Description
Code 120s are similar to code 94s for damaged/defective returns. The difference is that code 120s are discretionary claims for Walmart. This means that, on your supplier agreement, you have elected to not have defective merchandise returned to you and have left the handling of it to Walmart's discretion.
Often code 120s will come through in bulk for multiple defective items.
How to Prevent Valid Code 120s
Code 120s are typically valid if the supplier agreement specifies that the supplier is responsible for the cost of defective returns, and the supplier is NOT deducting a defective allowance off invoice. If the supplier agreement includes a defective allowance then it typically will state that the supplier is responsible for the cost of returns above and beyond the defective allowance %, and that additional claims will be filed by the returns center at fiscal year end (sometimes this is evaluated quarterly). The supplier should not be receiving code 120 deductions if they are already deducting a defective allowance from each invoice!
It is common for Walmart to create code 120 deductions for returns regardless of whether or not the supplier is deducting a defective allowance off invoice, so it is important to be aware of this.
One common reason for defective returns is damage in transit that is not seen until items are unboxed in store, at which point they are damaged out. Careful packaging and shipping through a trusted carrier can help alleviate some of this.
Since code 120s leave the handling of defective returns to Walmart's discretion, you could consider renegotiating your supplier agreement to specify that defective goods should be returned to you, although this will usually come with a return freight charge (code 44). Some suppliers consider this option so they can identify the types of damage or defects to which their products are most susceptible.
Can it be Disputed?
Code 120s would only be considered invalid and disputable if they fall under one of the following scenarios:
The supplier agreement includes a defective allowance, and the supplier is deducting the defective allowance off invoice.
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 is not deducting a defective allowance off invoice (choosing to let Walmart take deductions per PO), and 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, the supplier 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.
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 so severely that they leak during shipment.
EX: Liquids, Powders, Gels
Broken Glass (Candles / Mirrors) that present a clear danger for packing and shipping
If any of the above is 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 in Deductions Navigator (Virtual Claims will be listed with the division of 13 and the store number of 9070).
How to Dispute Invalid Code 120s
There are two categories of Code 120 claims. The first category are related to customer returns and are disputable through SupplyPike. See below for the supporting documentation we recommend for the various scenarios:
Scenario 1: Supplier Agreement has a defective allowance and the supplier is deducting the allowance off invoice.
Provide supplier agreement showing the agreed-upon defective allowance with verbiage from Walmart stating that deductions will not be calculated and applied until the end of the fiscal year
Provide invoice showing that the deduction for defective allowance was taken off invoice
Scenario 2: Supplier Agreement states that defective returns are not the responsibility of the supplier (very rare).
Provide supplier agreement
Scenario 3: Supplier agreement shows that defective goods must be returned to supplier
Provide supplier agreement
Provide statement showing that goods were never received
Scenario 4: Code 120 price doesn't match the invoice price per item
Provide invoice showing the actual cost of the item as less than the cost deducted per item on the claim
Disputing Walmart.com Returns Center Claims
The 2nd category of code 120 claims are from the Walmart.com Returns Center. Any walmart.com returns would be listed under division 46 and store 9462. Walmart has introduced a new dispute process for these returns. You can see the details of this process here. In summary:
Download and fill out the Defective Merchandise, Handling Fee, and RTV Freight Claim Form with the claim number, invoice date (aka claim date), amount you are disputing, and the reason for the dispute.
Include the backup details and documentation for each claim.
Submit your claim by creating a case with Partner Support and selecting Returns > Returns Chargebacks > Defective Merchandise, Handling, and RTV Freight Expense Claims. You must include the documentation and forms mentioned above for your claim to be reviewed.
**Claim Notes:
Your claim form must be named "VID_VENDOR#_VENDORNAME_MMM_YYYY" and saved as an .xlsx file (e.g., 456789_DSV SUPPLIER_SEP_2019.xlsx).
Claims under $50 will not be reviewed.
Claims outside of the 90-day dispute window from invoice post date will be denied.
Claims must be submitted in month batches, not individually.
This process is not for cost/pricing or inflex/multi-box issues. Please reach out to your Category Manager for assistance with either of these topics.
Disputing Samsclub.com returns
Any samsclub.com returns would have claim numbers that start with 184919. If you have questions or would like to dispute a samsclub.com code 120 then you would email comrtndisp@samsclub.com.