With the emergence of Comparison Shopping Services inside the Google Ads ecosystem, there are a few things that might get affected when choosing to work with a CSS provider other than Google Shopping - One of them being the free listings.
If you are affected by that issue, don’t worry, it's very easy to fix however you might wonder why you need to fix it in the first place since it has either started showing just now and you didn’t have that issue before or after a switch to another CSS.
Well, this is because, as Google has put it under their help article, due to the following reasons:
Each merchant domain can select only one CSS to represent them for placing products in ads and free listings outside Europe.
So in case you have not elected free listings eligibility before, or you switched recently to some CSS, Google might change the free listings association thus removing it from the account you are using and assigning it to some other CSS.
Now, the fix - all you need to do is:
1) Have a verified and claimed Google Merchant Centre account - the one you switched to another CSS doesn’t count anymore in that sense, the only one which can control the settings is a Google Merchant Centre which says - CSS: Google Shopping - like this
2) Go under Settings > Shopping Ads setup > Comparison Shopping Services
3) Nominate - Scroll down to Comparison Shopping Services (CSSs) selection table where you can see and nominate the Merchant Centre account you wish to have eligibility for Free listings:
And that is done - 24 to 48h later, the issue in your desired merchant center will be fixed.
You might now wonder what to do with that Google Merchant Centre you used to nominate the free listings eligibility if you want to run the ads and listings via another CSS. Well, the answer is nothing, just keep it verified for future needs but otherwise, you can keep it empty and run ads and feeds via the other CSS one.