Code 94s are used when a customer returns an item or it is considered defective merchandise.
How to Prevent Valid Code 94s
Code 94s are valid if the supplier agreement specifies that the supplier is responsible for the cost of defective returns. If the supplier agreement includes a defective allowance then it must also state that the supplier is responsible for the cost of returns above and beyond the defective allowance %. If the supplier agreement specifies that defective goods must be returned to the supplier, then those goods must be returned in order for a code 94 to be valid.
If your supplier agreement is written in this manner, then preventing valid code 94s would require renegotiating the supplier agreement to remove the obligation to pay for defective returns that exceed the given allowance %. This negotiation would typically necessitate offering Walmart a higher defective allowance %.
Also on your supplier agreement, you will choose what you would like Walmart to do with your returned/defective merchandise. You would either choose to have the merchandise returned to you or destroyed/donated option.
Can it be Disputed?
Code 94s would be considered invalid and disputable if they fall under one of the following scenarios:
- The supplier agreement includes a defective allowance, but the cost of returns has not exceeded the amount the supplier has paid through this defective allowance (excessive defectives).
- The supplier agreement includes a defective allowance and the cost of returns has exceeded the amount the supplier has paid through this defective allowance, but the supplier agreement does not state that the cost of defective returns in excess of the allowance are the responsibility of the supplier. (This is scenario is exceptionally rare)
- The supplier agreement specifies that for defective returns the defective items must be returned to the supplier yet the supplier has not received those items back. In this scenario there are some exceptions when the item is considered unsafe to ship, such as:
- Hazardous Materials that are not in shippable condition or damaged enough that they may leak in transit.
- Non-Hazardous items that are leaking or damaged severely they leak during shipment.
- EX: Liquids, Powders, Gels
- Broken Glass (Candles / Mirrors) that present a clear danger for packing and shipping
4. There is a pricing discrepancy between the amount deducted for a certain quantity of an item and the actual cost of the item (ex: Walmart deducted $8/item for a return when the actual cost is $5/item). In these scenarios you should only dispute the difference in the pricing. These disputes will typically have to be escalated to the buyer since it’s a pricing issue. It is also important to note that for customer returns, Walmart will typically deduct the retail price of the item, not the cost, to cover their lost revenue.
If any of the above are the case then it is considered a Virtual Claim. If you receive a Virtual Claim that does not meet these criteria, then you should dispute the claim on the Direct Commerce dispute portal. (Virtual Claims will be listed with the division of 13 and the store number of 9070.)
How to Dispute Invalid Code 94s
- Supplier agreement showing the agreed-upon defective allowance
- Documentation showing total cost of defective returns to date vs. amount paid in defective allowance
- Supplier agreement showing that defective returns are not responsibility of supplier
- Supplier agreement showing that defective goods must be returned to supplier and statement that goods were never received
- Pricing info showing the actual cost of the item as less than the cost deducted per item on the claim