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A former franchisee accuses the shipping giant of routinely gouging customers throughout the city


Last month, when nearly a dozen UPS Stores across the city closed down in a single day, the initial focus was on the customers put out by the shutdown: dozens of people found themselves unable to access their rented mailboxes, while others complained of packages lost in the shuffle. On the West Side, a blog surfaced to swap information about the fate of a store on West 57th Street.


What none of these customers knew at the time, though, was that they had unwittingly become part of a much bigger ? and at times bizarre ? dispute involving the franchisee who, until the shutdowns, owned 20 percent of all of the UPS stores in the city. The owners, brothers Robert and Thomas Hagan, were shut down by UPS, and their right to operate a UPS store was revoked.


But, in an effort to clear their name, the Hagans have filed an extraordinary claim against UPS in Federal Court that lays out, over 200 detailed pages, what they say is a systemic effort by UPS to rip off its Manhattan customers. The Hagans, UPS franchise owners since 2008 whose business grossed $6 million a year at its peak, even brought in a private investigator to secretly document the abuses they say occur at every UPS store in the city.


Among their claims:


Customers are routinely duped into paying more than necessary for shipping


Employees are encouraged to lie about the weight and dimensions of packages to result in a higher bill


Customers are told that one method of shipping is the cheapest, when often it is not


The Hagans, in their lawsuit, says the deception is so widespread at UPS in Manhattan that employees regularly swap stories about the best way to deceive customers. In the lawsuit, the brothers record detailed evidence of abuses, listing tracking numbers for overcharged shipping, and print the verbatim comments of employees involved in the deceptions. "Employees in virtually every Manhattan (UPS Store) location were so comfortable with the practice of ? lying about expected delivery dates, withholding accurate price quotes and over-dimensioning boxes to trigger higher retail billable rates, that they would gladly engage in conversations on the topic and even feign measuring boxes with measuring tapes while adding inches to boxes customers brought in or purchased in the same store," the lawsuit says.


A UPS spokeswoman, Chelsea Lee, calls the Hagans disgruntled former franchisees who themselves are being sued for nearly $200,000 in outstanding debts to UPS. "We believe the allegations are being made to distract from the UPS Stores' own claims" against the Hagans, she said.


Lee did, however, acknowledge that the shipping giant was investigating the allegations of customer fraud. "Despite no evidence to substantiate the validity of the allegations, UPS and the UPS Store Inc. are investigating this issue and take the allegations made in the lawsuit seriously," she said.


The Hagans declined to comment and their lawyer, Steve Savva, would not talk beyond the contents of the lawsuit. The brothers are seeking $50 million in damages from UPS.


For UPS customers in New York, though, the Hagan lawsuit is sobering for two reasons: first, the simple fact that one of the chain's biggest franchisees is accusing the parent company of widespread stealing from customers is unusual, to say the least; in addition, UPS, in its initial suit against the Hagans claims that it was the brothers ? and not the company ? who were routinely ripping customers off. In fact, UPS became so worried about how the Hagans were running their Manhattan stores that it dispatched one of its top California operating executives as a "mystery shopper" to the Hagan stores, to document customer abuses. The executive, acting on a tip from a former Hagan employee, claims he found such abuses at nine of the Hagans' 11 stores, triggering the series of events that would lead to the stores' closure. UPS, in its lawsuit, claims that Hagan employees were paid bonuses "based on how much they overcharged."


What all of this means is that customers in New York almost certainly have lost out. Like any legal dispute, this one is rife with finger-pointing and conflicting claims of fault. Yet this much is clear: at some point in the past few months, both the parent company and one of its biggest franchisees have documented cases of customer abuse at UPS in Manhattan; the only question is whether it was coming from the Hagans or other company stores. But both sides concede that customer abuses were happening ? and on a scale affecting hundreds of customers and hundreds of thousands of dollars in transactions across UPS's 56-store Manhattan network.


Lee, the UPS spokeswoman, said it's not unheard of for the chain to find itself in disputes with its franchisees. "But this," she acknowledged, "is one of cthe messier ones we've seen."


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