FedEx, Costco, UPS Are Main Targets for Consumer Tariff Refunds

A recent wave of consumer-driven litigation seeking to recoup tariff-related fees from companies like FedEx Corp., United Parcel Service Inc., and Costco Wholesale Corp. appears to turn on whether those businesses separately billed customers for such costs.

The consumers say the companies are wrongly keeping the money they charged through tariff-related fees and increased prices after the US Supreme Court declared some tariffs unlawful in February.

At least 17 lawsuits had been filed as of Tuesday, with 11 of those against FedEx alone, which billed separate tariff charges. The shipping giant is one of the few companies that’s directly pledged to return tariff costs to customers.

“It’s pretty hard to argue” that tariffs weren’t passed on to consumers where the company clearly told them what they paid in extra charges, said Jon Barooshian, a partner at Saul Ewing LLP.

But plaintiffs may face a more complicated case when they demand refunds from companies that raised prices without directly tying them to tariffs.

John Yanchunis, an attorney with plaintiffs’ firm Morgan & Morgan PA who’s leading one of the class actions against FedEx, said the firm is eyeing additional lawsuits against retailers who raised prices to absorb tariff costs. Consumer litigation is likely to snowball considering how widespread the tariffs were, he said.

“It ought to be FedEx’s responsibility to refund those monies to the consumer, and then it can go and collect from the federal government,” Yanchunis said.

The first wave of plaintiffs is largely arguing unjust enrichment—that the companies unfairly received a benefit at the consumers’ expense.

“These consumer-facing cases are still at an early stage. Facts will matter enormously,” said Lori Leskin, co-chair of the consumer products practice group at Arnold & Porter Kaye Scholer LLP. “Every company has eaten the impact of the tariff situation differently.”

‘Tip of the Iceberg’

After the Supreme Court ruled President Donald Trump lacked authority to impose tariffs under an emergency powers law, the Court of International Trade ordered Customs and Border Protection to refund the money.

Under the order, those refunds would go to the importer, not the end consumer—even if the costs were passed on.

Customs said it needs time to revamp its digital system to handle refunds, and none of the hundreds of thousands of importers that paid the tariffs has gotten money back yet.

That hasn’t stopped consumers from bringing their own suits.

John Breyault, vice president for public policy, telecommunications, and fraud at consumer advocacy organization National Consumers League, said the lawsuits aren’t premature because “class action litigation has often been seen as a tool to get businesses to do the ‘right thing.’”

But what’s been filed so far is likely the “tip of the iceberg,” said William Pletcher, the litigation director of Consumer Watchdog. “It’s just very early days with something like this that’s affecting basically the entire consumer economy and how you’re going to find ways to unwind that.”

Shippers and Retailers

FedEx told consumers how much they owed in tariff costs on imported items, according to complaints against the shipper.

Yanchunis asked the US Judicial Panel on Multi-District Litigation to consolidate the cases against FedEx in order to streamline the proceedings and avoid duplicative discovery or inconsistent rulings among courts.

UPS and clothing retailer Fabletics, which also allegedly told customers how much tariff cost they were paying on each purchase, have been hit with proposed consumer class actions as well.

Plaintiffs will likely have a harder time establishing a class when companies didn’t attribute price hikes directly to tariffs, Leskin said.

“There’s so many things that explain why prices go up, that it’s going to be very hard for a consumer to be able to establish consistency across an entirety of a class,” she said. “You have to not only have a common question, but the evidence that supports your claim has to be common across the entire class.”

Yanchunis suggested that economic analyses could show how tariffs increased the price of a good as a potential workaround.

Refund Promises

Some companies already have publicly addressed how they intend to use refunds, if they get them from the government.

FedEx, for instance, said in a statement that its “intent is straightforward: if refunds are issued to FedEx, we will issue refunds to the shippers and consumers who originally bore those charges.”

The company added that the timing and “exact process for requesting and issuing refunds will depend in part on future guidance from the government and the court.”

In a March 5 earnings call, Costco President, CEO, and Director Ron Vachris said the company would commit to “find the best way to return this value to our members through lower prices and better values” as refunds are recovered.

A UPS spokesperson said in an emailed statement to Bloomberg Law that “UPS will support our customers in obtaining IEPPA tariff refunds due from the government after a refund process is established by CBP.”

A Fabletics spokesperson separately said in an email that “While the Supreme Court ruling is an important development, tariffs remain in place and there are still many outstanding questions regarding implementation and potential refunds that we are closely monitoring. Right now we are reviewing the full range of options.”

Without referring to specific cases, Leskin cautioned that even as plaintiffs bring suits, companies still don’t have certainty on the broader rollout of tariff refunds.

“We have to wait to see how this plays out,” she said. “I wouldn’t encourage any companies to make promises at this stage until they have some more certainty.”