Chargeback

   A fee charged to a vendor by a retailer for one or more of the following reasons: late shipment, improper shipping method, mislabeled merchandise, advertising fee, incomplete order, poor quality, and/or returned merchandise by customers. Manufacturers (vendors) are "charged back" for these infractions—which have in themselves become a lucrative money-making proposition for many retailers. For instance, vendors can be penalized thousands of dollars for mislabeling shipping cartons; retailers claim the misla-belings cost them time and money, which affects their profit margin. Saks Fifth Avenue's 33-page manual lists compliance requirements ranging from acceptable types of hangers and labels to mandatory use of electronic data interchange (EDI) mapping specifications on shipping cartons. Other retailers, such as J. C. Penney's and Federated Department Stores, Inc., also have stringent regulations. Vendors are charged for markdown merchandise, product that does not sell fast enough, and for merchandise that is returned by customers due to poor fit or quality. In 2005, a class action suit was filed against Saks for improper chargebacks; the decision is pending. The Vendors Coalition for Equitable Retailer Practices (VCERP) was formed in 2005 to establish what is fair and unfair and to help monitor abuses regarding chargebacks.