You’re Probably Still Giving Partial Refunds on Defective Returns

Amazon Seller Central announcement: 9 October 2026

Amazon has added return-reason controls to FBA partial refunds, and the headline reads like good news: sellers can finally choose which return reasons qualify for a refund-and-keep offer, instead of the programme applying to everything. It is good news. But it arrives with a default that nobody has been told about. If you enrolled in FBA partial refunds before this update and have not revisited your settings, you are still offering partial refunds on every eligible return reason — including returns that point to a defective product. Amazon did not reset your configuration. There is no notification and no forced migration. Here is what changed, what it is costing, and how to fix it in a single sitting.

1. What Amazon Actually Changed

FBA partial refunds let a customer keep the product and receive part of the purchase price back instead of shipping it to a fulfilment centre. The mechanism works like an Amazon returnless refund, with one important difference: the seller keeps part of the sale rather than refunding the full price.

Before this update, a seller could choose which products took part in the programme. But once a product was enrolled, the partial refund applied to every eligible return reason. There was no way to say “I’ll accept a partial refund when the customer changed their mind, but not when they say it arrived broken.”

That distinction now exists. Amazon announced in Seller Central that sellers can select which return reasons qualify for a partial refund, configured in one of two ways. The settings live under FBA returns evaluation and ownership settings in Seller Central, alongside the older returnless-resolutions controls.

When Amazon first launched the programme in October 2025 it covered six stores — the US, UK, Germany, France, Italy and Spain. Canada is the one marketplace not named at launch, which makes it the addition here. Sellers can update return reasons, switch setup options, or turn off specific reasons on the FBA Partial Refunds settings page in Seller Central.

2. The Default Nobody Reset

This is the part worth reading twice.

Amazon has not changed anyone’s existing configuration. Enrolled sellers see no automatic change, because partial refunds stay active for all eligible return reasons until they update their preferences.

Read that in practical terms. If you enrolled in FBA partial refunds at any point before October 2026 and never went back into settings, you are currently paying partial refunds on defect claims — the exact category where you most want the unit back to inspect, and where a refund-and-keep quietly converts a quality problem into a cash leak.

It also removes your only diagnostic. Every defective unit you refund without inspection is a unit you will never weigh, photograph or grade — and a supplier conversation you cannot evidence.

There is no notification, no prompt and no forced migration. The new control only helps sellers who go and use it. That is what makes this a warning rather than a feature announcement.

3. What You Still Don’t Control

The new setting is narrower than it first appears, and it matters for any savings projection you build on top of it.

Amazon still decides which customers are eligible, using the shopper’s profile and purchase history. Your settings define where an offer may apply — they do not guarantee that every matching request becomes a partial refund. Ineligible customers continue to return items to a fulfilment centre as usual.

So configure your reasons correctly, but do not model the outcome as “we enrolled two reasons, therefore we only pay out on two reasons.” Settings narrow the aperture. Amazon controls who walks through it.

4. The Maths: When a Partial Refund Beats a Full Return

Whether a partial refund is cheaper depends almost entirely on whether the returned unit comes back sellable.

Take an illustrative $30 product with a $10 landed cost and $4 in return handling:

On the partial refund, you keep 60% of $30 — $18 — against a $10 landed cost, leaving $8. On the full return, you refund the whole $30, receive nothing back for the unit, and absorb the $10 landed cost plus $4 handling: a $14 loss. That is a $22 swing per unit.

Now flip the assumption. If the returned unit can be resold at full price, the seller keeps the inventory and loses only the $4 in handling — which makes a standard return cheaper than a partial refund.

The rule that falls out of this:

• Partial refunds make sense where units rarely come back sellable — opened consumables, hygiene items, assembled furniture, anything with a broken seal.
• Standard returns make sense where units usually do come back sellable — apparel in original packaging, unopened boxed goods, accessories.
• Defect and damage reasons should generally stay on the standard return process, because the whole point is getting the unit back to inspect it.

Note: These figures are an illustrative model published in a seller-focused breakdown, not Amazon’s own numbers. Model your own landed cost, handling cost and resale recovery before setting percentages.

5. Choosing Your Percentage — and the Cap Nobody Published

Amazon did not list the allowed percentage range in its announcement, so the available options have to be checked on the settings page in your account.

A workable percentage should reflect the FBA return processing costs tied to that specific reason — handling, plus the lost resale value of the unit. A reason where the unit is almost always unsellable can carry a higher percentage and still beat a full return. A reason where the unit usually resells should carry a low percentage, or stay out of the programme entirely.

Note: Amazon’s own seller-facing content has referenced partial refunds of “up to 50%” in the context of high-value FBA products, while the announcement did not restate a range. Check the live settings page in your account for the percentage options actually available to you.

6. How to Decide Which Reasons to Enrol

The decision should be built on your own data, not on a generic list. The FBA customer returns report lists return reason, ASIN and condition — and that combination shows how often units come back sellable for each reason.

Work it reason by reason:

7. Partial Refunds vs Full Returns: Our Verdict on FBA Return Reasons

Treat this as a margin repair job with a deadline, not a feature to explore at leisure.

The reason is the default. Ask a seller whether they would choose to give partial refunds on “item arrived defective” claims, and almost all would say no. Yet a large share of enrolled sellers are doing exactly that right now, because enrolment happened before the control existed and Amazon did not reset anyone. The feature is the fix; the leak is the story.

Our recommendation:

• Check your settings today — specifically whether defect and damage reasons are still active.
• Exclude defect reasons first, before you tune percentages on anything else.
• Start narrow. Enrol the two or three reasons where your own data shows units rarely resell, and leave the rest on the standard process.
• Do not model savings from Amazon’s eligibility logic. Your settings only define where an offer may apply.
• Reconcile monthly against the returns report rather than trusting the programme’s own reporting.

8. The Companion Cost Change: MCF Preferred Pricing

The partial refund update landed alongside a separate September 2026 announcement for Multichannel Fulfillment merchants, which is worth knowing if you sell outside Amazon.

Enrolment is through Seller Central, with discounts applied automatically when orders ship.

9. What to Do Next

Open your FBA Partial Refunds settings, confirm which return reasons are currently active, and switch off anything that points to a defect. Then build a per-reason table from your own returns report, enrol the two or three reasons where a partial refund genuinely beats getting the unit back, and diarise a quarterly review. The sellers who benefit most from this update will not be the ones who configure it most aggressively — they will be the ones who noticed they were already configured, and fixed it.