Royal Mail’s income from customer penalty fees rocketed to 50 per cent after it created mass confusion by changing the way it charges for letters.
In August 2006 the organisation moved to a system of charging based on the size rather than the simple system of sticking on a first or second class stamp.
Many customers were finding that their Christmas and Birthday Cards weren’t being delivered as expected.
In response people received unexpected warning notices telling them that letter with underpaid postage would have to be collected from a sorting office.
These customers not only had to cover the underpaid postage – which was often just a few pence – but were also hit with a £1 administration charge.
Concerns were raised by consumer groups who suspected that the charge was far too high and amounted to blatant profiteering.
The figures obtained by the Daily Mail using a Freedom of Information request confirmed that the organisation did cash in on the confusion created in charging.
And the total income from this source rose by 49 per cent in the year after the change came into effect – taking it up too £14.8 million in 2007/08 and then £16.5 million in 2008/09.
A break down of how many letters were surcharged was not provided by the Post Office but it is believed that at least 20 million were involved.
The new system has caused particular disruption around Christmas because a huge number of festive cards – as well as birthday cards – fell foul of the sizing rules.
Long queues formed outside the sorting offices as people lined up to pay penalty fees and underpaid postage in order to get a card from their loved ones.
Details about the income from the charges is being kept a secret.
The figures were first asked for in the run-up to Christmas 2008 by The Daily Mail. The Royal Mail repeatedly refused so the Daily Mail made a request under the Freedom of Information Act. The appeal was again refused claiming the information was commercially confidential.
19 months later and following a successful appeal to the Office of the Information Commissioner Royal Mail has been forced to hand over the details.
The official customer body, Consumer-Focus, has questioned the £1 fee is a fair reflection of the actual costs suffered by Royal Mail when it expects the customer to come and collect their letter.
A spokesman said, “We have questioned Royal Mail on how they arrive at the £1 cost and also on the volume of mail that this applies to.
“Unfortunately only Royal Mail will be able to give you answers to these questions as we are not allowed to go public with this information.”
The official customer body, Consumer-Focus, has questioned whether the £1 fee is a fair reflection of the actual costs suffered by Royal Mail when it expects a customer to come and collect a letter.
Royal Mail said, “Royal Mail does not make a profit from the administration fee involved in the collection of underpaid mail as the fee simply reflects the extra work involved.
“If there was no system to collect unpaid postage, it is very likely tat the current tiny fraction of mail with no or underpaid postage on it would increase significantly – at a cost to all other customers who pay the correct postage.”
Royal Mail did admit that the administration fee charged to businesses which underpay on outgoing mail amounts to 20p an item. However they charge customers five times more.
It said that this was justified because of the extra work involved. “The extra work includes sorting underpaid letters and separating them form the rest of the post, informing customers through a card delivered to their address about the underpaid item, storing the item for up to three weeks until it is collected, and then returning the item to the sender free of charge…if it is not collected,” it said.
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