Keep it, or send it back? Two new Amazon FBA settings let you decide per return reason

A box on the grading table

It's a Tuesday in early January. At an Amazon fulfillment center, a returned box from your store sits on a grading table: a pair of wireless earbuds, opened, one ear tip missing, the charging case scuffed. The customer's return reason says "no longer needed."

Somewhere else, another of your customers is starting a return on a set of glass storage jars. The reason says "item arrived damaged." Shipping a box of maybe-broken glass back across the country so it can be thrown away is nobody's idea of a good outcome.

Every return asks the same question: is this item worth more on the shelf than the cost of getting it there?

Until recently, FBA sellers had limited say in either moment. Two updates Amazon announced in October 2026 change that. One lets you decide which return reasons get a partial refund instead of a return trip. The other lets you tell Amazon what "sellable as new" means for your products.

Setting one: partial refunds by return reason

Amazon's FBA Partial Refunds program lets you offer a customer part of their money back to keep the product, rather than processing a full return. Amazon pitches it as a way to cut return shipping and processing costs.

The new part, announced about two weeks ago for sellers in the United States, United Kingdom, Germany, France, Italy, Spain and Canada, is that you can now pick which customer return reasons qualify. There are two ways to set it up:

• For all ASINs, with different partial refund percentages by return reason and up to three configurations.
• For selected ASINs, by uploading an Excel file that lists which products and which reasons qualify. Anything not listed follows the normal return process.

If you were already enrolled, nothing changes unless you act: customers keep getting partial refunds for all eligible return reasons. You manage this on the FBA Partial Refunds settings page.

Amazon also keeps a hand on the wheel. It reviews each return request against the customer's profile and purchase history to check eligibility and prevent abuse. If a customer doesn't qualify, the item comes back to a fulfillment center as usual.

Setting two: telling Amazon what "as new" means

The second update, announced about five days ago, is customized grading. You can now give Amazon your own criteria for evaluating FBA returns for resale, by category:

• seal and packaging
• included accessories
• product authenticity indicators
• device capabilities
• other requirements

You can apply rules to specific ASINs, your whole catalog or a CSV upload. And you can set instructions for when an item can be restored to new or should be sold as used, including used-price percentages by condition.

Two words in Amazon's announcement matter. It uses your input "as guidance" during grading, alongside its standard process. So this shapes the outcome; it doesn't guarantee it. And ASINs not covered by a rule keep using Amazon's default grading. Customized grading also works alongside Grade and Resell, Amazon's program for reselling returned items as used.

Back on the grading table, those earbuds with a missing ear tip are the kind of item where your rule decides whether it's resold as used at a set percentage, or treated differently.

Choosing reasons and rules without guessing

The temptation is to switch everything on. Resist it. The right settings depend on your products, and you probably have the information you need already.

Start with your return reports. Look at your FBA returns for the last few months: which products, which reasons, and what happened to the units. Did they come back sellable, unsellable or get disposed of? Group them by reason.

Partial refunds fit cheap-to-replace, expensive-to-ship items. Bulky, heavy or fragile products where the return shipping and handling cost a big share of the price, and where "arrived damaged" or "missing parts" returns rarely come back sellable, are good candidates. Glass jars fit that picture. Electronics usually don't, because a returned unit can often be graded and resold.

Be careful with reasons that invite abuse. A generous percentage on "no longer needed" can turn a partial refund into a discount for anyone who asks. Amazon screens eligibility, but your percentages still set the incentive.

Write grading rules for the products where condition decides value. Electronics with accessories, sealed beauty or health products, collectibles with authenticity marks. Be specific: which accessories must be present, whether a broken seal means "used," which functions must work.

Keep the rules short. A few clear rules on your highest-return products will do more than a long document Amazon can only use as guidance anyway. You can always add more once you see how the first ones are applied to real returns.

We wrote about a related gap, where the reason a customer types isn't what the person opening the box sees, in The return reason CS typed is not what the bench opens. These settings make that gap more expensive to ignore, since your refund rules now key off the stated reason.

Before January, and after

Holiday returns arrive in a wave after the season. If you want these settings to help, set them up in November and check them in early December.

In November, pull your returns data, pick two or three return reasons and a handful of products for partial refunds, and write grading rules for your top returned items. Use the selected-ASIN Excel option if your catalog is mixed, so you can start narrow.

In December, look at the first results. Are partial refunds going to the reasons you expected? Are graded items coming back with the conditions you described?

In January, compare return costs and recovered value for the products you covered against the ones you didn't. Then widen the settings that worked and drop the ones that didn't. Any percentages you set are your call, so treat the first ones as a test and adjust them with real numbers in hand.

If you sell across Amazon and other marketplaces and want returns rules, data and inventory working together, our marketplaces team helps sellers set this up and measure it. Talk to us.

Related work: Paddle8.