Lawsuit Revived against Staples Chain over Insurance Charges

January 10, 2006

A California appeals court reinstated a lawsuit that claims office supply chain Staples Inc.cheated customers by charging them for insurance when shipping some products.

The 2nd District Court of Appeals, in a 2-1 decision, ruled that Staples was acting as an unlicensed insurance agent when it doubled the shipping insurance costs on some packages and took half of the premium.

Staples automatically covered products worth up to $100 but charged customers additional money to insure anything over that amount.

Staples offered the insurance through United Parcel Service. UPS charged Staples 35 cents per additional $100 of declared value. The lawsuit claimed Staples charged consumers 70 cents and pocketed the difference.

The suit, which seeks class-action status, alleged that Staples violated the state’s insurance regulations and unfair business practices law.

Staples argued it was simply making a profit on a product.

A Superior Court judge agreed with Staples, but the appellate court reversed the decision and said the extra charge was a “commission” for Staples.

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