Package delivery giant UPS on Wednesday reached a
$4.2 million settlement for overcharging 17 states and three local entities by
falsely recording that next-day delivery packages reached their intended
destinations on time. The agreement, the Atlanta-based company's second on
similar allegations this year, covers alleged wrongdoing from 2004 to 2014 in
which some employees recorded inaccurate delivery times on packages that
government customers sent via UPS next-day delivery services.
The changes resulted in apparent on-time
arrivals of premium-priced packages, even though the deliveries
were late. UPS employees allegedly applied inapplicable or inappropriate
"exception code" that excused late arrivals of next-day delivery
packages based on false claims of adverse weather or other conditions. As
a result, the government customers weren't able to claim refunds for the
late deliveries.
The company did not acknowledge liability in the settlement
and disagreed with the position of state officials. The agreement covers
tens of thousands of government agencies in California, Delaware, Florida,
Hawaii, Illinois, Indiana, Massachusetts, Minnesota, Montana, New Mexico,
New York, North Carolina, Tennessee and Virginia, as well as three cities.
"UPS improperly profited from charging New York state
government entities — and ultimately our taxpayers — when its
employees failed to meet its guaranteed delivery times for overnight
deliveries," said New York Attorney General Eric Schneiderman, whose
office led the multi-jurisdiction group that investigated
delivery allegations raised by a former UPS employee.
The whistle-blower, Robert Fulk, will receive a portion of
the recovery, Schneiderman said. UPS also agreed in May to a $25 million
settlement with the U.S. Department of Justice and a $750,000
agreement with New Jersey about similar allegations about late deliveries
of Next Day Air overnight packages. The company said it settled that case to
avoid costly litigation but continued to disagree with the position of the
federal and state officials.
UPS shares closed up 0.67% at $105.26.
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