United Parcel Service - Fees For Canadians

Fees For Canadians

The normal procedure for residential customers in Canada to import goods from the U.S. by mail is relatively simple; they are required to pay 5% GST on the item in Alberta, Saskatchewan, Manitoba, and Quebec and higher rates of HST (Harmonized Sales Tax) in eastern Canada, Ontario (13% HST), and British Columbia, plus a C$5 handling fee collected by the Canada Border Services Agency (CBSA) on behalf of Canada Post. This applies for mailed items greater than C$20 and gifts less than C$60 in value; this does not apply to items shipped by couriers such as UPS.

When delivering packages in Canada, UPS brokers or clears the item through the CBSA and transfers a cost to the buyer. These fees are not disclosed at the time of purchase by the seller, as many sellers from the U.S. are themselves unaware of this.

As a result, there have been two class-action lawsuits filed against UPS by Canadians. The first one, filed in October 2006 by Robert Macfarlane, a resident of British Columbia alleges that the UPS brokerage is "so harsh and adverse as to constitute an unconscionable practice."

The second, filed by Ryan Wright and Julia Zislin in Ontario, claims "that UPS failed to obtain consumers’ consent to act as a customs broker; to disclose the existence and/or amount of the brokerage fee; and to provide consumers with the opportunity or disclose to them how to arrange for customs clearance by themselves."

It is possible for the recipient to avoid these brokerage fees if the parcel is being shipped by a UPS "express" (premium) service, that is, another service other than UPS Standard (Ground). Fees may also be avoided if the recipient clears the parcel him- or herself at a CBSA office.

This distinction is not limited to Canada, or to UPS. As a rule, "mail" import procedures in all countries apply only to items imported by mail, i.e., originated by the exporter's local postal authority (for Canadians, commonly USPS) for delivery by the importer's local postal authority (Canada Post); they do not apply to shipments made by courier services such as UPS, FedEx, or DHL. For example, this distinction is specifically noted by U.S. Customs and Border Protection (CBP) in its website's page on Internet purchases imported into the United States; it also warns that imports by courier may come with "higher than...expected" brokerage fees that "sometimes exceed the cost of (the) purchase", and that prepaid shipping charges on imports by courier normally do not include duties or brokerage fees. (The distinction may be sharper in the U.S. because CBP normally waives duties on mail imports of up to US$200 per day, but not on courier imports of any amount. Use tax, the U.S. equivalent of GST, is collected only by the states, not by CBP or shippers.) What makes this case unique is that UPS charges a substantial brokerage fee on ground shipments to Canada, when other Canadian small-package services apparently charge nothing (UPS "express" services) or a minimal fee (Canada Post).