UPS: United Profiteering Service

This blog entry doesn’t describe some revelation but it further corroborates and exposes a not-so-well-known and annoying money-making scheme employed by UPS to extort money from Canadians receiving goods originating out of the US. 

Before getting into the details I have to say that I find it ironic that UPS marketing geniuses were bold enough to ask the question: What has brown done for you lately?  Answer: Tried to extort me.  (What is the most negative and stinky thing that comes to mind when someone says “brown”?)

If you have ever excitedly greeted the UPS driver at your door, only to be surprised to learn that an additional (exorbitant) brokerage fee stands between you and your goods, you know exactly where I am going.  I’ve had this happen to me before and thinking I was smart, I did my homework and took action before my goods got to Canada in an attempt to head the issue off “at the pass”.  The result in one word: fail.  I actually called UPS and they indicated that there were no brokerage fees if the shipment was personal and valued at less than $1,600, which it was.

Here’s how the scheme works:

1. You order something from a US merchant
2. You pay the merchant for the product and also the shipping fee.
3. The merchant ships it via UPS standard service (this is an important point)
4. UPS conveniently “clears” the shipment for you through Canada Border Services Agency in their eastern receiving port of Lachine, Quebec.  UPS doesn’t call or notify you.
5. UPS shows up at your door and demands payment of the brokerage fees in return for giving up your goods.

Here are the details about my shipment.

Of this total there as $140 in duty, taxes and brokerage fees.  The brokerage fee portion was $60, and not at any point along the way (before the package arrived at my door) was I notified there would be a $60 brokerage fee nor was I provided with any alternatives to get the package without paying UPS the $60.  Simply put, this is extortion as per the most accurate definition of the word, which I include below courtesy of http://www.merriam-webster.com/dictionary/extorting

Here are the problems with UPS’s money making scheme (scam?)

1. UPS knows exactly what they are doing.  In other words, they are sly.  They know that most people will pay the fee out of ignorance, thinking it is some form of tax-like levy, or they (the receiver) will perform the ‘balance of convenience’ and justify shelling out the brokerage fees on the spot because they want the package more than the hassle of fighting over the fees (this is the extortion, plain and simple)

2. UPS does not provide the consumer with easy or any access to information about the fees.  I actually called UPS shortly after the tracking number was assigned to make sure I either would not be charged the brokerage fee or to be provided with alternatives for avoiding the brokerage fee, such as doing what is sometimes called “self-clearance”.
3. IF brokerage is required and a consumer chooses to use the services of a broker, they should have a choice of who they use.  If no choice is available that constitutes a monopoly and gives the monopolizer pricing power, which is exactly what UPS seems to demonstrating.
4. The brokerage fees charged should be commensurate with the value of the work performed, the risk assumed, and the effort required. I strongly suspect that in the case of my package, it was not individually processed or ‘cleared’ by UPS.  Essentially, other than the actual carriage of the box, the brokerage transaction was nothing more than a completely automated process involving database and data network activities.  In fact, the only manual process is the
   driver collecting the brokerage fee at the door.  

Now, I should tell you that I didn’t pay the $60 extortion fee and I still got my parcel. How you ask?  Well, ironically, when the parcel arrived at my door, I was not home.  My nice mother-in-law was there and she intuitively rejected the notion of handing over $140 in “COD charges” as she did not know the parcel was coming.  This was a good thing.  The driver told her he would try and make a delivery attempt the next morning, which I would then prepare for.  In preparing, I called UPS to express my concern for and rejection of the exorbitant brokerage fees. Initially, the nice lady said that there is nothing I or UPS can do.  I asked if I could self-clear/broker the package myself and she said no because that would need to have happened at the port of entry, which is over 1,600 kms away in Lachine, Quebec.  Hearing this, I then politely expressed my concern that UPS is now holding my package for ransom.  I indicated that this was unacceptable and that I would like to have my request escalated.  The nice lady put me on hold momentarily then returned and offered to lower the brokerage fee to $20 as a one-time “goodwill” gesture on the part of UPS.  She did stress this was a one-time thing.  (oh, thanks UPS). I accepted this fee and paid it when the package was delivered the following day.

In researching my entry, I came across the following popular post from a David Ross, where he explains his story.  David makes note of a couple of class action lawsuits against UPS for the practices described herein.  

In summary: shame on UPS.  The executives and marketeers at UPS should be embarrassed   to be taking gains on these practices of extortion.  If you folks don’t have the skill and ingenuity to create a profitable model based around transparency, choice and value for money, then you don’t deserve the positions of power you hold.