Amazon Destroyed My Inventory: Who Pays?
Short answer: Who pays depends on who triggered the disposal. If your own automated removal settings or a removal order sent units to disposal, you pay a per-unit disposal fee and Amazon owes nothing for the goods. If Amazon lost or damaged units before a customer ordered them, Amazon reimburses you at manufacturing cost, not your selling price. If Amazon disposed of sellable inventory without a valid trigger, the reimbursement policy may not be the limit of what you can recover, and the dispute can go to arbitration under the Business Solutions Agreement.
Key takeaways
- Since March 2025, Amazon reimburses inventory lost or damaged before a customer order at your manufacturing cost. Inventory lost or damaged after an order is still valued at the sale price minus fees.
- If you never entered a manufacturing cost, Amazon uses its own estimate, which is usually lower than your real cost.
- Most fulfillment center claims must be filed within 60 days of the loss or damage being reported.
- A suspension does not stop the disposal clock. Inventory with no active offers because of an account status issue can be removed after 60 days.
- Since March 1, 2026, removal and disposal fees are charged per unit as each unit is processed, so a large disposal shows up as many small charges.
- Disposal of sellable inventory without authorization is a legal dispute, not just a reimbursement ticket.
Who pays in each situation?
Sellers usually say "Amazon destroyed my inventory" to describe five very different events. The answer to "who pays" is different for each one.
| What happened | Who usually pays | What you can do |
|---|---|---|
| Your automated removal setting was set to Dispose, and Amazon followed it | You pay the disposal fee and absorb the loss | Change the setting today. Check whether the units were actually unfulfillable. |
| Amazon lost or damaged units in a fulfillment center | Amazon, at manufacturing cost | Confirm the automatic reimbursement. File within 60 days if it did not happen. |
| Units were lost or damaged during a removal shipment back to you | Amazon, if you file a timely removal claim | File a removal claim with the Removal Shipment Detail report and photos. |
| Your account was suspended and stranded inventory was disposed of after the notice period | Usually you, unless Amazon failed to give proper notice or ignored a removal order you placed | Place a removal order immediately. Preserve every notice and case ID. |
| Amazon disposed of sellable units with no valid trigger, or against your instructions | Disputed. The seller may have a claim beyond the reimbursement policy. | Build the evidence file, make a written demand, and consider arbitration. |
What is Amazon's reimbursement policy for destroyed inventory?
Amazon's FBA lost and damaged inventory reimbursement policy is the default remedy when inventory is lost or damaged while it is in Amazon's control. Two changes have shrunk what it pays:
- Valuation. Since March 2025, pre-order losses are valued at manufacturing cost, meaning what you paid to source or produce the unit. That figure excludes shipping, duties, and handling. You set it on the Manage Your Manufacturing Cost page in the Inventory Defect and Reimbursement portal. If you leave it blank, Amazon estimates it.
- Deadlines. Since October 2024, claims for units lost or damaged in a fulfillment center must be filed within 60 days of the loss being reported, down from 18 months. Amazon also began reimbursing many warehouse losses automatically, but automation does not catch every loss, and it does not cover every claim type.
Here is a simple example. A unit that sells for $45 and cost you $12 to make is reimbursed at about $12 if Amazon loses it in the warehouse. If your cost field is blank, Amazon may pay less than $12.
Can Amazon dispose of inventory while I am appealing a suspension?
Yes, and this is where I see the largest losses. When an account loses selling privileges, its FBA inventory becomes stranded. In 2025 Amazon shortened the period before it removes inventory that has no active offers because of an account status issue from 90 days to 60 days. If your automated settings say Dispose, or if Amazon does not have a valid return address, the units can be disposed of while you are still working on the appeal.
Sellers often assume reinstatement will come first and the inventory can wait. That is a mistake. A removal order costs money, but a disposal costs the inventory and the disposal fee. If you are deactivated, create a removal order for everything that can be removed, even while you appeal. Inventory held in reserved status may not be removable right away, so document the date you tried.
From my own seller years: the automated removal settings page is the most neglected screen in Seller Central. Many sellers set it once, often to Dispose to avoid storage fees on cheap returns, and forget it applies to everything. Check it before you need it.
Why am I paying disposal fees on top of losing the goods?
Disposal and removal fees are charged whenever a removal or disposal is processed, whether you created the order manually or it was triggered by an automated setting, a required removal of unfulfillable inventory, or a stranded-inventory removal. Since March 1, 2026, Amazon charges these fees per unit as each unit is processed, rather than once when the whole order completes.
When Amazon disposes of units because of its own error, or disposes of sellable units that should not have been touched, you are not only out the inventory. You were also charged to lose it. Both the fee and the inventory value belong in your claim.
When can a seller recover more than manufacturing cost?
The reimbursement policy is built for ordinary warehouse losses: a unit damaged by a forklift, a carton that disappears between docks. It is not a license to destroy a seller's sellable goods. When Amazon disposes of sellable inventory without a valid trigger, ignores a pending removal order, or disposes of goods that its own reports show were in sellable condition, the dispute is about Amazon's performance of the contract.
In those cases a seller may be able to pursue, in arbitration under the Business Solutions Agreement:
- Breach of contract, for handling inventory contrary to the FBA terms or the seller's instructions
- Conversion, for disposing of property the seller owned and had not abandoned
- Refunds of disposal, removal, and storage fees charged in connection with the wrongful disposal
- Related losses that the evidence supports, subject to the contract's limitation provisions
How much is recoverable is never automatic. It depends on the contract language, what notices Amazon actually sent, what your settings said on the date of disposal, and the quality of your records. That is why the evidence file matters more than the argument.
What evidence do I need?
Download these before you open a case. Amazon's reports roll off, and the screenshots only prove something if they are dated.
- Inventory Ledger for each affected FNSKU, showing when units moved from sellable to disposed
- Removal Order Detail and Removal Shipment Detail reports
- Reimbursements report, showing what Amazon already paid and at what value
- Transaction view filtered for disposal and removal fees
- A dated screenshot of your automated removal settings, and any earlier version you have
- Supplier invoices proving your manufacturing cost per unit
- Every Amazon notice about stranded, unfulfillable, or required removals, with the email address it went to
- Case IDs and Amazon's written responses
What should I do right now?
- Stop further losses. Go to Settings, then Fulfillment by Amazon, and set every automated removal setting to Return, or use a price threshold so higher-value units are always returned. Confirm your return address.
- Enter your manufacturing cost for every ASIN, backed by invoices. This raises every future reimbursement.
- If you are suspended, place removal orders for all removable inventory now. Do not wait for the appeal.
- Reconcile monthly. With 60-day windows, a quarterly audit means some claims are already lost.
- File claims with ASINs, FNSKUs, quantities, dates, and invoices. Ask for a re-evaluation if the value is wrong.
- Escalate when Amazon denies a claim for sellable inventory or stops responding. A written demand from counsel, followed by arbitration if needed, is the path that produces a decision rather than another templated reply.
Frequently asked questions
Does Amazon pay for FBA inventory it destroys?
It depends on who authorized the disposal. If the seller's own automated settings or a removal order sent the units to disposal, Amazon generally does not pay and charges a per-unit disposal fee. If Amazon lost, damaged, or destroyed units in error, its reimbursement policy applies, and if Amazon disposed of sellable units contrary to the seller's instructions or its own policy, the seller may have a claim in arbitration under the Business Solutions Agreement.
How much does Amazon reimburse for lost or damaged FBA inventory?
Since March 2025, units lost or damaged before a customer order are reimbursed at manufacturing cost, meaning what the seller paid to source or produce the unit, not the selling price. If no cost is entered on the Manage Your Manufacturing Cost page, Amazon uses its own estimate. Units lost or damaged after a customer order are still reimbursed at the sale price minus fees.
Can Amazon dispose of my inventory while my account is suspended?
Yes. When an account loses selling privileges, its FBA inventory becomes stranded, and Amazon may remove or dispose of it after a notice period, which Amazon shortened in 2025 to 60 days for inventory with no active offers because of an account status issue. Sellers should create a removal order immediately, even while an appeal is pending, and should not assume the appeal pauses the clock.
Why was I charged disposal fees for inventory I did not ask Amazon to destroy?
Disposal fees are triggered by automated removal settings, required removals, and stranded-inventory removals, not only by manual removal orders. Since March 1, 2026, removal and disposal fees are charged per unit as each unit is processed. If Amazon disposed of units without a valid trigger, or disposed of sellable units, the seller should dispute both the fees and the lost inventory value.
How long do I have to file an FBA reimbursement claim?
Claims for units lost or damaged in a fulfillment center must be filed within 60 days of the loss or damage being reported in the account. Customer return claims and removal order claims have their own separate windows. Amazon automatically reimburses some fulfillment center losses, but not all, so sellers should reconcile their inventory reports at least monthly.
What should I do if Amazon disposed of sellable inventory?
Preserve the evidence first: download the Inventory Ledger, removal and disposal reports, reimbursement reports, and fee transactions, and screenshot the automated removal settings. Then open a Seller Central case with ASINs, FNSKUs, units, dates, and supplier invoices. If Amazon denies the claim or does not respond, a written demand and then arbitration under the Business Solutions Agreement are the next steps.
Can a seller recover more than manufacturing cost for destroyed inventory?
Possibly. The reimbursement policy is Amazon's administrative remedy for ordinary warehouse losses. When Amazon wrongfully disposes of sellable inventory, a seller may pursue claims such as breach of contract and conversion in arbitration, together with refunds of disposal and removal fees. How much is recoverable depends on the contract's limitation provisions, the evidence, and the arbitrator.
How do I stop Amazon from automatically disposing of my inventory?
In Seller Central, go to Settings, then Fulfillment by Amazon, and review every automated removal setting, including unfulfillable and aged inventory removals. Set them to Return rather than Dispose, or use a price threshold so higher-value units are always returned. Keep a dated screenshot of the settings, and keep the return address current.
Summary
Amazon pays for destroyed inventory only in specific situations, and since 2025 it pays less and expects claims faster. Your own settings decide most disposals, so fix them before a suspension or a stranded-inventory notice makes the decision for you. When Amazon destroys sellable goods without a valid reason, treat it as a legal dispute: preserve the records, file the claim on time, and escalate when the claim is denied. If Amazon is also holding your funds, see our Amazon funds appeal page.
Did Amazon dispose of inventory you could have sold?
AMZ Sellers Attorney® reviews the records, values the claim, and takes it to Amazon Legal or arbitration when Seller Central will not resolve it.
Book a free consultationThis article is general information, not legal advice, and does not create an attorney-client relationship. Amazon's policies, fees, and claim windows change frequently; confirm current terms in Seller Central before acting. Prior results do not guarantee a similar outcome. Attorney Advertising. AMZ Sellers Attorney® (Amazon Sellers Attorney, Ltd.), 9350 Wilshire Blvd Suite 203, Beverly Hills, CA 90212. [email protected] | +1-888-806-2440.
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