(Undated) — The United Parcel Service has agreed to pay up over a tactic that frustrated hundreds of thousands of customers all over the country.
Notices have begun arriving at businesses and homes in Houston and across the nation, informing customers that UPS will spend $12-million to reimburse victims of a billing tactic that made millions for the company over the past five years.
As with most class action lawsuits, UPS is admitting no wrongdoing as it opens up its checkbook to reimburse its own customers and end a lawsuit filed by an Alabama auto parts firm.
Barber Auto Sales in Limestone County, Alabama was among the countless customers who calculated the size and weight of packages it was shipping to customers.
After the dimensions of each package were entered into the UPS website, Barber and other customers agreed to pay a set price.
Then, out of nowhere, UPS would add new charges to your bill after you thought the transaction was finished.
How small businesses were hurt
A Houston business that shipped thousands of computer disks by UPS is now joining in by filing a claim in this lawsuit after going through the same thing.
The Houston firm would enter the measurements and weight of boxes, and then the UPS website would calculate the amount it would cost to ship it.
Customers who bought the computer disks, just as with the auto parts for Barber, would then be billed for the actual item and the shipping.
That means if the Houston firm would collect $20 for the box of disks and then $5 for shipping, suddenly shipping may cost another $5 on top of that after the transaction is finished and the end customer has already received the disks.
The Houston disk shipper said it felt like a rip-off each and every time a new bill would arrive from UPS, notifying of “additional charges.”
There is no way to budget for such a thing for most small businesses.
If the business owner passes along to his customer the exact cost that UPS quotes for shipping, you’d never know when UPS would simply make up a different amount after the transaction was finished.
In other words, UPS quotes that shipping the box of disks will run $5, so that cost is passed on to the buyer of the disks. The buyer receives the disks after paying the $5 shipping fee, and then the poor seller finds out UPS is hiking up the price by another few bucks.
Specifics of the court case
In the original lawsuit filed in November 2006, lawyers for Barber Auto Sales tallied $4,679 worth of overcharges by UPS after it had shipped auto parts to customers.
When the company disputed those charges with UPS, the shipper gave back $3,500.
During that process, the company’s owner said a UPS manager mentioned other customers going through the same thing, and getting similar reimbursements after filing complaints about it.
The lawsuit filed in Alabama federal court says each UPS customer agrees to terms of service that allow UPS to “audit” the size of each package that is shipped through its website interface.
According to the lawsuit:
“UPS manipulated these audit procedures so that it could improperly invoice plaintiff increased shipping charges based on false dimensions.”
The lawsuit says hundreds of thousands of customers were affected by the UPS tactic.
The Houston disk business kept getting charges booted up the same way over more than a year’s time. In one single notice, four different shipments had their charges boosted after the fact.
That means 4 different customers were charged one shipping fee for the disks, but then UPS came along and hiked the fee that was slapped against the sender.
In the class action lawsuit, lawyers write:
“UPS falsely increased shipping charges based on false dimensions.”
So if your scales said you were shipping a 12-inch square box that weighed 5-pounds, UPS would suddenly come along and say that your scales and your measurements were wrong so you needed to cough up more money.
The shipper most certainly fattened its bottom line by millions of dollars by employing this tactic against its customers over the years.
The lawsuit by Barber Auto Sales accused UPS of fraud, unjustly enriching itself, and breaching its contract with its customers who ship things.
In a partial victory for UPS, an appeals court ruled that Barber Auto Sales could not sue for any of the money it lost to this UPS tactic older than 180-days from its original complaint.
The appeals court ruled that since the UPS terms of service for all customers specifically spells out that you can only challenge the steeper charges if you file a complaint within 180-days.
The Houston business never filed a complaint or sought to get reimbursement before this lawsuit process. The business owner said he threw up his hands in frustration, unable to prove that UPS was lying.
With the package now long gone and having been opened by the end customer, how could the Houston firm prove that UPS was fabricating the added weight or dimensions it was claiming in its surprise “additional charges” invoice?
The official “class” that is getting paid
Anyone who shipped packages with UPS between May 15, 2006 and August 29, 2011 is eligible to get money back if they were hit with a surprise increase charge after shipping a package.
The notice arriving in mailboxes in Houston and elsewhere says the exact amount of the payments to each victim cannot be determined yet. It will be based on the number of people who file claims, along with the amount of the adjusted charges they paid.
Payments will be reduced if there’s not enough money in the specific settlement amount being approved by the court.
Specifically, only $2-million is being set aside to repay victims of this tactic between the above dates. The other $10-million will pay other victims who come forward in the future, according to the settlement document approved by the court.
A hearing is being held in December to finalize the settlement and all claims have to be filed shortly thereafter.
When the lawsuit was first filed, a UPS spokesperson was quoted in a blog as saying UPS mesauring devices are accurate and the company looked forward to proving that at trial.
Now, without admitting any wrongdoing, UPS will pay to avoid that day in court.
The settlement requires that its policies on additional charges must be more clearly spelled out to customers in the future.
Read more: Official class action site (to file a claim)
Class action blog’s reporting on this case
Letters received by customers with surprise charges