Why Retailers Shouldn’t Fall Prey to Shipping Refund Waivers6 min read

Major carriers such as FedEx and UPS offer shippers such as yourself the option to claim refunds when they commit a service failure.

Claiming refunds for service failures is a must-do to ensure that you’re not overpaying your shipping carrier. Given that over 15% of parcels shipped through them face service failures and delivery issues (P.S it becomes 2x or even 3x during busy seasons such as holidays).   

Despite all this, both carriers are increasingly showing an unwillingness to provide refunds for their deficient service. 

This is evident in the convoluted refund process and short time window to claim refunds if you’re doing it manually. And if that’s not enough, they have customers sign waivers of Guaranteed Service Refunds and Money-Back Guarantees.   

Before we get into why retailers shouldn’t sign a shipping refund waiver, we’ll start with understanding what FedEx’s Money-Back Guarantee and UPS Guaranteed Service Refund are.

Understanding FedEx Money-Back Guarantee (MBG) and UPS’ Guaranteed Service Refund (GSR) in Terms of Shipping Refunds

FedEx’s Money-Back Guarantee (MBG) and UPS’ Guaranteed Service Refund (GSR) are refund policies within the carrier’s service-level agreements (SLAs) that promises a 100% refund on shipping charges for select service types if a parcel is delayed by even 60 seconds except in exceptional circumstances (natural disasters, weather delays, etc.).

What are the services applicable for MBG and GSR?

FedEx and ups services that are currently eligible for money-back guarantee

Shipping Refund Waivers: Why Retailers SHOULD NOT Fall Prey to Signing Them

Now that we know what a money-back guarantee is, we’ll head right to what money-back guarantee waivers are before we get to the penultimate question.

What are shipping refund (money-back guarantee) waivers?

Shipping refund waivers or (specifically called) money-back guarantee waivers are clauses within the SLAs that provide special benefits (typically discounted prices) to shippers in return for giving up (waiving off) their right to claim shipping refunds. Carriers more often than not claim that not signing the waiver will deprive you of saving your shipping costs and insist you do sign them.

Why do FedEx and UPS want shippers to sign refund waivers?

Now the obvious question arises: Why are UPS and FedEx representatives so keen on getting shippers to sign refund waivers? Is it because they want to provide them with discounts and help their clients reduce their shipping costs in the bottom line?

Not at all.

So, why are insisting then? This is why:  

  • Over 3 billion dollars go in unclaimed shipping refunds each year – Unclaimed refunds are just money left on the table and carriers like FedEx and UPS want to keep it for themselves. This money rightfully belongs to retailers like you, but if you cannot claim your refunds because of the waiver you signed.
  • Fear of accountability despite ever-increasing shipping costs – Shipping carriers have dodged accountability despite higher shipping costs due to a lack of close watch on their service failures and not claiming refunds.    

However, the growing demand for refund claims and better service has proved to be inconvenient for them. This is what makes them eager to get shippers to sign refund waivers so that they can skirt their responsibilities despite increasing costs YoY.

Now that it is evident that signing waivers of UPS’ Guaranteed Service Refund and FedEx’s Money-Back Guarantee only stands to benefit these carriers, let’s consider how you, the shipper, stand to lose because of them.

What are the disadvantages of signing a shipping refund waiver?

1. Your customers will start blaming you for delivery issues

When your shipping carrier sneaks away from accountability, the next thing that happens is you bearing the brunt of delivery issues

It is not fair, especially when the carrier is the one who needs to be held accountable.

As if that won’t be enough, you must also keep in mind that about one-third of customers won’t repurchase from you after a late delivery.

2. You can’t expect better service performance from the carriers

When you don’t hold your carrier accountable for service failures by claiming shipping refunds, you don’t have a system in place to improve their performance by monitoring them carefully. 

In a situation where a waiver has been signed, there would be nothing you could do to pull up UPS or FedEx for the poor quality of service, leading to your last-mile suffering in a big way.  

It is also to be noted that the meager discounts that are promised at the time of signing a waiver are often superseded by add-on charges beyond the cost of shipping. Also, the discounts promised with waivers usually last a limited period. On the other hand, the waiver is permanent.

Worry not! At the end of the day, there are ways for you to avoid being forced to sign a waiver of your UPS Guaranteed Service Refund or FedEx Money-Back Guarantee.

What Can You Do to Avoid Signing Shipping Refund Waivers?

  • Be prepared with comparative data about the services of various shipping carriers before negotiating a contract.
  • Ask the shipping carrier representative to provide you an impact summary to detail how signing a refund waiver will affect your monthly shipping spend and how many packages will be affected.
  • Before signing the contract, check to ensure that there is no clause waiving off your right to claim refunds.

Congratulations! You’ve managed to avoid signing a waiver and are now eligible for claiming refunds from shipping carriers for their service failures. So, what next? 

Before you start claiming refunds, there’s one more thing that you must keep in mind. 

Manually claiming shipping refunds with carriers such as UPS is such a hassle for more reasons than one. Therefore, it is a good ploy to start using automated parcel audit companies such as LateShipment.com to do it for you. 

How Can Parcel Audit Companies Like LateShipment.com Help?

LateShipment.com’s Parcel Audit and Shipping Refunds feature exists just to make “parcel shipping & delivery” transparent and help businesses be fully in control of their last-mile success.

It helps you: 

  • Audit your monthly shipping invoices for 50+ service failures (such as late deliveries, lost/ damaged packages) and billing errors (such as incorrect surcharges) 
  • Submit refund claims to your carrier(s) on your behalf
  • Deposit the refunded amount directly into your account
  • Save you up to 20% of your overall shipping spend.

Not just that, 

Our Shipping Analytics and Reports also help you optimize your shipping operations and make your shipping process both cost and operationally efficient 

  • Get a single consolidated view of your carrier(s) delivery performance metrics across services and geographies.
  • Compare carriers and make better shipping decisions with detailed reports 
  • Access detailed reports of your savings from refunds split by carriers and service types

It takes less than 2 minutes to see LateShipment.com in action without any change to your existing workflow.

Try us now or get in touch by writing to us at sales@lateshipment.com