Rohan Rinaldo Felix
Sashank RavindranathShipping is an area of e-commerce business that is highly risk-worthy and more prone to errors than the other phases of the order journey. The carriers responsible for your customers’ orders during this stage are very much aware of this — hence, major carriers such as FedEx, UPS, Canada Post, Purolator, Royal Mail, DHL, UK Mail, etc, offer the option to claim refunds when they commit a service failure.
Given that over 15% of parcels shipped through them face service failures and delivery issues (it becomes 2x or even 3x during busy seasons such as holidays), claiming refunds is a must to ensure you’re not overpaying your shipping carrier.
While carriers provide the option to claim refunds for different errors from their end, they understand the need for shippers like you to extra-emphasize handling as many late deliveries as possible. This is what led them to specifically come up with a money-back guarantee policy for late deliveries.
What are Money-Back Guarantees or Guaranteed Service Refunds?
Shipping carriers work on the condition that they abide by their contract and one such condition is their commitment to on-time deliveries. If these deliveries are missing their mark, carriers will ensure a 100% refund under their ‘money-back’ guarantee policy’.
Money-back guarantees are refund policies within the carrier’s SLAs that promise a 100% refund on shipping charges for select service types if a parcel is delayed (sometimes even by 60 seconds) except in exceptional circumstances (natural disasters, weather delays, etc.).
Major carriers that provide money-back guarantees for late deliveries
Here’s the list of different terms and conditions on money-back guarantees from major shipping carriers that you can revisit to stay aware of while filing refund claims.
Shipping carriers offer money-back guarantees to assure customers of the reliability and timeliness of their services. I.e., if the carrier fails to meet certain predefined service standards or delivery commitments, then you, the shipper, are entitled to hold them accountable for their service failures and thereby are eligible for a refund of the shipping cost.
Benefits of claiming refunds under the money-back guarantee
Shipping carriers such as FedEx and UPS have money-back guarantees that offer refunds for late deliveries. However, they either don’t get automatically credited to your account nor are not easy to claim. Therefore, shipping invoice audits act as document evidence that can help you recover costs directly associated with late deliveries. There’s more to it.
Firstly, making full use of the money-back guarantee and claiming refunds gives you the opportunity to save on your shipping costs.
Second, regular auditing of invoices and claiming refunds holds carriers accountable for their service level agreements (SLAs). This ensures better visibility into your carrier’s delivery performance and fosters a more transparent relationship between you and the carrier.
As a third, with insights into the form carrier performance metrics such as recurring delays with specific routes, services, etc., you can optimize your shipping and make informed decisions regarding logistics.
Data from audited invoices can also be used as leverage in negotiating better terms (lower rates or improved service guarantees) for future contracts with shipping carriers, thereby enhancing overall logistics efficiency and cost-effectiveness.
However, enjoying these benefits and claiming refunds are not so straightforward, as these money-back guarantee policies often come with certain fine print caveats that make it complicated for you to claim refunds.
Refund hurdles under the money-back guarantee policy
- There is a list of eligible services – Only certain services are applicable for money-back guarantees. It is important to check if your packages are sent through a service where the guarantee is valid.
- It can be excluded based on conditions – Money-back guarantee is not applicable when delays are caused by natural disasters, weather conditions, incorrect addresses, customs delays, the unavailability of the recipient, or other events beyond the carriers’ control.
- There are modifications and suspensions – Carriers reserve the right to modify (increase the permissible duration) or suspend the money-back guarantee during high-volume periods like the holiday season.
- The claim process is tiresome and time-consuming – Even if all conditions are in your favor, the claim can still be rejected owing to the reason that the carrier must be notified within a specific time frame after the delivery (typically 15 days). This can be a hassle, especially if you’re filing these claims manually.
What Are Shipping Refund (Money-Back Guarantee) Waivers And Why Avoid Them?
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 on your shipping costs and insist you do sign them.
However, signing a shipping refund waiver might not be best for you and hence, must be avoided. Before we look into why you must avoid waivers, let’s see why carriers insist on signing them so much.
Why do carriers want shippers to sign refund waivers?
Now the obvious question arises: Why are carrier 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 they insisting then? This is why:
- Over 3 billion dollars go into unclaimed shipping refunds each year – Unclaimed refunds are just money left on the table and carriers 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 inconvenient for them. This 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 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?
Not claiming refunds roughly translates to not holding your shipping carrier accountable for their failures.
With your shipping carrier conveniently left out of accountability, the next thing that happens is you bear the brunt of the delivery issues. And as if that won’t be enough, keep in mind that about one-third of customers won’t repurchase from you after a late delivery.
In the long term, lack of accountability also leads up to the fact that you can’t expect better service performance from the carriers. In a situation where a waiver has been signed, there would be nothing you could do to pull up the carrier for the poor quality of service, leading to your last-mile suffering in a big way.
Amidst growing concerns about on-time deliveries, you end up overpaying your shipping carrier. It is 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, discounts promised on waivers usually last for 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 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 with 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 to claim 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 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.
Rather than seamlessly cruising through the tiresome process of late delivery claims, LateShipment.com also helps in identifying and claiming refunds for 50+ service failures and billing errors.
