Locked In

Locked In

23rd April 2020

Many Scottish consumers paying inflated fees for parcel delivery

by Greg Thomas, CAS policy officer

As the Coronavirus continues to spread, our attention is understandably drawn by the tragic cases of death and illness impacting Scottish citizens. But for the majority of us, the day-to-day effects of the pandemic might be more humdrum. We’re staying in, working in our studies or at our kitchen tables, and ordering much of what we need over the internet. 

For many consumers and businesses, however, this means increasing reliance on services that can seem exploitative and even extortionate. Research by Citizens Advice Scotland has found that up to one million Scottish consumers may be affected by parcel surcharging: paying unfairly high prices for delivery of items ordered online.

The problem is particularly pronounced in the north and north east. People in these parts of the country pay on average 30% more to get online items delivered. For the most severely affected area, the Scottish Islands, the average is 50% more. At a time of increased economic stress, the effects of surcharging could become truly financially damaging for many, particularly for small-to-medium sized businesses.

Parcel surcharging is a product of the age of internet shopping. Unlike in-person shopping, online purchases place the customer in a three-way financial relationship, involving both a retailer and a delivery company. The contractual arrangements between these organisations are confidential, so it’s not clear how and why surcharges are being applied to certain consumers.

Surcharging is also the result of an increasingly crowded parcel delivery market. Royal Mail’s Universal Service obligation, enforced by Ofcom, means that they have to deliver mail “at an affordable, uniform public tariff across the UK.” So Royal Mail doesn’t surcharge. But there are now lots of delivery companies on the market, and online retailers can push consumers into relationships with delivery companies charging higher prices than they are used to.

Surcharging is theoretically prevented by existing consumer law. The Provision of Services Regulation 2009 makes it illegal to discriminate against consumers on the grounds of location unless this can be justified by “objective criteria.” The trouble is, it’s hard to enforce this rule when the reasons for surcharging are not public knowledge: “objective criteria” can cover a multitude of sins.

Christine Martin runs a music publishing company on Skye, while also letting a holiday cottage and managing a working croft. “We buy many different kinds of things online”, Christine says, “as do most people here due to lack of shop suppliers locally.” Her experiences of surcharging are countless, as are her experiences of misleading pricing policies, and of simple refusal to deliver. Recently, she ordered a £300 polytunnel cover from a company offering free delivery on orders over £150. “After the order was placed, they got in touch and said there would be a surcharge of £35, so we had to agree, but later that day they said the courier now wanted £180!” On this occasion, Christine was able to get the item sent to Glasgow and arrange for a local courier to complete the delivery at a reasonable price. But for businesses like hers, such costs are not just an irritant: they’re a potential threat to financial survival. 

Citizens Advice Scotland began campaigning on this issue a decade ago, after it was reported to us by a local CAB. Since then we’ve undertaken extensive research and advocacy work, seeking evidence from the public, raising awareness of the problems and meeting with ministers and companies to find solutions. This has been one of the biggest consumer campaigns we have ever fought, and we’re proud of the way we have put the issue on the political agenda.

And we’ve seen some victories. We were at the forefront of efforts to reduce misleading online information about parcel deliveries, resulting in the Committee for Advertising Practice issuing enforcement notices to almost 300 online retailers in 2018-19. We were also involved in the discussions that led the Scottish Government to launch their Fairer Deliveries For All Action Plan in 2018, committing government to action on surcharging, including developing an online postal data hub and interactive map to promote fairer deliveries. These resources will be launched later this year.

The Scottish government also published a statement of principles in 2013, advising retailers on best practice in parcel deliveries, including that prices should not discriminate based on location. But seven years later we continue to hear that Scottish businesses and consumers are paying over the odds for their post.

Over the coming year, we aim to work on developing the Scottish Government’s Statement of Principles into a pledge that companies can sign, proving their commitment to giving their customers the best possible deal on deliveries. Where regulation has fallen short, maybe heightened market pressure will do the trick.

At this time of uncertainty and stress, it’s more important than ever that Scottish citizens and small businesses are not penalised for their geographical isolation. That’s a sentiment I’m sure we all feel more sympathetic towards with every passing day.