I currently have our live store setup with free domestic shipping. Recently I've noticed an increase in orders to customers in Puerto Rico and Guam. These customers are able to obtain free ground shipping when they list the United States as their country. However, if they list Puerto Rico or Guam as both their state and country they receive standard UPS domestic shipping rates, FedEx International Rates, and free shipping is not an option.
My preference is to restrict free domestic shipping to the continental 48 United States. This would exclude Alaska, Hawaii, and all US territories.