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UPS Sued over Declared Value Charge

UPS again plays the role of Defendant this New Year in a class action lawsuit filed in the State of Michigan. One Steven Sitak of Michigan, and International Samaritan, a charitable organization serving the poor in Latin America, have filed a class action lawsuit against UPS with the help of the Complex Litigation Group LLC. The matter is fairly simple, and one that has perplexed auditors for years.

UPS offers a minimum declared value of $100 for every package shipped to cover loss or damage claims. Beyond $100, shippers pay $0.85/$100 in value. As stated in the UPS Tariff:

“– UPS’s liability for loss or damage to a shipment is limited to $100.00 without a declaration of value.– The maximum declared value is $50,000.00 per package. UPS’s liability for loss or damage can be increased up to $50,000.00 (subject to terms and conditions) by making a declaration of value for an additional charge.

– $0.00-$100.00         $0.00

– $100.01-$50,000.00       for each $100.00 (or portion of $100.00) of the total value declared $0.85– Minimum $2.55″

Though the tariff states that the first $100 is free, once a shipper pays for a declared value beyond $300 (the minimum DV charge is $2.55), UPS includes a $0.85 charge for the first $100 in its declared value calculation.
The complaint states the problem succinctly:

“However, despite the explicit representation and contractual promise that the first $100 of liability coverage is provided at zero cost to the shipper, on information and belief when a shipper purchases additional coverage for a declared value in excess of $300.00, UPS charges the shipper $0.85 for the first $100 in coverage and an additional $0.85 for each additional $100 in coverage or portion thereof.

For example, on information and belief, where a customer declares a value of $350.00, instead of charging $2.55 (the “minimum,” which is also 3 X $0.85 for each $100 or portion thereof in excess of $100), UPS charges $3.40. As a further example, on information and belief, for a declared value between $400 and $500, UPS charges $4.25, and so on”

As a parcel auditor, part of our contract optimization process is to go after UPS for the first $.85 in declared value charges. We consider these overcharges.  It’s unsettling that despite the fact that this apparent inequity has been brought to the attention of UPS many times over, the policy remains unchanged. The cynic may agree with the lawsuit’s plaintiffs that UPS hasn’t changed the policy because the monetary gains of status quo are huge. Pay out a few refunds here and there when auditors bring the overcharges to the carriers attention, but keep the policy in place to keep the cash flowing in. Might this be unethical, even illegal? The plaintiffs certainly think so.
The suit alleges Breach of Contract, Declaratory Relief, Unjust Enrichment, and violations of the Racketeer Influenced and Corrupt Organizations Act (RICO). As a class action suit, the impact could be huge if plaintiffs prevail. At the very least, look for a change in the UPS tariff pertaining to Declared Value charges. We’ll keep watch.

You needn’t wait for a potential pay-out as one of the affected class. Let Direct-Recovery recover the Declared Value excess you may have paid in 2013.

Read the full complaint here.


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