(CN) – UPS agreed to a $4 million settlement with 14 states and three cities for claims that it charged overnight rates for late deliveries.
The deal comes on the heels of a $25 million settlement reached earlier this year between UPS and the federal government based on a whistleblower lawsuit that claimed the company had been systematically overcharging government clients since 2004.
UPS provides delivery services to scores of federal agencies through contracts with the General Services Administration and the U.S. Transportation Command — an agency that supports the U.S. Defense Department.
The allegations stem from a 2011 complaint filed against UPS by former employee Robert Fulk. He said that the package delivery company made up false reasons for late deliveries and entered incorrect delivery times to make it appear that deliveries arrived on time.
“From at least 2004, UPS employed these and other techniques to make false claims amounting to hundreds of millions of dollars as well as to avoid paying its promised money-back guarantee to federal, state and local government customers,” according to Fulk’s federal complaint, which was filed in Alexandria, Va.
Last week’s settlement included the attorneys general of New York, California, Massachusetts, Delaware, Florida, Hawaii, Illinois, Indiana, Minnesota, Montana, New Mexico, North Carolina, Tennessee and Virginia, along with New York City, Chicago and Washington D.C.
New York will get $1.2 million in the settlement, according to Eric Schneiderman, the state’s attorney general.
“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,” Schneiderman said in a statement. “Corporations that improperly profit at the expense of taxpayers will be held to account.”
In addition to the settlement payment, UPS implemented training, monitoring, and reporting compliance programs for potential delivery failures or policy violations, according to a press release from Virginia Attorney General Mark Herring.
UPS says it remains in good standing with the state and municipal governments.
“We resolved all the claims with UPS on this issue,” UPS spokesperson Susan Rosenberg said. “When we were notified of the issues, UPS focused to improve our training, systems and technology for better customer service. Those actions have been taken.”
The delivery company disputed the federal government’s claims earlier this year. Its settlement did not include an admission of liability by UPS.
UPS is the world’s largest package delivery company, averaging 18 million parcels per day worldwide, according to a U.S. Securities and Exchange Commission filing.
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