Ordering Online? Beware of Surprise Charges

Customs and other fees can make what looks like an Internet bargain into a costly purchase.

Anyone who makes online purchases on a regular basis can almost certainly recall at least one instance of being forced to pay additional delivery charges on top of the amount originally quoted.

The main frustration voiced by consumers isn’t just the added cost. It’s that there’s almost no way of calculating in advance the extra charges beyond the known taxes or to understand the fees listed on the final bill.

In complaints reaching the Israel Consumer Council and TheMarker, even consumers who are familiar with customs regulations and value-added tax claim they check over and over before ordering through overseas websites − and are still surprised to be hit with additional charges by the post office or courier companies.

To shed a little light on the matter, we tried checking to see if there’s a way to calculate charges in advance and clarify how much delivery should cost through each courier service.

Choose regular mail

Customers often have no way of choosing the courier service or type of delivery, but if given a choice, regular mail is always best.

When it comes to deliveries from abroad, it’s important to note that the courier company’s real client is the website selling the product. The vendor selling an item on eBay, for instance, procures the services of one of the courier companies and serves as an intermediary in providing the customer with it. So in effect the courier company is duty-bound to the seller, not to the person receiving the shipment.

The consumer becomes the courier company’s client the moment he needs to pay the fees connected with releasing the parcel in Israel, but by then it’s already too late to choose: In order to get the goods from customs he must pay the required fees. The cheapest alternative is ordering delivery by regular mail intended for parcels of up to two kilograms, or five kilograms for printed materials. This service comes at no additional cost expect for taxes in Israel set by law, so it’s always the best option.

It seems, however, that regular postal service is gradually losing ground. One of the courier companies hints that, in the interest of maximizing profits, these companies offer online vendors deals for lowering their shipping costs and make their money on the other end through handling fees charged directly to the consumer. This is why customers are often forced to pay dearly for ordering an item, without any control over the matter.

Find out which company is performing the delivery and check its fees and rates.

After it’s made clear that the package won’t arrive by regular mail but through a courier company, calculating the costs becomes complicated since it is hard to understand what fees are involved and how much each company charges. When the cost of the package, including delivery, doesn’t exceed $1,000, it can be assumed that it will be released from customs through a collective clearing process.

Using this method, the companies charge all customers a uniform fee for customs handling which is meant to cover the costs incurred from some packages not complying with customs conditions. This is how the companies ensure they can cover the bill while the customer can enjoy peace of mind from knowing exactly how much is charged. Left unsaid is that the companies very likely come out well ahead in the process, far beyond the amount needed to cover their extra costs.

Customs clearing and brokerage fees range from NIS 35 for DHL, half the price charged by the postal company’s express mail service ‏(EMS‏), to NIS 105 for FedEx.

Other fees include the customs bill of entry and security fees, and a credit allocation fee, as required by the tax authority and collected on its behalf by the courier companies. Although people can clear their own parcels from customs themselves, the process is loaded with bureaucracy, and even if you save a few shekels it’s not worth taking the time off work.

The total amount charged for collective clearing of customs ranges from NIS 58 to NIS 200. The only way to exercise any control is to find out ahead of time which company will be used for delivery and to determine its fee schedule before deciding if the purchase is still worthwhile.

Random inspections

The customs department stops 3% of parcels on a random basis for examination and clears them on an individual basis − with fees charged accordingly.

Most online shoppers are probably already familiar with the new regulations on shipping packages to Israel, which offer a full exemption on taxes for items worth up to $75 and a customs duties exemption on anything less than $375. But what many tend to forget is that these amounts include shipping charges, so an item costing $50 plus $40 for delivery will still be subject to VAT upon release.

In cases where packages need to clear customs individually as part of the 3% sampling − or due to the specific category of goods requiring authorization, such as cellphones − the courier company ostensibly needs to devote more effort and therefore charges additional fees. The tax authority charges added fees as well.

The minimum charged by companies in such cases is NIS 150, on top of NIS 100 to the tax authority, and from there the cost could climb to hundreds of shekels and more depending on the type of package and the procedures required. At Ben-Gurion International Airport, the Maman cargo management company charges another NIS 2 per kilogram for storing packages whose release is delayed.

Instances like these often make Internet purchases prohibitive, so most courier companies recommend calling them before buying the product to try to find out how much the package will cost in advance − and not after receiving a bill of hundreds of shekels for releasing an iPhone.

A U.S. address sometimes seems more expensive but helps avoid most of the surprise charges along the way.

The unwillingness to have packages sent to Israel has led to the formation of Israeli companies such as BUY2USA that mainly deal with bringing U.S. goods to Israeli consumers. These provide Israelis with a U.S. address where packages are sent before being forwarded to Israel. Some also promise to absorb customs clearing and brokerage fees if the package is stopped for inspection, helping consumers avoid the red tape.

Ultimately, the best thing to do before making any online purchase is to try find out the final price for the item after taking into account all potential charges. But this could involve particularly complicated calculations, so consumers often have no way of knowing the final cost to any degree of certainty.

“There is no doubt that the desirable situation is having the consumer presented with one price when buying delivery service,” says attorney Ze’ev Feldman, the Israel Consumer Council’s legal adviser. “There is also no doubt that if the consumer faces a risk in certain circumstances of being asked to pay an additional sum, the risk should be brought clearly to his attention before closing the transaction.”

“Israel’s Consumer Protection Law requires anyone advertising a price or service to specify just the total price, which could solve the problem,” Feldman explains. “The difficulty in arranging shipment of products from abroad arises due to difficulties in applying laws to overseas concerns and often from language difficulties too. Meanwhile, consumers have no alternative but to find out what they can, read the entire transaction documentation, ask for information, and try to estimate the product’s final cost − but by no means rely only on the shipping price.”

Haaretz