A Look at Chargebacks: Another “Hidden Cost” to Consumers

Part 1: The Rise of Chargebacks

There are some distribution operational situations that have a direct impact on the cost of order fulfillment that tend to increase the cost of goods that you and me, the consumers, pay.

One of these is what is known as a “chargeback” that occurs frequently and for which a good amount of money is spent to prevent occurrences.

In logistics, a chargeback is a post-transaction financial penalty or cost recovery that one party (usually a retailer, shipper, or customer) deducts from payments owed to another party (usually a supplier, carrier, warehouse, or 3PL (third party logistics) provider to recover costs caused by an error or non-compliance.

It is not a credit card dispute. It’s an operational cost-reallocation mechanism used in supply chains.

Put another way, a logistics chargeback is money taken back by a company from a vendor or service provider because they ...