We recently had a conversation with a UPS shipper that had a nasty surprise on his recent UPS invoice. Upon reviewing the invoice, we found nearly $500 in charges in the invoice category labeled “Chargeback.” There were 4 tracking numbers shipped 5 months in the past that were rebilled to the shipper.
Upon further investigation, the recipient purchased a product from our shipper and wanted the shipper to use the recipient’s account number for the UPS shipping charges. The shipper entered the proper information in the UPS system and the charges were originally billed to the recipient, but after 5 months of non-payment or a possible dispute, UPS came back to the original shipper and applied these charges.
The new charges were at full price plus some additional fees. UPS did not apply the shipper’s contracted discount rates, then added a $15.90 fee to the total of each package. So our shipper was charged published rates plus an additional fee on 4 packages that the recipient agreed to pay for. How does this happen? Let’s investigate more…
So what is a chargeback?
You the shipper, take full responsibility for all your shipments.
According to the FedEx and UPS services guides, you take full financial responsibility for the packages you send from your location. Regardless if any third party that agrees to pay for the shipping charges, the carrier retains the right to come back to you the shipper for full payment at any time.
UPS® Tariff/Terms and Conditions of Service – United States – 52. Payment of charges on Page 22
“Notwithstanding any billing plan that is in effect or payment or billing option selected at the time of shipment, the Shipper is ultimately liable for and agrees to pay all Charges, including in the event of insolvency, bankruptcy, non-payment, or refusal to pay by the Receiver or Third Party.”
The payer has 180 days to dispute the charges. The additional charge can be found on page 120 of the UPS Rate and Service Guide. A UPS chargeback for consignee billing shipments is defined by UPS as: In the event of non-payment by the consignee or third party, the original shipper will be billed a refusal fee in addition to the shipping charges. UPS will apply and additional $15.90
FedEx Service Guide – page 135 Billing – Express
“G. NOTWITHSTANDING ANY PAYMENT INSTRUCTIONS THAT ARE GIVEN TO FEDEX, THE SENDER IS ULTIMATELY LIABLE FOR, WILL BE BILLED FOR AND AGREES TO PAY ALL CHARGES AND FEES, INCLUDING ANY SPECIAL HANDLING FEES, IF THE RECIPIENT OR THIRD PARTY FAILS OR REFUSES TO PAY.”
“H. 2. Payer Rebilling. A special handling fee will be charged to the sender for each request for a change to billing instructions for a package. We will accept requests for change to billing instructions up to 90 days from the invoice date”
The additional charges can be found on page 127 of service guide: “Payer Rebilling For every request to change the billing instructions for a shipment, we will assess a fee to the payer in addition to shipping charges. U.S. Express Package Services, International Express Package Services, U.S. Express Freight Services $15 per shipment.” For FedEx Ground and Home Delivery, you can find the information on page 166 of the service guide.
So what can be done to prevent chargebacks and rebilling?
1. Don’t do it!
- Ask for the requesting third party to create a label online and email that to place on all the shipments necessary. These labels are created on their account number and are not connected to your account number in any way.
2. Watch your Invoices
- Monitor each invoice for these chargebacks and payer rebilling. As soon as your identify a potential issue, get on the phone with carrier billing and your recipient. Having access to a chargeback report will help highlight these charges.
3. Only use the account number of established business partners
Be sure the account number is billable and active. Pick up the phone and call FedEx or UPS to confirm.
4. Have written confirmation of approval to use third party’s account number
In the event of a dispute by the third party, having an email confirming the approval to use that account number will help with the charges.
5. Create a company chargeback policy
If you have customers that insist on using their account number, create a policy that must be followed and consented. Another good option would be to keep the customer’s credit card number on file in the event of a dispute. The policy should clearly state your option to charge the shipping fees back to the credit card in the event of a chargeback or payer rebilling.
In today’s competitive world of e-commerce, shipping fees can be the difference in gaining or losing a customer. Having a flexible shipping policy is crucial to all business owners. The cost of additional transportation impacts all parts of your supply chain, these chargebacks could eliminate all profits or even cause a complete loss. Contact us as Refund Retriever to gain visibility into your shipping and become the shipping hero of your company.