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UPS Paying $8.4 Million To Settle Overcharge Claims

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UPS Inc (NYSE: UPS) has agreed to pay $8.4 million to resolve a civil dispute with the U.S. Government over allegations the company overcharged federal agencies for ground package deliveries.

The U.S. Department of Justice (DOJ) claimed that between 2007 to 2014, UPS failed to provide the General Services Administration (GSA), the federal government's purchasing agency, with "lower prices that had been offered to another customer," which violates a price reduction clause in the contract and resulted in the government overpaying for delivery services.

"Contractors are expected to carefully comply with the pricing requirements of GSA contracts and other federal contracts," Assistant Attorney General Jody Hunt said on Sept. 13, in announcing the settlement. "This settlement demonstrates that the government will hold accountable contractors that overcharge federal agencies by failing to follow the pricing terms of federal contracts."

The settlement comes roughly four years after UPS paid $25 million to settle a similar lawsuit with the federal government for next-day air delivery overcharges under contracts with GSA, the U.S. Transportation Command, which supports the U.S. military. The 2015 settlement resolved claims that between 2004 and 2014, UPS concealed its failure to comply with its delivery guarantees under the contracts.

"In particular, the government alleged that UPS knowingly recorded inaccurate delivery times on packages to make it appear that the packages were delivered on time, applied inapplicable ‘exception codes' to excuse late delivery, and provided inaccurate ‘on-time' performance data under the federal contracts," the DOJ stated at the time.

The 2015 case was the result of a whistle-blower lawsuit filed by Robert Fulk, a former UPS employee, who received $3.75 million of the settlement.

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