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Fighting the Squeeze: Vendors Dig In Heels Against Chargebacks

As consolidation continues to sweep the retail landscape, vendors are becoming increasingly concerned about getting caught in a chargebacks squeeze. And...

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However, there are things that vendors can do to protect themselves.

Donald Kreindler, an attorney at Phillips Nizer, said he has many clients who are impacted by what he characterized as retailers’ “excessive” demands for assistance from their vendors, whether it’s called markdown money, chargebacks or some allowance.

“It is very hard to know the percentage, but it’s very substantial. I’ve heard of markdowns charged by one or more retailers by as much as 35 percent of the wholesale sales price of the goods, and even more than that,” the attorney said.

He added it can be hard for vendors confronted by retailers to fight back, since many manufacturers fear that, if they don’t agree, then the retailer won’t bother to order from them the following season.

He counsels clients to keep good records of all orders. “Clients who have good documentation and can respond promptly when claims of chargebacks are made are in a stronger negotiating position and tend to have greater success in negotiating a favorable, or at least fair, settlement with the retailer,” the attorney said.

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