How Much are Customer-Damaged Returns Costing you on FBA?

TL;DR

• Customer-damaged returns happen when buyers send back items in poor condition, but Amazon doesn’t always reimburse you unless you file a claim.

• These returns are a hidden cost because there are no alerts, and many sellers assume Amazon handles it automatically.

• Even a few unclaimed returns each month can lead to thousands in yearly losses, especially for high-volume sellers.

• You can find these returns in your account by checking return reports, inventory adjustments, and reimbursement reports.

• Most sellers don’t claim these losses due to lack of time, awareness, or understanding of Amazon’s policies.

• Tools like Refunzo automate the process of identifying missed reimbursements, filing claims, and helping you recover lost revenue easily.

Customer-damaged returns are one of the most overlooked ways Amazon FBA sellers lose money. When a customer sends back an item in poor condition, scratched, broken, stained, or incomplete, Amazon may mark it as “customer damaged.”

But here’s the catch: not all of these are automatically reimbursed. If you’re not actively tracking these returns and filing claims, you could be losing hundreds or even thousands of dollars each year without realizing it.

This blog breaks down everything you need to know about customer-damaged returns, what they are, why they’re a hidden cost, and how much they can impact your bottom line. We’ll also show you how to find these returns in your account, why many sellers miss claiming them, and most importantly, how to get that money back. With the help of tools like Refunzo, recovering these losses can be quick and stress-free.

What counts as a customer-damaged return?

A customer-damaged return happens when a buyer sends back a product that is no longer in its original condition. This could include items that are broken, scratched, stained, missing parts, or tampered with in any way.

For example, a customer might return a kitchen appliance with damaged packaging, a piece of clothing with visible wear or stains, or a toy with missing accessories. In all these cases, Amazon marks the item as “customer damaged” in your returns report.

These items are often unsellable and should not be returned to inventory. However, Amazon doesn’t always reimburse you automatically for these returns even if they’re clearly damaged by the customer. That’s where many sellers lose money without realizing it.

To qualify for Amazon FBA reimbursement, the damage must be caused by the customer and the item must be marked as unsellable. If Amazon chooses to restock the item, even if it’s damaged, you won’t get reimbursed. That’s why it’s important to review your returns regularly and look for “customer-damaged” tags.

Knowing what qualifies as a customer-damaged return is the first step toward protecting your profits. If you catch them early, you can file a claim and recover the money you’re owed.

Why is this a hidden cost for FBA sellers?

Customer-damaged returns are a hidden cost for FBA sellers because they often go unnoticed in the day-to-day hustle of running an Amazon business. When a customer returns an item in damaged condition, Amazon may mark it as “customer damaged.”

However, unless the item is unsellable and not restocked, Amazon won’t automatically reimburse you. That means unless you actively check your reports and file a claim, you’re left absorbing the cost of that damaged inventory.

The problem is, many sellers assume Amazon will handle everything fairly and automatically issue refunds where needed. In reality, these returns can quietly chip away at your profits, especially if you sell high volumes or products with frequent returns. Over time, these unclaimed reimbursements add up to significant losses.

What makes this cost truly hidden is the lack of alerts or automatic actions from Amazon. There’s no obvious notification saying, “Hey, we didn’t reimburse you for this one.” You have to go looking for it, and many sellers simply don’t have the time.

That’s why understanding this issue and taking action is critical. Whether you handle it manually or use a tool to track and claim these returns, staying on top of customer-damaged inventory is key to protecting your margins.

Real examples of what it can cost you

Let’s say you sell a product that costs you $10 to source and sells on Amazon for $30. If a customer returns it damaged, say, with missing parts or broken packaging, Amazon may label it as “customer damaged” and restock it, even though it's unsellable. In this case, you don’t get the item back, and you don’t get reimbursed. That’s a $10 loss right there.

Now imagine this happens just 10 times a month. That’s $100 in lost inventory monthly or $1,200 per year on just one product. If you have 10 or 20 SKUs, the cost multiplies fast. Many sellers don’t track these cases or assume Amazon will refund them automatically, but that’s rarely the case.

These silent losses eat into your profit margins. Tools like Refunzo help catch these cases early, file claims, and recover your money with Amazon inventory reimbursement. So you’re not unknowingly giving away free products every month.

How to find customer-damaged returns in your account

Finding customer-damaged returns in your Amazon FBA account isn’t difficult, but it does take some time and attention to detail. If you’re not actively checking, you could easily miss them. Here’s how you can locate them:

1. Go to the returns reports

Log in to your Amazon Seller Central account and navigate to reports > fulfillment > customer concessions > returns. This report shows all customer returns, including the return reason.

2. Look for “customer damaged” in return reasons

Once you open the report, scan the "return reason" column for terms like “customer damaged,” “damaged item,” or “missing parts.” These are key indicators that the return may qualify for reimbursement if the item can’t be restocked.

3. Cross-check with the inventory adjustments report

Go to reports > fulfillment > inventory adjustments and filter by adjustment type “customer damaged.” This helps confirm if the item was removed from inventory or restocked.

4. Check the reimbursement report

Now go to reports > fulfillment > reimbursements to see if Amazon issued a reimbursement. If no reimbursement was made for a damaged item that wasn’t restocked, you may be eligible to file a claim.

5. Use Automation Tools

Instead of doing this manually each week, tools like Refunzo automatically scan your account, identify customer-damaged returns, and alert you to items that should be reimbursed. Staying on top of these reports regularly, or automating the process, ensures you don’t miss out on your Amazon FBA inventory reimbursements.

Why don’t sellers claim these losses?

Many Amazon FBA sellers don’t claim customer-damaged losses simply because they’re unaware of them. Amazon doesn’t notify you when an item is marked as “customer damaged” and not reimbursed. Unless you’re regularly checking return reports and comparing them against your inventory records, these cases slip through the cracks.

Another reason is time. Manually reviewing each return, identifying which items qualify for reimbursement, gathering the necessary data, and filing claims through Seller Central takes effort, especially for busy sellers managing multiple SKUs.

Some sellers also assume Amazon will automatically reimburse them for anything that isn’t resellable, which isn’t true. Amazon only reimburses you if the item meets specific conditions, and it’s your responsibility to file the claim.

Finally, the process can feel confusing or tedious, leading many sellers to skip it entirely. That’s where automation tools help by spotting missed claims and handling the process, so you don’t leave money behind.

How to get that money back

Getting your money back for customer-damaged returns on Amazon requires you to take a few simple but important steps. First, regularly check your returns and FBA inventory adjustments reports in Seller Central. Look for items marked as “customer damaged” that were not restocked and have not been reimbursed.

Once identified, you’ll need to file a claim through Seller Central. Include all relevant details like the ASIN, order ID, return reason, and a short explanation of the condition of the item. It’s helpful to mention that the item is unsellable and has not been returned to your inventory.

Make sure you’re within Amazon’s claim window, usually 18 months from the return date. Being timely and accurate improves your chances of approval. Also, stay organized. Keeping a simple record of claims and their outcomes helps ensure you’re not missing any reimbursements. By being proactive, you can recover money that might otherwise be lost.

How Refunzo makes it easy

Refunzo makes it incredibly easy for Amazon FBA sellers to recover money from customer-damaged returns and other overlooked issues. Instead of digging through reports manually, Refunzo connects directly to your Amazon account and scans for problems like customer-damaged items, lost inventory, and incorrect refunds.

The tool uses over 20 audit checks to spot issues that Amazon may have missed. Once a customer-damaged return is identified, Refunzo either alerts you to file a claim or handles the entire process for you, depending on your preference. 

You can file Amazon FBA reimbursement claims yourself using the detailed report Refunzo provides, or let their team submit and follow up with Amazon on your behalf. Refunzo also sends reminders about approaching deadlines, so you never miss your window to file a claim.

Everything is tracked in one clean dashboard, making it easy to monitor your reimbursements. There’s no subscription fee, no upfront payment, and no credit card needed to start. You only pay a small percentage if Refunzo successfully recovers money for you.

It’s a simple, risk-free way to stop losing money to customer-damaged returns and take control of your FBA reimbursements without adding more to your to-do list.

Final thoughts: The real cost of doing nothing

Customer-damaged returns may seem small, but when left unclaimed, they silently eat into your profits. Every missed reimbursement is money Amazon owes you but won’t pay unless you ask for it. Manually tracking these losses is time-consuming, which is why many sellers never bother.

But with tools like Refunzo, recovering your money becomes simple and stress-free. From scanning reports to filing claims, it handles the hard part for you. If you're serious about protecting your margins, it's time to stop letting these returns go unnoticed. Explore our trusted Amazon seller reimbursement services and start claiming what’s rightfully yours before those hidden costs add up.