At a time when one would think UPS would be most sensitive to customers� reactions to rule changes, the carrier has changed its money-back guarantee policy on all of its services, ground and air. It accomplished this simply by publishing the following new restriction on its Web site: �UPS reserves the right to refuse any request for a credit or refund when such request is either (a) made by or (b) based on information obtained by a party other than the payer of the shipping charges.� (As this new impediment to recovering charges on late deliveries was not dated, it is difficult to determine the exact date on which this restriction became effective.)
Apparently, UPS is attempting to demolish the �cottage industry� of freight auditors. UPS actually created the industry in 1997 when it was the first package express carrier to offer a refund or credit on ground service failures to every commercial address in the United States. Dozens of auditors quickly recognized an opportunity to assist UPS� customers in the task of tracking their shipments and reporting service failures. Millions of dollars have been invested in the electronic equipment, software and know-how needed to develop these services. Over the years, auditors have recovered millions of dollars for UPS� customers, despite the numerous obstacles erected by UPS to discourage the filing of claims for refunds. But these refunds will probably end abruptly if and when UPS begins to exercise this new policy � assuming that it will be able to withstand judicial scrutiny (or adverse customer reaction).
When viewed in conjunction with UPS� most recent attempt to curtail its customers� claims (Editor�s Note: This is in reference to the prohibition against customers� suing UPS as a party to a class action suit, which is outlined in the Viewpoint column of the March 2002 issue of Parcel Shipping & Distribution), it appears UPS will take any measures necessary to avoid refunding charges, even at the risk of offending its customers. The rationale for UPS� policy has been that it initiated the ground guarantee for its customers� benefit, not to foster a host of auditors out to make a profit from the guarantee. But large-volume shippers must use high-speed electronic systems to process millions of transactions within the 15-day time limit for the filing of refund claims. Obviously, most customers will not be able to file such claims in a timely manner.
In addition, UPS often requires, as a condition for entering into a contract, that the customer agree that it will not file claims for service failures. Yet another interesting (and profitable) provision in all contracts is that the applicable rates will be those that are in effect on the date of shipment, rather than the effective date of the contract. Motor carrier contracts are generally �date of contract.� Many shippers have entered into two-, three- or even four-year contracts with UPS believing the rates and charges stated in the contract will be applied during the entire life of the contract, only to discover their rates and charges were increased during the contract period.
These, and other issues, need to be addressed by the parcel shipping industry. First, it needs to find an effective forum in which to air these problems. Then it needs to meet with the parcel express carriers that have adopted these policies. If satisfactory solutions cannot be reached, the industry needs to consider seeking relief from appropriate administrative agencies such as the Surface Transportation Board, which has jurisdiction over motor carriers and parcel express carriers. As a last resort, Congress may need to hold Oversight Hearings on the adverse effects of its �sunsetting� of the Interstate Commerce Commission in 1996.
William J. Augello, Esq. is an adjunct professor of Law at the University of Arizona, a member of the Institute of Logistical Management�s Board of Directors and Faculty and is executive director for the Transportation Consumer Protection Council, Inc., in Huntington, New York. He is of Counsel to Augello, Pezold & Hirschmann, PC, and he may be reached by e-mail at or by phone at 520-531-0203.