UPS accused of tipping the scales

Parcel firm denies overcharge claims

October 24, 2007

BY KATHERINE YUNG

FREE PRESS BUSINESS WRITER

The Michigan Attorney General's Office and the Michigan Department of Agriculture are looking into allegations that United Parcel Service of America Inc. uses faulty package measurement devices to overcharge thousands of customers and package shipping stores.

"We are treating this very seriously," said Brad Deacon, hearings coordinator for the Agriculture Department's Weights and Measures Program.

The allegations stem from a complaint the department received this spring from Pez Afrin, a UPS Store franchisee in Commerce Township. Afrin also has sued the shipping giant in U.S. District Court in San Francisco, accusing it of breach of contract and of violating racketeering laws.

The lawsuit is seeking class-action status to cover the 10,000 package shipment centers and more than a million UPS account holders that could potentially be affected.

In a legal filing, UPS denied the allegations and said it treats its customers fairly and deals with them in good faith. "Nothing's really changed in our response," said spokesman Norman Black. "We intend to continue defending the reputation of the company."

Representatives from Atlanta-based UPS, the Attorney General's Office and the Agriculture Department met in late July to discuss the situation.

"We will continue to work towards a resolution," Deacon said. He declined to say what steps the state might take or how soon any actions might occur.

The Attorney General's Office also remained tight-lipped about the investigation.

"We are working with our client," the Agriculture Department, "to get an answer to the problem," said Matt Frendewey, a spokesman for the attorney general.

The devices that are the subject of the lawsuit and the complaint are those run and maintained by UPS at its distribution hubs in Michigan and other states. They are used to verify that the measurements and weights of packages recorded by UPS Stores, other retailers and corporate account holders are accurate.

If the measurements are not accurate, UPS bills the stores and account holders for the correct shipping charges. By that time, it's too late for the stores to get customers to pay the extra amount, so they must swallow the costs or appeal the charges to UPS.

Under Michigan law, measuring devices must either be certified by a state inspector or a service person or company registered by the state. But UPS said it is not subject to state laws because it is a carrier engaged in interstate commerce.

UPS said it tests its measuring devices multiple times every day with different-sized boxes and immediately removes from service any equipment that fails. It also only purchases and installs devices that meet mandatory federal guidelines.

"We take our responsibility here quite seriously," Black said in a statement.

But Afrin, a 32-year-old Commerce Township resident, said UPS overcharges his store every week by $100 to $250. Though he can appeal the charges electronically, he says the process is time consuming and wouldn't be necessary if UPS equipment were accurate.

"A lot of time they are making mistakes," Afrin said. "Sometimes, 1 inch can make such a big difference in price."

His lawyers are seeking to consolidate his lawsuit with two others filed in Alabama and Oregon that involve similar allegations.

This isn't Afrin's only lawsuit against UPS. He also is part of a national group of UPS Store franchisees suing the company, accusing it of undercutting their business by giving online customers lower shipping rates than what the stores are allowed to charge.

UPS also has denied those allegations, and the lawsuit is making its way through the legal system.