FAQs on Amazon Compliance Policy Changes

Amazon's 2025 compliance updates introduce stricter rules for sellers, especially those using Fulfillment by Amazon (FBA). Key changes include reduced reimbursement amounts, shorter claim windows, tighter inventory controls, and updated insurance requirements. These updates demand precise documentation, better inventory management, and adherence to stricter performance metrics.

Key Takeaways:

• Reimbursements: Based on manufacturing costs, capped at $2,000 per item, with a 60-day claim window.

• Inventory Rules: Long-term storage fees now apply after 271 days; storage limits tied to performance metrics like IPI score (minimum 400 required).

• Insurance: Sellers exceeding $10,000 in monthly sales must maintain $1M liability insurance.

• Performance Metrics: Late shipment rate under 4%, order defect rate below 1%, and cancellation rate under 2.5% are mandatory.

To stay compliant, sellers must monitor inventory, maintain accurate records, and meet Amazon’s updated standards. Automation tools like Refunzo can simplify claims and compliance management, ensuring sellers avoid penalties and protect their accounts.

Amazon's New Rules for 2025: What Sellers Must Know NOW!

FBA Reimbursement and Inventory Management Changes

Amazon's updates for 2025 introduce new rules for FBA reimbursements and inventory storage. These changes call for strategic shifts to keep your business profitable.

New FBA Reimbursement Policy Requirements

One of the biggest changes is how reimbursements for lost or damaged inventory are calculated. Previously, sellers were reimbursed based on estimated sale proceeds - essentially, the selling price minus Amazon's fees. Starting March 31, 2025, reimbursements will instead be based solely on the product's manufacturing cost.

What does this mean? If you sell a product for $40 but it costs $10 to manufacture, you'll only receive $10 as reimbursement. This calculation excludes shipping, handling, customs duties, and other related expenses.

Sellers can either use Amazon's estimates or provide their own manufacturing costs. To avoid getting shortchanged, make sure to input your actual costs in Seller Central. However, this process requires detailed documentation, including invoices, proof of purchase, and shipment tracking records.

Additionally, the window for filing claims has been shortened, so you'll need to monitor inventory discrepancies more frequently and keep your records well-organized.

To adjust, consider these steps:

• Audit your SKUs to identify high-risk items.

• Reinforce FBA packaging for fragile products.

• Look into third-party inventory insurance for added protection.

• Track reimbursement trends to refine your inventory strategy.

Now, let's look at how storage and restocking changes will affect your operations.

New Inventory Storage and Restock Rules

Amazon has tightened its FBA storage limits, reducing them from 6 months to 5 months of forecasted sales. On top of that, ASIN-level restock limits are back, meaning each product now has specific limits based on performance metrics and sales velocity.

New fees and penalties are also in place. A Storage Utilization Surcharge will apply if you hold more than 26 weeks' worth of inventory. Long-term storage fees will now kick in after 271 days instead of 365 days - a three-month shift that could hit slow-moving inventory hard. On the other hand, a Low-Inventory Level Fee will apply if your stock falls below 28 days' worth of supply, prompting immediate replenishment.

"Make sure you are addressing excess or unhealthy inventory to free up more capacity for faster-selling products." - Amazon Representative

Amazon has also tied storage capacity to performance metrics like your Inventory Performance Index (IPI) score, sales velocity, and overall efficiency. Poor performance can lead to drastic capacity cuts - some sellers have reported reductions as high as 75%. While Amazon has removed automatic over-capacity fees, exceeding your limits will block new FBA shipments. This makes it crucial to monitor inventory levels and remove slow-moving products proactively.

For extra storage, you might consider Amazon Warehousing & Distribution (AWD). Although AWD rates are increasing to $0.38 per cubic foot per month in 2025, inventory stored through AWD won’t count against your FBA storage limits.

How IPI Score Affects Inventory Management

Your IPI score, which ranges from 0 to 1,000, plays an even bigger role under the new policies. This score reflects how well you manage your FBA inventory and directly impacts your storage capacity and fees. If your IPI drops below 400 for more than eight weeks, you’ll face restricted storage and higher fees. Amazon updates these scores weekly in Seller Central.

Several factors influence your IPI score, including:

• Excess inventory percentage: Avoid holding more than a 90-day supply.

• Sell-through rate: Aim for inventory turnover within 4–6 weeks.

• Stranded inventory percentage: Fix inactive listings caused by policy issues.

• In-stock rate: Keep your best-selling items stocked for 30–60 days.

To maintain a healthy IPI score, act quickly. Run promotions, adjust PPC campaigns, or remove underperforming products to improve sell-through rates. You can also use Amazon's Capacity Manager to request additional storage when necessary.

New Seller Liability Insurance Requirements

As part of the compliance updates for 2025, Amazon has tightened its insurance requirements to enhance operational security. Sellers are now required to maintain commercial liability insurance once their gross monthly sales exceed $10,000. A compliant Certificate of Insurance (COI) must be uploaded within 30 days of reaching this threshold, and Amazon reserves the right to request proof of coverage at any time.

These changes mean sellers need to stay on top of their insurance documentation to avoid disruptions.

Insurance Coverage Amounts and Notification Process

Once your monthly sales surpass $10,000, you’re required to carry insurance with at least $1 million in coverage per occurrence and in aggregate, on an occurrence basis. This policy must cover all your listed products.

It’s crucial that your policy explicitly lists "Amazon.com Services LLC and its affiliates and assignees" as additional insureds. Omitting this language could result in your COI being rejected.

"Commercial liability insurance will protect you from incidents resulting from the products you sell, and give you peace of mind while you focus on growing your business." - Steve_Amazon, Amazon

Additionally, Amazon requires your insurer to provide at least 30 days' notice for any policy cancellations, modifications, or non-renewals. This ensures there are no unexpected coverage gaps.

Amazon also steps in to handle claims under $1,000 directly at no cost to sellers, provided your insurance is valid and you comply with their policies. These smaller claims represent over 80% of all cases in its marketplace.

"Amazon will directly pay customers for claims under $1,000 - which account for more than 80% of cases - at no cost to sellers, and may step in to pay claims for higher amounts if the seller is unresponsive or rejects a claim we believe to be valid." - Amazon

Now that you know the coverage requirements, here’s how to stay compliant and manage your seller insurance effectively.

How to Manage Seller Insurance Compliance

Failing to meet insurance requirements can lead to serious penalties, including listing removals, payment holds, or even account suspension until a valid COI is submitted.

Uploading Your COI

To upload your COI, log in to Seller Central and go to Account Info > Business Insurance > Step 2: Upload Proof of Insurance. You’ll need to provide details like the insurer name, insured name, policy number, and coverage dates. Make sure the insured name exactly matches your legal entity name in Seller Central - any mismatch can result in rejection. Your COI must be complete, signed, and valid for at least 60 days from the date of submission. If it’s not in English, include a certified translation. Amazon typically reviews COIs within 2–5 business days.

Insurance Costs

Premiums depend on your product category and associated risk. For lower-risk products, annual premiums generally range from $250 to $600. Private-label sellers in low-risk categories might pay between $300 and $900 annually. Higher-risk products, however, can lead to premiums in the thousands. Some insurers, like Assureful, provide monthly payment options starting at $26, while The Hartford reported an average monthly premium of $141 for Business Owner’s Policy customers in April 2025.

Avoiding Compliance Issues

To prevent lapses in coverage, keep a PDF copy of your COI stored securely and set a calendar reminder at least 30 days before renewal. If you add new products, ensure they’re covered under your current policy. For claims-made policies, consider purchasing tail coverage when switching insurers to maintain protection.

Amazon’s Insurance Accelerator program can connect you with pre-approved insurers familiar with their requirements, simplifying the approval process.

Maintaining compliance isn’t a one-time task. Regularly review your policy, stay ahead of renewals, and ensure your documentation is up-to-date. By doing so, you’ll protect your account and business from potential disruptions.

Performance Metrics and Compliance Monitoring Updates

Amazon has rolled out updates for 2025 that emphasize proactive, tech-enabled monitoring to catch compliance issues early. Instead of waiting for customer complaints to pile up, the platform now uses advanced systems to continuously track seller performance across various points of interaction. This shift allows Amazon to spot potential problems early and address them before they escalate. These updated metrics are crucial for avoiding account penalties, as outlined below.

Updated Performance Metrics and Limits

Amazon continues to monitor key performance metrics, but the enforcement of these standards has become stricter, with more frequent checks. Here's what sellers need to know:

• Order Defect Rate (ODR): Must stay below 1% to avoid account restrictions.

• Late Shipment Rate: Should remain under 4%, or sellers risk receiving performance warnings or even account suspension.

• Pre-fulfillment Cancel Rate: Needs to be under 2.5% to prevent listing restrictions and account reviews.

Amazon has also introduced a more detailed Customer Experience (CX) Score. This new metric evaluates factors like response times to customer inquiries, the quality of product listings, and consistency in order fulfillment. Here's a quick breakdown of the updated thresholds:

These metrics work alongside inventory and reimbursement standards to help sellers maintain their account health.

For programs like Seller Fulfilled Prime (SFP) and Premium Shipping, Amazon has raised the bar. Sellers must now demonstrate consistent and reliable delivery performance, with minimal deviations from promised delivery times. Delivery windows are tracked more precisely, not just for on-time arrivals but also for consistency.

Tax compliance has also been tightened. Sellers are required to maintain accurate tax settings and documentation in Seller Central. Regular audits are now conducted, and any discrepancies are flagged automatically, requiring immediate attention to avoid further issues.

How to Avoid Penalties and Account Suspension

Account suspension is a serious risk for sellers who fail to meet Amazon's performance standards. To protect your account:

• Monitor Your Account Health Dashboard: Regularly check your dashboard and maintain organized records to respond quickly to compliance alerts.

• Prioritize Customer Service: Respond to customer inquiries within 24 hours, process returns and refunds promptly, and address negative reviews to maintain high satisfaction levels.

• Train Your Team: If multiple people manage your account, ensure everyone is familiar with Amazon's latest policies and procedures.

• Use Automation Tools: Supplement manual reviews with automation tools to stay on top of performance metrics.

The competitive landscape in 2025 offers a silver lining for sellers who stay compliant. With the number of active sellers dropping by 20.8% - from 2.4 million in 2021 to 1.9 million in 2025 - remaining sellers now enjoy 31.2% more monthly traffic per seller. This increased visibility highlights the importance of maintaining strong compliance records and delivering a great customer experience.

Adapting to these stricter standards requires ongoing effort and investment in reliable systems, but sellers who rise to the challenge are well-positioned for long-term success in Amazon's evolving marketplace.

Tools and Services for Compliance Management

Amazon’s tightening compliance updates for FBA operations have made it clear: relying solely on manual processes is no longer practical. Managing these requirements can feel overwhelming, but automation offers a way to stay ahead, ensuring sellers maintain strong account health while focusing on growing their business.

Using Automation for Compliance Tasks

Automation tools have become indispensable for sellers aiming to keep their accounts in good standing without the constant hassle of manual checks. These tools don’t just save time - they also help sellers avoid costly mistakes and improve overall efficiency.

For instance, automated performance monitoring keeps an eye on key metrics like Order Defect Rate and Late Shipment Rate, sending alerts when thresholds are close to being breached. This proactive system gives sellers the chance to fix problems before they escalate into bigger issues.

Inventory management automation is another game-changer. These tools help sellers maintain the right inventory levels in line with Amazon’s guidelines by flagging restock issues early. This can prevent compliance headaches, like running out of stock or incurring unnecessary storage fees.

Financial reconciliation automation is equally important. By comparing your records with Amazon’s data, these tools can identify discrepancies in fees, refunds, or inventory counts. Reports show that these systems can improve operational efficiency by up to 50% compared to traditional methods.

Beyond compliance, automation reduces human error and streamlines workflows, leading to fewer order issues and higher customer satisfaction - both of which are critical under Amazon’s stricter policies.

These benefits make automation a cornerstone for effective compliance management.

Refunzo: Complete FBA Reconciliation and Compliance Support

Among the available tools, Refunzo stands out as a comprehensive solution for tackling Amazon’s increasingly stringent reimbursement and compliance challenges. Its primary focus? Ensuring your financial records align with Amazon’s data - a critical need given Amazon’s updated policies requiring precise documentation and timely claims.

Refunzo offers lifetime free reconciliation, powered by over 20 automated criteria checks that identify discrepancies in your FBA account. This includes everything from lost inventory to incorrect fee charges - issues that manual reviews often overlook. The platform continuously monitors your account and alerts you to potential reimbursement opportunities within Amazon’s claim windows, which range from 18 to 90 days depending on the issue.

What makes Refunzo unique is its two-fold approach to reimbursement management. After identifying potential claims, sellers have two options: they can either file claims themselves using detailed reports or let Refunzo’s team handle the entire process. As Brijesh Singha, CEO of eStore Factory, explains:

"The claims process requires both time and expertise. Many sellers lack the resources to monitor every detail, and as a result, potential refunds are left unclaimed. Without active tracking and claims filing, sellers could be losing significant revenue."

For those who choose Refunzo’s claims management service, the team manually verifies and files each claim, ensuring compliance with Amazon’s strict documentation requirements. The service operates on a 15% commission fee (capped at $5,000), charged only after reimbursements are credited to your account.

Refunzo’s reputation backs up its effectiveness. With a 4.5/5 rating on Trustpilot based on 27 reviews, it’s clear that sellers trust the platform to uncover funds Amazon owes them due to lost or damaged inventory. As Jimi Patel of eStore Factory puts it:

"Our goal with Refunzo is to empower sellers by simplifying a tedious process. Sellers connect their account, and the platform identifies missed reimbursements, giving them a clear picture of what’s owed."

Designed with compliance in mind, Refunzo works within Amazon’s policies rather than trying to bypass them. Beyond claim management, it offers support for international marketplaces, helping sellers navigate compliance requirements across different regions. It also integrates smoothly with other compliance tools, providing a robust safety net against operational risks.

With Amazon’s compliance standards set to become even stricter in 2025, having a reliable reconciliation solution like Refunzo is about more than just recovering lost revenue. It’s about keeping your financial records accurate for audits and staying prepared for whatever changes come next. Refunzo ensures sellers can meet today’s demands while staying ready for the future.

Summary and Action Steps

Amazon's updated compliance policies for 2025 bring notable changes for sellers, particularly those using Fulfillment by Amazon (FBA). These updates impact areas like reimbursement limits, delivery performance, and packaging responsibilities. Here's a breakdown of the key changes and actionable steps to stay compliant.

Key Changes in 2025 Compliance Policies

• FBA Reimbursement Limits:

  Reimbursements are now capped at $2,000 per item, and the claim window has been reduced from 18 months to just 2 months.

• Stolen Goods Documentation:

  Sellers must maintain thorough records of their supply chain, including sourcing relationships and purchase agreements.

• Seller Fulfilled Prime (SFP) Delivery Targets:

  During the holiday season, at least 20% of standard-size items must be delivered within 1 day, and 45% within 2 days.

• On-Time Delivery Rate (OTDR):

  A 90% on-time delivery rate is now mandatory for all seller-fulfilled products to avoid account restrictions.

• Packaging for Sharp Products:

  Sellers are now fully responsible for the proper packaging of sharp items, as Amazon no longer provides prep services for these products.

Steps to Ensure Compliance

• Adjust Pricing and Inventory Plans:

  Regularly review FBA Inventory Reconciliation Reports to identify discrepancies and align strategies with the updated reimbursement policies.

• Maintain Detailed Sourcing Records:

  Keep all invoices, purchase orders, and supplier agreements organized to meet the stolen goods policy requirements.

• Optimize Product Listings:

  Review and update product titles to comply with Amazon's character limits and formatting standards.

• Track Delivery Metrics:

  For SFP, implement systems to monitor delivery performance and meet the stricter holiday season requirements.

• Revise Packaging Procedures:

  Ensure sharp products are packaged appropriately to avoid issues at fulfillment centers.

• Utilize Automation Tools:

  Consider tools like Refunzo to simplify reconciliation and claims processing. Refunzo offers a lifetime free Amazon FBA reconciliation service and optional assistance with reimbursement claims, helping you manage claims within the reduced 2-month window.

Taking these steps promptly will help you navigate Amazon's updated policies while protecting your account. Staying proactive with documentation, monitoring, and compliance will be crucial as these changes roll out.

FAQs

How can I make sure my FBA reimbursements comply with Amazon's new policy on manufacturing costs?

To align with Amazon's updated FBA reimbursement policy, it's crucial to first ensure your inventory records accurately document the manufacturing costs of your products. Since reimbursements will now hinge on these costs rather than retail prices, maintaining detailed and precise records is non-negotiable.

On top of that, make it a habit to regularly review Amazon's policy updates and adjust your claims to match the new requirements. Double-check that all your supporting documents are current and complete - this will help you avoid any shortfalls in reimbursements when the policy officially takes effect on March 31, 2025. Proactive preparation is key to maximizing your reimbursements while staying fully compliant with the updated rules.

How can I maintain a strong IPI score under Amazon's updated inventory management rules?

To maintain a solid Amazon IPI score under the updated inventory management rules, focus on smart inventory practices. Start by addressing stranded inventory, boosting sell-through rates, and cutting down on excess stock. Keeping your top-selling products consistently in stock is crucial to meet customer demand and maintain sales momentum.

Make it a habit to review your inventory regularly. Identify and phase out slow-moving items while fine-tuning stock levels to prevent overstocking. The IPI score is designed to reward sellers who stay on top of their inventory game, so staying ahead with proactive management is your best strategy for success.

How do Amazon’s updated insurance requirements affect sellers with varying monthly sales, and what should they do to stay compliant?

Amazon has introduced an updated insurance policy requiring sellers with monthly sales exceeding $10,000 to carry at least $1 million in liability coverage per incident. This shift could pose challenges for sellers whose sales fluctuate, as they might unexpectedly surpass the threshold.

To remain compliant with Amazon’s rules, sellers should:

• Keep a close eye on their monthly sales to see if they cross the $10,000 mark.

• Adjust their insurance coverage promptly to align with Amazon’s requirements.

• Submit proof of insurance via Amazon Seller Central and ensure the policy remains active for several months after submission.

By routinely reviewing your insurance coverage, you can avoid account suspensions and maintain smooth operations within Amazon’s marketplace.

Related Blog Posts

• Understanding Amazon's FBA Reimbursement Policy

• FBA Reimbursement FAQs: Expert Answers for Sellers

• Amazon Reimbursement Policy 2025: Key Updates

• How To Monitor Amazon FBA Policy Changes