for approved amount
6. You recover refund cost through credit

Your Net Cost: $0 (if claim approved) or full refund amount (if claim denied)

Scenario 2: Customer Changed Mind (No Fault Return)

Situation: Customer returns unused item in perfect condition. Simply doesn’t want it.

Financial Resolution:

1. Customer pays return shipping (per your policy)
2. EFS inspects and restocks item
3. You issue customer refund minus return shipping cost (per your policy)
4. Item returns to your inventory at no cost

Your Net Cost: Lost initial shipping cost + payment processing fees

Scenario 3: Wrong Item Shipped (EFS Pick Error)

Situation: EFS picked wrong item for order. Customer received incorrect product.

Financial Resolution:

1. You issue customer refund or ship correct item
2. You file service error claim with EFS
3. EFS investigates and determines fault
4. EFS approves credit (up to $100)
5. Credit applied to your next invoice

Your Net Cost: Difference between actual cost and $100 credit (if your cost exceeds $100)

Scenario 4: Defective Product (Manufacturer Defect)

Situation: Customer receives item with manufacturing defect. Not EFS’s fault.

Financial Resolution:

1. You issue customer refund or replacement
2. Return inspected; EFS confirms defect (not shipping damage)
3. You file claim with supplier/manufacturer
4. Item placed in hurt bin for your disposition

Your Net Cost: Customer refund minus any manufacturer reimbursement

Scenario 5: Customer Fraud (Different Item Returned)

Situation: Customer returns wrong item, empty box, or damaged item claiming it arrived that way.

Financial Resolution:

1. EFS inspection reveals fraud (photos show wrong item, or damage inconsistent with transit damage)
2. EFS provides detailed documentation with photos
3. You use documentation to dispute customer refund request
4. You follow your anti-fraud policies

Your Net Cost: Depends on dispute resolution; documentation helps reduce fraudulent claims

10. Refund Policy Best Practices

Setting Customer Expectations

Clear Return Policy Should Include:

• ✓ Return window (30 days, 60 days, etc.)
• ✓ Condition requirements (unused, original packaging, tags attached)
• ✓ Who pays return shipping
• ✓ Refund timeline (upon receipt, after inspection)
• ✓ Restocking fees (if applicable)
• ✓ Non-returnable items
• ✓ Exchange vs. refund options
• ✓ Store credit vs. original payment method

Where to Display Return Policy:

• Product pages
• Checkout page
• Order confirmation email
• Packing slip included in shipment
• Dedicated page on your website
• FAQ section

Reducing Refund Costs

Strategies to minimize financial impact:

1. Improve Product Information
• Detailed descriptions reduce “not as expected” returns
• Multiple photos from different angles
• Sizing charts and dimension details
• Customer reviews showing real experiences
2. Quality Control
• Catch defects before shipping
• Proper packaging reduces transit damage
• Insurance on high-value items
3. Customer Service
• Respond quickly to questions pre-purchase
• Resolve issues without requiring returns when possible
• Offer partial refunds for minor issues
4. Return Policy Structure
• Restocking fees discourage frivolous returns
• Exchange-first policies reduce refund rates
• Store credit option keeps revenue
5. Clear Communication
• Set realistic delivery expectations
• Provide tracking information proactively
• Follow up on delivery

11. Financial Reporting and Reconciliation

Monthly Return Cost Analysis

Track these metrics monthly:

Return Rate Metrics:

• Total returns ÷ Total orders = Return rate %
• Total refunds ÷ Total revenue = Refund rate %
• Restocked items ÷ Total returns = Restock rate %

Cost Metrics:

• Total refunds issued
• Shipping costs (outbound + return)
• Restocking/processing fees
• Carrier claims received
• EFS service credits received
• Net cost of returns

Category Analysis:

• Return rate by product category
• Return rate by SKU
• Return reasons by category
• Seasonal patterns

Using EFS Reports for Financial Reconciliation

Reports to Run Monthly:

1. Returns Report
• Shows all returns processed
• Classification (restocked/damaged)
• Allows calculation of restockable rate
2. Inventory Activity Report
• Shows restocking transactions
• Verifies inventory value recovery
• Tracks hurt bin transfers
3. Invoice History
• Shows all return-related fees
• Credits applied
• Net return processing costs

Reconciliation Process:

1. Export all three reports for month
2. Match returns to refunds issued
3. Calculate recovered inventory value (restocked items)
4. Add return processing fees from invoices
5. Subtract carrier claim credits
6. Subtract EFS service error credits
7. Calculate true cost of returns

12. Support Contact

For questions about refunds, credits, or financial aspects of returns:

Support Ticket (Recommended):

• Client Info → Support in FCP
• Use appropriate ticket title:
• “Carrier Claim Request – Order #[number]”
• “Service Error Claim – [error type]”
• “Missing Credit Inquiry – Ticket #[number]”
• “Dispute Documentation Request – Order #[number]”

Direct Support:

• Email: [email protected]
• Phone: 1-866-922-6783 (Press 2 for Customer Service)
• Website: http://support.efulfillmentservice.com

For Accounting Questions: Contact your Client Care Account Specialist via support ticket for questions about invoicing, credit application, or billing concerns.

Next Steps

Continue to the Return Shipments to Seller guide for information on managing hurt bin items, requesting disposal, arranging returns to your location, and understanding storage fees.