A parcel has been "in transit" for three weeks. The customer has stopped being polite, the tracking page has not changed since a depot scan, and you are staring at two questions that no one seems to answer clearly. Who has to make this right, and who ends up paying for it?
A parcel lost in transit leaves your customer expecting you to fix it, the card issuer expects you to deliver or refund, and the courier will pay only what its terms say. Those three positions rarely line up, and the gap between them is where your money goes. This guide explains how the liability actually works for an Australian Shopify store, what Australia Post's compensation page says in A$, how to claim, and how to decide between refunding, replacing and fighting.
This guide is for you if:
- You have a parcel that is lost, stuck or hopelessly late, and you want to know who pays.
- You ship valuable orders and want to understand what cover you really have.
- You want a clean routine for lost parcels so each one costs you as little as possible.
Last updated: 9 October 2026. Written by the ChargeFix team. Reviewed against sources on 9 October 2026.
The 30-second answer (TL;DR)
- When a parcel is lost in transit, the customer will usually look to you, and a card dispute will land on you, whatever the courier's terms say.
- Australia Post's compensation page says the sender can claim for lost domestic items. Included cover on domestic parcels is up to A$100 plus a postage refund, and Extra Cover is available up to A$5,000 in A$100 steps.
- You must lodge within 6 months of posting and you need proof of lodgement. Without it, no cover applies.
- Items that are not adequately packed, and consequential or indirect loss, are not covered.
- Refund or replace the customer first, then claim. Do not wait for the carrier before keeping your promise to the customer.
- If a chargeback is open and the parcel is truly lost, you cannot win by evidence and you cannot refund. Accept, then claim.
- We could not verify the legal position on who bears the risk of loss in transit. For large amounts, ask a lawyer.
Quick note: There are three separate questions that people mix up. Who owes the customer? Who pays the merchant? Who wins the bank dispute? The answers can all be different, and your cash depends on the gaps between them.
Who is liable? A quick map
| Relationship | Who is involved | What decides it |
|---|---|---|
| Customer and store | You owe what they bought | Your promise, your terms, consumer law |
| Store and carrier | Sender claims from the courier | Carrier terms, cover, proof of lodgement |
| Customer and bank | Bank questions the payment | Card scheme rules and your evidence |
| Store and Shopify | Dispute, fee, payout | Shopify's process and deadlines |
When is a parcel lost in transit, and when is it just late?
A parcel is lost in transit when it has been lodged with the carrier and has not reached the customer, and there is no realistic prospect it will. Most carriers and card issuers separate it from a parcel that is merely late.
Three states are easy to confuse.
Delayed. The parcel is moving, slowly. Tracking is updating. It will probably arrive.
Stuck. Tracking has stopped at a depot or facility. It may be misrouted or waiting. This is the grey zone.
Lost. The carrier cannot locate it, or has confirmed it cannot be found. This is when claims and refunds make sense.
You do not need to wait for the carrier to declare something lost before you act for the customer. If a parcel is badly overdue, the customer's experience is already a failure, and your reply should not wait for a depot to look.
How do you know it is lost, not just late?
- Tracking has not changed for many days and the estimated date has passed.
- The carrier cannot give a location after an enquiry.
- The customer has checked the address, neighbours and shared areas, and tracking does not say delivered.
We have not verified a fixed number of days after which Australia Post treats a parcel as lost, so check its enquiry process and use your own judgement. The 6 month claim window is the outer limit, not the signal.
Who is liable to the customer when a parcel is lost in transit?
In practice, you do. The customer paid you, not the courier. They expect the goods or their money back, and the card issuer will usually take the same view.
Shopify's reasons page lists "Product not received" as a dispute reason, and the evidence it suggests is the fulfilment date and time, billing information, shipping and tracking. If the tracking shows no delivery, that evidence cannot answer the claim. There is nothing to submit that shows the customer got what they paid for.
What does consumer law say about risk in transit?
We looked for a clear answer and did not find one in the sources we reviewed. The ACCC's repair, replace, refund, cancel page deals with failed consumer guarantees on goods, such as faulty or not-as-described items. It says "no refund" signs and terms do not override consumer rights, and relying on them for faulty goods is illegal. It does not address who bears the risk of a parcel lost in the post.
That means we cannot tell you whether a term such as "risk passes to the buyer on posting" would hold up for an Australian consumer sale. Do not rely on it. For a high-value order or a repeated problem, get advice from a lawyer, and in the meantime treat the customer's claim as yours to resolve.
Why you should not argue with the customer
Who is liable under the law and who pays in practice are different questions. Even if the law gave you an argument, the card network will not wait for it. A customer who is told "it's the courier's problem" has an easy next step: call the bank. A dispute then costs you the order value, the fee and your time, on top of a parcel you never recovered. Fast resolution is cheaper than a right-sounding argument.
What does Australia Post compensation cover for a parcel lost in transit?
Australia Post compensation is set out on its compensation page, which explains who can claim, how much is covered and what you need. The details below are taken from that page.
Who can claim
- The sender can make a lost parcel claim for items sent within Australia that are lost, and for all items sent overseas.
- The recipient can claim for domestic items received damaged or with missing contents.
- If a party signs a waiver, compensation goes to the other party.
How much is covered
| Service | Included cover | Extra Cover (maximum) |
|---|---|---|
| Domestic parcels (Parcel Post, Express Post, Courier Post) | Up to A$100 plus a postage refund | Up to A$5,000 |
| International parcels | Up to A$100 plus a postage refund | Up to A$5,000 for limited services and destinations. Economy items are capped at A$500 |
| Domestic letters and Letter with Tracking | Up to A$100 plus a postage refund | Up to A$500 |
| Registered Post | Up to A$100 plus a postage refund | Up to A$5,000, not International Post Registered |
Extra Cover can be bought in A$100 steps. We did not verify what it costs, so check Australia Post's current rates before you decide.
Time limits
- Lodge a lost parcel claim within 6 months of posting.
- For International Courier or Express items, lodge within 30 days of delivery or the intended delivery date.
What you need
- Proof of lodgement: a postage or lodgement receipt, or the tracking sticker on some prepaid satchels and envelopes. Without it, no cover applies.
- Proof of value, which may be required.
- For missing items, a missing item enquiry form. For damaged items, a damage report at a Post Office, which only the addressee can do.
- The page says claims are assessed case by case, and for online purchases suggests contacting the seller first.
What is not covered
The page lists items without proof of lodgement, items that are not adequately packed or packaged, damage not caused or contributed to by Australia Post, consequential or indirect loss, prohibited items, items seized by Customs or other authorities, and valuables over A$100 such as coins and passports unless Extra Cover is bought.
"Consequential or indirect loss" matters to you. It generally means losses that flow from the loss of the parcel, such as a lost sale, a dispute fee or a customer's cancelled order. Do not expect the carrier to pay your A$25 dispute fee or your time.
How big is the gap between Australia Post compensation and your loss?
Included cover of up to A$100 plus postage leaves a gap on any order worth more than that. Here is the shape of it.
Illustration: the cover gap on three orders
Assumed figures. You refund the customer in full, and the claim succeeds in full. Postage is A$12. There is no Extra Cover.
| Order value | Included cover, up to (A$100 + A$12 postage) | Shortfall if you refund in full |
|---|---|---|
| A$80 | A$112, more than the order value | A$0 |
| A$180 | A$112 | A$68 |
| A$400 | A$112 | A$288 |
Whether the payout is based on the sale price or your cost is a question for the claim assessment, and the page does not say. We have shown the sale price as an upper bound. The pattern holds either way. On orders above A$100, included cover leaves a large gap, and the higher the order, the larger the gap.
Should you buy Extra Cover?
Extra Cover is a trade. You pay a fee per parcel to reduce the gap on the rare parcel that is lost. Use a simple test.
Buy cover if: (chance a parcel is lost × gap) is greater than the cover fee.
If one parcel in 200 is lost, the expected gap on a A$400 order with no Extra Cover is about A$288 ÷ 200 = A$1.44. If Extra Cover for that order costs more than A$1.44, you are paying more than the expected loss. If it costs less, buy it. We do not know your loss rate and we did not verify Extra Cover prices, so the numbers are placeholders. Use your own loss history.
Australia Post compensation through Extra Cover also reduces the stress. A store that ships a few high-value parcels a week may prefer certainty to a spreadsheet.
What is the right order of operations for a parcel lost in transit?
Customer first, carrier second, bank third. Here is the sequence.
Step 1: acknowledge and offer
Reply within hours. Offer a refund or a replacement. If you can send a replacement quickly and the original is only stuck, say so.
Hi [name], I'm sorry your order hasn't arrived. Tracking shows it stopped at [location] on [date]. I've asked Australia Post to investigate. In the meantime, I'd like to put this right: I can send a replacement today, or refund you in full. Which would you prefer?
Step 2: lodge the enquiry and keep the receipt
Lodge a missing item enquiry with the tracking number, lodgement date and proof of lodgement. Save the reference. Put the 6 month deadline in your calendar.
Step 3: refund or replace
If the customer chooses a refund, refund the full amount. For an inquiry, Shopify says a full refund ends it, while a partial refund does not. If the dispute is already an open chargeback, Shopify says you cannot refund it, so your options are to respond or accept.
Step 4: lodge the lost parcel claim
Submit the lost parcel claim with proof of lodgement and proof of value. Keep every message. Be accurate about the contents and the packaging.
Step 5: learn
Record the service, the route, the packaging and the order value. If lost parcels cluster on one service or route, change it.
Illustration: the timeline
Dates are examples.
| Date | Event |
|---|---|
| Tue 6 Oct 2026 | Parcel lodged. Receipt saved |
| Fri 16 Oct | Tracking stuck at a depot for 7 days. Customer emails |
| Fri 16 Oct | You reply, offer refund or replacement, and lodge the enquiry |
| Mon 19 Oct | Customer chooses a refund. You refund A$180 in full |
| By Tue 6 Apr 2027 | Latest date to lodge a claim, 6 months after posting |
The refund on 19 October ends the matter with the customer. You have not waited for the carrier, and you still have until April 2027 to claim.
How do you write a lost parcel claim that gets paid?
A lost parcel claim is paperwork, and paperwork rewards the organised. Australia Post's compensation page says claims are assessed case by case, so the clearer your file, the easier it is to say yes.
What to gather before you lodge
- Proof of lodgement: the receipt or the tracking sticker, photographed or scanned. Without it, the page says no cover applies.
- Proof of value: the invoice or order record showing what the customer paid, and your cost if relevant.
- Tracking history: a full screenshot of the last scan, with the date and time.
- Contents and packaging: a list of what was in the parcel and, if you have one, a photo of how it was packed. Items that are not adequately packed are excluded.
- Customer contact: the customer's report that it did not arrive.
- Dates: posting date, expected delivery date and the date you lodged the enquiry.
A short statement you can adapt
Parcel lodged on [date] at [location], tracking [number], addressed to [name and address]. Contents: [description], value A$[amount]. The last scan was [scan] on [date]. The recipient reports the parcel has not arrived. I request a search and, if it cannot be located, compensation under the applicable cover. Proof of lodgement and proof of value are attached.
Keep it factual. Do not guess at causes, and do not include your dispute fees or lost sales, because consequential or indirect loss is not covered.
What happens if the claim is refused?
Ask for the reason in writing. Common reasons on the page are missing proof of lodgement, inadequate packaging and cover limits. If the refusal is about packaging, record that and improve your packing. If it is about proof, set up a routine so every parcel has a receipt saved. We did not find a published appeal process on the page, so ask Australia Post how to escalate.
Worked scenarios: three lost parcel cases
All figures and dates are assumed.
Scenario 1: the A$60 order stuck for ten days
A customer ordered A$60 of goods. The parcel has been stuck at a depot since Friday 9 October 2026. There is no dispute yet.
Move: apologise, offer a replacement or refund, and lodge the enquiry. At this value, included cover of up to A$100 plus postage covers the order, so the claim could recover most of the cost. Refund quickly, because the customer's patience is the real cost.
Scenario 2: the A$350 order and a lost parcel claim
A customer ordered A$350 of goods. No Extra Cover was bought. The parcel is lost.
Move: refund or replace, then lodge the lost parcel claim. Included cover leaves a gap of at least A$238 even if the claim pays in full (A$350 minus A$112). Next time, consider Extra Cover for orders above A$100, and use a signature option where it fits.
Scenario 3: the open chargeback on a lost parcel
A customer in a regional area disputes a A$200 order. Tracking stopped at a depot nine days ago and the bank has filed a chargeback. A$200 and a A$25 fee have been taken.
Move: accept, because you have no delivery proof to submit. Lodge the claim with Australia Post and keep the dispute record. If the customer wants the matter closed, they can ask their bank to withdraw the dispute, which Shopify says takes 30 to 90 days or more for a letter. The lesson is to act while the complaint is still an inquiry.
When is a parcel lost in transit, and when is it just late?
The difference matters because a late parcel may still arrive, and a refund before it does can leave you out of pocket twice. A short checklist helps.
- Is tracking updating? If scans keep coming, it is moving.
- Is the estimated date long past? If so, the customer has a fair complaint even if the parcel is still moving.
- Has the carrier answered your enquiry? A confirmed loss is the clearest signal.
- Is the order perishable or time-critical? If so, a late parcel may be as bad as a lost one.
If in doubt, offer the customer a choice: wait a few more days, receive a replacement now, or take a refund. Most customers choose a refund or replacement and appreciate being asked. A parcel lost in transit that is later found can then be recovered or restocked.
What if the customer has already opened a dispute?
Your options depend on the type.
If it is an inquiry
A full refund ends it, and nothing has been taken yet. Refund in full, then claim from the carrier. Our guide to chargeback vs inquiry explains why the type matters.
If it is a chargeback
The amount and the fee have been taken. You cannot refund an open chargeback. Because the parcel is lost, you have no delivery proof to submit. Accepting is usually the right call. You can still claim from the carrier, and if the customer is happy with the outcome, a withdrawal letter from their bank takes 30 to 90 days or more according to Shopify.
Why you cannot win a lost-parcel chargeback
The evidence Shopify suggests for product not received is the fulfilment date and time, billing information, shipping and tracking. If tracking shows the parcel never reached the customer, that evidence supports their claim. Do not spend 45 minutes building a pack for a case you cannot answer. See accept or fight a Shopify dispute for the break-even maths.
Illustration: a lost A$180 parcel that becomes a chargeback
Assumed figures: goods A$90, postage A$12, fee A$25, no Extra Cover. The sale price is taken back by the bank, so you receive nothing for the order.
| Item | Amount |
|---|---|
| Goods and postage already spent | A$102 |
| Dispute fee | A$25 |
| Cash lost before any claim | A$127 |
| Carrier claim, best case at included cover | up to A$112 |
| Net position, best case | about A$15 down, plus your time |
| Net position, claim refused | A$127 down, plus your time |
Now compare the same parcel if the customer's complaint is still an inquiry and you refund in full. There is no dispute fee, so you are about A$102 down before any claim, and close to break-even if the claim pays up to A$112. The payout is assessed case by case, so treat that as a best case. Either way, the early refund saves the A$25 fee and your time on a pack you cannot win. See do you lose the money and the product in a chargeback for the full cost view.
How do you set up your store so a lost parcel costs less?
Match the service to the value
Cheap untracked services leave you with no proof of delivery and no way to show what happened. For orders above your included cover, choose a tracked service and consider Extra Cover.
Keep proof of lodgement for every parcel
The compensation page says without proof of lodgement, no cover applies. Save the receipt or the tracking sticker against each order, as a photo or PDF.
Pack to the standard
Items that are not adequately packed are excluded. Photograph high-value parcels before they leave, and keep the photo with the order.
Write the policy in plain words
State what happens if a parcel is lost: "If your parcel doesn't arrive, tell us. We'll investigate and either send a replacement or refund you." Avoid language that blames the customer. A "buyer bears all risk" line may not protect you, and it reads badly to a reviewer.
Notify early
Shopify's prevention guidance says to give tracking, set realistic estimates and notify customers of delays. A customer who is told early rarely calls the bank.
Watch the pattern
If lost parcels cluster on one route, service or product, fix that. Every dispute counts toward your Shopify chargeback rate, and a high rate can lead to a reserve or NDRP enrolment, with a A$25 fee per auto-resolved dispute in Australia. See Shopify chargeback rate and account health.
What about international parcels?
Australia Post's page says the sender can claim for all items sent overseas. Included cover is up to A$100 plus a postage refund, and Extra Cover goes up to A$5,000 for limited services and destinations, with Economy capped at A$500. For International Courier or Express items, the claim window is shorter: 30 days of delivery or the intended delivery date.
Customs adds another layer. The page lists items seized, confiscated or destroyed by Customs or any government authority as not covered. Our post on international orders from Australia covers customs delays and disputes in detail. For now, remember that a parcel held in customs is not the same as a lost parcel, and the claim rules differ.
What's different for Australian merchants?
Distance. Long routes and remote areas mean slow and sometimes stalled parcels. State realistic times, and offer a tracked service where the value justifies it.
The cover is small. A$100 of included cover is modest compared with many Shopify order values. Plan for the gap.
The claim is the sender's. For lost domestic items, Australia Post's page says the sender claims. You carry the paperwork, not the customer.
The customer's window is long. NAB gives cardholders up to 120 days for Visa and Mastercard disputes, varying by reason, and 210 days for eftpos. CHOICE reports it can run from the expected delivery date, with an outer limit of 540 days for Visa. A lost parcel can become a dispute months after the sale.
Consumer Affairs Victoria and AFCA. Customers can escalate to AFCA if their bank rejects a chargeback request. Consumer Affairs Victoria says chargebacks are not available for cash, transfers, cheques, direct debit or BPAY. Card payments through Shopify Payments are eligible.
Dates and money. Use A$ and full dates in cover notes and claims, such as 6 October 2026.
Common mistakes
Waiting for the carrier before replying
The customer is waiting for you. Reply, then chase.
Arguing "risk passed on posting"
We could not verify that this holds for Australian consumer sales, and it will not stop a bank dispute.
Not keeping proof of lodgement
Without it, Australia Post says no cover applies.
Forgetting the 6 month limit
Put the lodge-by date in your calendar the day you lodge the enquiry.
Fighting a dispute you cannot answer
If tracking never reached delivery, do not build a pack. Accept or refund.
Underestimating the gap
Included cover is up to A$100 plus postage. On a A$300 order, that is a small part of the loss.
Skipping the pattern
One lost parcel is bad luck. Five on the same route is a signal.
What we could not verify
- The legal position on who bears the risk of loss in transit for Australian consumer sales.
- The price of Extra Cover for any service.
- Whether a claim pays the sale price or your cost. The page says claims are assessed case by case.
- Any fixed number of days after which Australia Post treats a parcel as lost.
- Claim terms for Sendle, StarTrack and Aramex. See our post on courier proof of delivery.
- GST and BAS treatment of refunds and carrier payouts. Ask your accountant.
If a decision depends on one of these, ask the carrier in writing, or take professional advice, and keep the reply.
Frequently asked questions
Who is liable when a parcel is lost in transit?
For your customer, you are, because they paid you and a card dispute lands on you. For the carrier, Australia Post's page says the sender can claim for lost domestic items, within 6 months of posting, with proof of lodgement. We could not verify the legal rules on risk in transit, so ask a lawyer for large amounts.
How much does Australia Post pay for a lost parcel?
Its compensation page lists included cover on domestic parcels of up to A$100 plus a postage refund, with Extra Cover available up to A$5,000 in A$100 steps. Consequential or indirect loss is not covered, so it will not pay your dispute fee or lost sales.
How long do I have to claim for a lost parcel?
Australia Post's page says to lodge within 6 months of posting. For International Courier or Express items, the window is shorter: lodge within 30 days of delivery or the intended delivery date. Put the date in your calendar on the day you lodge the enquiry, and keep proof of lodgement with the order.
Do I have to refund the customer if the courier lost the parcel?
Treat it as yes in practice, because the card issuer will usually expect you to deliver or refund. We have not verified the legal position on risk in transit. Refund or replace first, then claim from the carrier. Waiting for the carrier tends to produce a bank dispute.
Can I fight a chargeback if the parcel was lost?
Rarely. Shopify's suggested evidence for product not received is fulfilment, shipping and tracking. If tracking shows no delivery, that evidence supports the customer. Accept the chargeback and claim from the carrier, or refund early if it is still an inquiry.
What proof do I need to claim from Australia Post?
Proof of lodgement, which is a postage or lodgement receipt or the tracking sticker on some prepaid satchels. Without it no cover applies. Proof of value may also be required, and for missing items you submit a missing item enquiry form.
Is Extra Cover worth buying?
It depends on the order value and your loss rate, because Australia Post compensation through included cover stops at A$100 plus postage. Included cover is up to A$100 plus postage, so orders above that carry a gap. Multiply the chance of loss by the gap and compare with the fee. We did not verify prices, so check Australia Post's current rates.
What if the parcel is stuck in customs?
A parcel held by Customs is not the same as a lost one, and Australia Post's page lists items seized, confiscated or destroyed by Customs as not covered. Keep the customer informed, check the carrier's guidance, and read our post on international orders for the dispute side.
Will a lost parcel hurt my Shopify account?
Only if it becomes a dispute, and then every dispute counts toward your chargeback rate, whether you win or lose. A high rate can lead to an account health notice, a payout reserve or NDRP enrolment. Early refunds on inquiries keep disputes out of the count.
Start free trial with ChargeFix
ChargeFix helps Australian Shopify merchants keep order, delivery and message records together so each dispute has a ready response. You review and file it, or let Auto mode handle them. If a parcel lost in transit keeps turning into a dispute, you can try it on a free trial first.
Sources
- Compensation for lost or damaged parcels, Australia Post
- What is Authority to Leave, Australia Post
- Chargeback reasons, Shopify Help Center
- Resolving a chargeback or inquiry, Shopify Help Center
- Preventing chargebacks, Shopify Help Center
- Chargeback monitoring, Shopify Help Center
- Repair, replace, refund, cancel, ACCC
- Chargebacks, Consumer Affairs Victoria
- Chargebacks: prevention and dispute guide for merchants, NAB
- How do card chargebacks work?, CHOICE
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