WSJ Your Money Briefing - Why You’re Paying for Other People’s Stolen Packages

Episode Date: January 7, 2025

Some retailers are requiring all customers pay package-protection fees to ease the financial burden of replacing lost or stolen deliveries. Wall Street Journal personal finance reporter Imani Moise joins host J.R. Whalen to discuss how much the fees are, and what they typically cover. Sign up for the WSJ's free Markets A.M. newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Get groceries delivered across the GTA from real Canadian superstore with PC Express. Shop online for super prices and super savings. Try it today and get up to $75 in PC Optimum Points. Visit superstore.ca to get started. Here's your money briefing for Tuesday, January 7th. I'm JR Whalen for the Wall Street Journal. As porch pirates continue to steal deliveries from people's properties, some retailers are making package protection fees mandatory, spreading the burden of package theft among

all customers. So if a package gets damaged in transit or stolen after it gets delivered, customers usually turn to retailers to make it right, which is a cost for them. And as porch piracy becomes a larger problem, retailers are really struggling to keep up with those rising costs on top of things like potential tariffs or inflation and other things that are putting pressure on their bottom line. We'll talk to Wall Street Journal personal finance reporter Amani Moise after the break. But keeping your cat off your keyboard? That's up to you. Reach out to TD Direct Investing today and make your investing steps count. Plus enjoy 1% cash back.

Conditions apply. Offer ends January 31, 2025. Visit td.com slash DI Offer to learn more. Some retailers are spreading the financial burden of package theft among all of their customers. Wall Street Journal personal finance reporter Amani Moise joins me. Amani, what is the value of merchandise that is stolen from outside of people's houses each year? It's been a growing number.

So it's a bit of a moving target. But in 2023, Americans reported that $13.4 billion worth of packages were stolen by porch pirates. PAUL SOLMAN. Why are retailers charging fees to customers, even if their packages haven't been stolen? TAMARA LYNCH. Because when something goes wrong, so if a package gets damaged in transit or stolen after it gets delivered, customers usually turn to retailers to make it right, which is a cost for them. And as porch piracy becomes a larger problem, retailers are really struggling to keep up with those rising costs on top of things like potential

tariffs or inflation and other things that are putting pressure on their bottom line. How much are these extra fees? It depends on the retailer and their risk profile. So it's really a deal that's made between the retailer and then these third-party companies like Corso or Route. But they're usually around $2, but I have seen one as high as $6 for a flower company, because flowers are very perishable and something like even a one-day delay could render the product useless. PAUL SOLMAN. You mentioned two companies, Corso and Routes. What do they do? KAYLA GRIFFIN-MORRIS. They partner with retailers to offer order-specific package protection. So what that means is they take over the customer experience after the point of purchase. So they're responsible for keeping the customers up to date on where their package is. And if there's a problem

like damage or theft, they would report to one of those companies that would order a replacement on their behalf. What is the range of things that these fees usually cover? So they cover package theft, of course. They also cover damage that may happen in transit, and they also cover package loss. So sometimes packages do get lost in the transit system. And if that happens to you, they'll make sure you get a replacement. Are retailers upfront about these charges and when do customers usually see them?

Again, that really depends on the retailer. Like I've seen some founders that'll make an announcement, send an email blast to all their customers when they introduce a service like this. But some retailers only disclose these fees at checkout, which means that after you put everything in your cart and you hit the checkout button, then you'll start to see them appear in your cart and be included in your subtotal. So you'll see them, like maybe as you're entering your shipping details or your payment information. But usually by that time, a lot of consumers are kind of laser focused on just hit the

button, hit the button to get their order confirmed. So it could be a little tricky if you're not paying attention. How are these fees and when they show up going over with consumers? So there is a proposed class action suit that I came across where a group of consumers are claiming that these fees are deceptive because they're disclosed so late in the process. But what I found is for customers of companies that disclose them very clearly and upfront, they actually prefer the service because it's only a few dollars to protect them for a potential larger loss.

President Biden has specifically called out so-called hidden fees, and the FTC has finalized rules about the disclosure of fees. Do these charges conform to those rules? Again, it depends. So retailers have the choice to either make these fees optional, meaning that the customer can opt out during the checkout process or mandatory. So if the fees are mandatory, then they have to be disclosed upfront to be in compliance with the new junk fee rules that are coming out at the state level and are being worked

on at the federal level. You mentioned that some consumers are okay with these fees as long as they're aware of them. But do retailers run the risk of driving some customers away? Absolutely, especially if they make them mandatory instead of optional and you've done something like moved into a building with a doorman or invested in your own security to prevent this from happening. Some consumers may feel like this is redundant.

It might just soon become the state of play in business as usual. What about third-party companies like Shopify that make money off of transactions? Where do they come down on these fees? So Shopify is actually making a change to its checkout process, and it told brands and these third-party companies late last year that starting in February, brands are prohibited from automatically opting consumers into fees during the checkout process. That means if you're a customer and you're shopping

at a website that offers this and it's optional, you'll no longer be automatically opted in. You'll have to make that choice to opt in. So it can go two ways. Either more retailers will make it mandatory or they'll try harder to convince customers that it's worth paying for. What happens if a consumer opts out of this?

So if you opt out, you should be aware that some retailers are drawing a harder line when it comes to making it right for consumers or offering refunds or free replacements. So for example, I spoke with one business owner who said that she started offering route because she could no longer afford to replace lost orders for free. So she's now trained her customer service team to say that they cannot replace or refund orders if they're damaged in shipping or they get lost. There may be some other routes to recourse.

So if you made the purchase on a credit card, you may be able to use your purchase protection, but in the fine print of a lot of credit card agreements, they say that it does not cover property that's left unattended, which is usually the case when it comes to package theft. How do these charges the companies are adding compare with delivery insurance companies like Porch Pals, which we discussed on the show last month? The main difference here is that Porch Pals is a direct-to-consumer offering, and these

new services are more in line with the way the industry traditionally worked. Traditionally, it's on retailers to purchase things like shipping insurance, and that's usually considered part of the price of just shipping. But now what we're seeing is more retailers are saying they can't absorb this kind of shipping loss on top of the other rising prices. So it's being broken out as its own separate expense. That's WSJ reporter Imani Moise. And that's it for your money briefing. This episode was produced by me, J.R. Whelan, with development producer Aisha Al-Muslim. Thanks for listening.