There has been reports recently of a high level of fraud for packages imported from China for delivery by the USPS. Officials are uncovering a systematic effort with literally tons of packages and millions of dollars of counterfeit labeled packages. Reminding us all of the old axiom, if the rate is too good to be true.. it probably is not true.

The "number of USPS counterfeit labels from China is staggering"

Industry professionals have commented that fraudulent USPS labels are commonplace on Chinese social media platforms. Labels that sell first class package priority mail up to 5 pounds, no zone for as low as $5.


Some background on shipping e-commerce parcels from China

International companies - particularly in low manufacturing countries - are able to take advantage of duty free import to the USA for shipments valued under $800 USD. This import advantage has translated into millions of individual packages imported daily for delivery by the USPS.

Overseas parcel volume has become more important to the USPS as Amazon, FedEx and UPS continue to shift volume away from postal "parcel select" services.

strip-jet-worldwide-graphicUnderstanding Section 321 and importing to the USA

Most USA clearance facilities focus on the import clearance process as sellers in China prefer to pre-label their shipments. Once imported, shipments are most often given to postal consolidators for delivery via the USPS.

But the price of shipping from China often seems less than the cost of shipping in the USA. This discrepancy was largely resolved with new postal (UPU) rules.

Yet, accounts below market delivery costs from China to the USA persist due to the use of fraudulent USPS labels.


Fraudulent USPS packages at a large scale?

Postal counterfeiting is well known but there may be fraud at a scale never before realized. The potential fraud could make a recently settled multimillion dollar case seem small by comparison:

A guilty plea in federal court of "conspiring to engage in a wide-ranging postage counterfeiting, forging, and tampering scheme that, over the course of multiple years and more than 160,000 packages..."

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Some posts from online postal forums and industry professionals regarding USPS fraudulent shipments:

  • "we get LOADS of them daily..... about 2 Gaylord’s worth a day"
  • "those packages are a pain!"
  • "...we were told that we need to just keep returning them to sender with an ‘evidence of counterfeit’ label taped on"
  • "Those are just international packages, cleared by customs, to be sent to a third party shipping fulfillment company that supplies the postage"
  • "..... inundated with fraudulent postage and garbage. We regularly skim these out of priority and express ..."
  • "Curious to know how they are fake"
  • "I estimate that 500,000 fake label packages enter the US Postal System a day at least"
  • "this has been an issue for sometime now. Just crazy"

Fraudulent mislabeled USPS parcels may be more than incidental and at a scale that will surprise the most seasoned industry experts.


Postal Evidencing System and Points of Injection

The fraud likely is a result of a fraudulent "postal evidencing system*" and strategic insertion to a USPS processing facility.

* Postage Evidencing Systems authentic and print USPS shipping labels.

It is the job of the U.S. Postal Inspection Service to investigate such fraud. The complicating part is that the labels were likely produced overseas. The shipments were likely properly cleared and forwarded via a US agent. Taking action against the offending party in overseas is unlikely. Taking action against the USA importing company would involve proving complicity in the scheme.


Parcel Fraud Perpetuated Overseas, Facilitated in the USA

US clearing agents and facilities are primarily responsible to US Customs. Packages they clear are most often pre-labeled with a USPS, FedEx or UPS label. Their involvement in last mile delivery is minimal and often just transferring shipments to a USPS specialized carrier.

USA import clearance facilities primary focus is on US customs import compliance. Many partner with either FedEx, UPS or USPS specialists.

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The recent fraud likely results from fraudulent labeling coupled with strategic injection at USPS processing centres

We believe a multiagency task force will take up an investigation (and likely already has). No matter how or where, mail fraud is stealing money from the U.S. government and American taxpayers. It also perverts the market making it difficult for legitimate carries, facilities and logistics providers.


Best Import Solution for e-commerce to the USA

At Jet Worldwide, we advise shippers to ensure their solutions are scaleable. There is incredible legitimate opportunity via section 321, multiple port injection and low cost USPS final mile delivery.

Our team only works with industry leaders who can provide scaleable solutions with regulatory expertise and approvals.

In this case, it is not that fraud is a problem. What may be surprising is the scale in which it is happening for below market cost shipping from China.Again, if it sounds too good to be true, it probably is!

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Written by Timothy Byrnes