Background

ePostage is an electronic postage program that provides small merchants a convenient way to print labels, pay postage, and drop off packages at a post office rather than designated facilities for large customers. The Postal Service collected billions in ePostage revenue in fiscal year 2023, and future program growth aligns with its Delivering for America goals to serve small and medium businesses. Effective ePostage management to verify correct postage and enforce program requirements is critical for the Postal Service to protect revenue and operations and meet its planned goals.

What We Did

Our objective was to evaluate program management and postage verification of ePostage payments. For this audit, we interviewed staff, conducted site visits, and analyzed 592 million ePostage packages shipped from July 2022 to January 2024.

What We Found

The Postal Service did not effectively manage the ePostage program. We identified independent weaknesses in its postage verification system to collect revenue and monitoring program compliance. As a result, it lost estimated annual unrecoverable ePostage revenues. Without monitoring compliance, the Postal Service limited its ability to identify potential fraud, ensure transparency, and provide customer service. Overall, we found that these issues occurred because the Postal Service did not have an ePostage program manager assigned to oversee revenue strategy and ensure that monitoring and enforcement consistently occurred. 

Separately, the Postal Service’s team that identifies lost revenue was not sufficiently detecting merchants that frequently underpaid or enforcing corrective action. While officials stated these shortcomings occurred due to limited resources, the lack of related guidance and automated processes to identify these underpaying merchants and enforce corrective action will threaten future program revenues.

Recommendations and Management’s Comments

We made seven recommendations to address the issues identified in the report. Management’s comments and our evaluation are at the end of the findings and recommendations. The U.S. Postal Service Office of Inspector General considers management’s comments responsive to recommendations 2 through 7 and corrective actions should resolve the issues in the report. For recommendation 1, we acknowledge management’s business decision to not pursue past revenue, and closed the recommendation based on actions taken with the issuance of this report.