What Every Shipper Ought to Know About Shipping Refunds, Guaranteed Service Refunds, & Parcel Auditors

You have a guarantee. UPS and FedEx absolutely positively guarantee that your package will be delivered on time or your money back.

There are dozens of parcel recovery companies that are offering to get your money back for parcels that don’t get delivered on time. Should you do it?

Companies like this have been around for a while and there are a few items that shippers ought to know.

  1. Parcel auditors generally charge 50% of the actual savings they generate. So if you have a $20 package that was late, they will keep $10. However, most will negotiate based on your volume. Some will take 30% of the savings.
  2. Carriers are late about 3% of the time. 97-98% of the time, they are on time. UPS and FedEx do a great job. And, when they are late, it does not mean that the package qualifies for a discount. There are a lot of exceptions, including weather.
  3. You must make the request within 15 days that the package was received.
  4. UPS & FedEx have put provisions in their agreements that give them the right to charge you for tracking and refund requests. From page 18 of the service guide, “UPS reserves the right to assess a shipper an additional charge of $3 per request for each Package Tracking/Tracing and Refund Request initiate by or at the request of the shipper. This charge will not be assessed for the first 50 package tracking requests per calendar week, or for a quantity of package-tracking request equal to or less than 20% of the shipper’s package volume for that week, whichever is greater. This charge will not be assessed for a quantity of package-tracing requests equal to or less than two percent of the shipper’s package volume for that week. UPS also reserves the right to assess the shipper a charge in the effective UPS Rates for Service Guarantee refund requests when the subject package was delivered in accordance with the applicable UPS Service Guarantee in the effective UPS Tariff/Terms and Conditions of Service.”
  5. In addition, if the request was made by a third party, such as a parcel auditing company, they don’t have to give it back. “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.” (p 30) “At the sole discretion of FedEx, the money-back guarantee may not be honored when the request is made by, or the information utilized to determine the status of the package is determined by, a third party other than the payer of the charges.” (p 138)

There are a few options that I would suggest.

  1. Get reports from your carriers that show what percentage of your packages were delivered late. If it does end up being 2 or 3 percent, when you are negotiating, ask for an additional 2-3 percent discount.
  2. Many shipping systems can track and generate reports of packages that are late. Sort it by dollar amount and have one of your own clerks request refunds on the packages that cost a lot of money. This way you get 100% of the money back.
  3. Have your accounting clerk review the invoices from the carriers. Ask for them electronically and determine which ones were late. Talk to your carrier representative about which reports can help you.

I know that this is a controversial subject and I invite your feedback. What are you doing about promises that have not been fulfilled about your packages?


2 Responses to What Every Shipper Ought to Know About Shipping Refunds, Guaranteed Service Refunds, & Parcel Auditors

  1. Jim L. says:

    Regarding Option #1 – UPS usually gives only a 1% discount if a customer agrees to forego refunds for late deliveries however that 1% only applies to the first contract you sign after you make the concession. As time passes most companies do not re-evaluate the true cost of this concession.

    I’ve been told by industry professionals that if you make this concession, in essence you are giving UPS the right to deliver your packages late. With that in place the driver will provide better service to the customer who is getting refunds for late deliveries. Is there any evidence of that?

  2. Dan says:

    I would never sign away a guarantee. However, you can look at the data and reports provided by the carrier.

    Additionally, when you create a label via carrier API your systems can get the guaranteed delivery date if you record that bit of information, it’s a relatively simple task to compare delivered date to guaranteed date.

    Those that fall outside the delivery guarantee then need to be individually tracked to confirm there wasn’t another reason to void the guarantee. In addition to weather UPS and FedEx do not guarantee oversized packages, so check for that as well.

    Lastly in response to Jim’s post. Once in their network UPS & FedEx won’t slow down a package. HOWEVER if you have enough volume that you are dropping your packages in to their sort OR have a dedicated truck, these trucks are often processed last. Net effect, the cartons won’t show that they were tendered until the next day.

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