The Michigan Attorney General's Office and the Michigan Department of Agriculture are looking into allegations that United Parcel Service (UPS) uses faulty package measurement devices to overcharge thousands of customers and package shipping stores.

Brad Deacon, hearings coordinator for the Agriculture Department's Weights and Measures Programme, said the matter is being treated very seriously.

The allegations stem from a complaint the department received this spring from Pez Afrin, a UPS Store franchisee in Commerce Township. Afrin also has sued the shipping giant in US District Court in San Francisco, accusing it of breach of contract and of violating racketeering laws.

The lawsuit is seeking class-action status to cover the 10,000 package shipment centres and more than a million UPS account holders that could potentially be affected.

In a legal filing, UPS denied the allegations and said it treats its customers fairly and deals with them in good faith. UPS said the company intends to continue defending the reputation of the company.

Representatives from Atlanta-based UPS, the Attorney General's Office and the Agriculture Department met in late July to discuss the situation.

The devices that are the subject of the lawsuit and the complaint are those run and maintained by UPS at its distribution hubs in Michigan and other states. They are used to verify that the measurements and weights of packages recorded by UPS Stores, other retailers and corporate account holders are accurate.

If the measurements are not accurate, UPS bills the stores and account holders for the correct shipping charges. By that time, it's too late for the stores to get customers to pay the extra amount, so they must swallow the costs or appeal the charges to UPS.

Under Michigan law, measuring devices must either be certified by a state inspector or a service person or company registered by the state. But UPS said it is not subject to state laws because it is a carrier engaged in interstate commerce.

UPS said it tests its measuring devices multiple times every day with different-sized boxes and immediately removes from service any equipment that fails. It also only purchases and installs devices that meet mandatory federal guidelines.