OIG: USPS loses millions on shortpaid PC postage parcels

In 2013, the USPS Office of Inspector General found that faulty controls over “electronic parcel payment systems, including PC Postage” had cost the agency as much as $262 million. The OIG says it recommended corrective steps. The USPS disagreed with those recommendations, saying it would instead “review its automated verification capabilities”.

Four years later, the USPS has still not implemented its Automated Package Verification (APV) system- it’s scheduled to go online in August. Here’s how the OIG summarized the situation- without providing any calculations of the actual financial losses:

In September 2013, we reported that the Postal Service’s internal controls for PC Postage parcels were inadequate and the Postal Service estimated $[redacted] million in shortpaid postage (postage that was either underpaid or not paid). We recommended corrective interim controls and automated systems. The Postal Service disagreed and instead decided to review its automated verification capabilities.

The Postal Service is currently developing an automated verification solution known as the Automated Package Verification (APV) system. APV would use data collected from mail processing equipment to automate identification and recovery of shortpaid PC Postage parcels. APV has a projected cost of almost $[redacted] million, and is expected to evaluate almost [redacted] percent of all PC Postage parcels for accurate postage. It was to be implemented in January 2017, but has been delayed to August 2017.

The OIG doesn’t explain the redactions- presumably it’s the usual “proprietary information” excuse the USPS uses to hide bad news. (Who do they think the postal service’s “proprietors” are?) In addition to redacting the loss figures, and much else in the report, the OIG also removed the entire original 2013 report from their online archives. The total lost revenue identified in the 2013 report, however, is given as $262 million in the “prior audit coverage” section of the new report.

The OIG says the revenue loss has “grown” since the original report, so presumably the loss for the current fiscal year is more than $262 million. Add them together and you get over half a billion in revenue lost in two years.

The USPS says it isn’t really all that bad- the reason they’ve lost more money is that total package revenue is up- in other words, they’ve lost more money because there’s more money to lose!

What does the future hold? The OIG says the USPS faces significant hurdles to implementing its APV program. The OIG provided this helpful table outlining the software challenges:

Yes, you guessed it- it’s “redacted”…

Source: Shortpaid PC Postage Parcels | USPS Office of Inspector General

  • Ohio Carrier

    I always knew that we were being ripped off. Picking up large boxes with postage for 1lb, when it is obvious that it weighs more. The customer just slaps on a postage strip and the Postal Service sends it right through….no postage verification. Losing millions from lost postage, but that carrier better not take 1 minute over on break!

  • 92TE

    How much money has been lost to Amazon’s sweet deal with the USPS? If it wasn’t such a sweet deal then why isn’t it what Amazon’s paying transparent? I’d venture to say it’s cost the USPS way more than $262 million.

  • MikeS

    We have a clerk that is very proactive at this and finds a lot of underpaid parcels which get marked postage due. She frequently takes advantage of this though and overcharges when someone has made an obvious mistake, such as a company that mailed out a catalog (flat) as with a 1st class parcel label on it at $2.30. She decided to charge parcel rates and marked it postage due for another $5 and some cents.

  • Jake Black

    It took a OIG to discover that people are short paying postage > All they have to do is go to the SPBS for a hour to find that out