Background
The Postal Service primarily finances its operations through postage sales, with package delivery as one of its most important services. In fiscal year (FY) 2025, it shipped 6.8 billion packages, generating $32.6 billion in revenue. However, it lost an additional $1.6 billion in revenue the same year by accepting counterfeit postage labels. To address this growing concern, the Chief Information Security Office and U.S. Postal Inspection Service were tasked with combatting counterfeit labels and pursuing legal action against offenders.
What We Did
Our objective was to evaluate the Postal Service’s and Postal Inspection Service’s efforts to address counterfeit postage. We interviewed management and analyzed data related to counterfeit label volumes and revenue losses. We also conducted site visits at 20 processing plants and 27 retail and delivery units to observe mitigation efforts.
What We Found
The Postal Service and Postal Inspection Service made progress mitigating the use of counterfeit labels but lacked comprehensive oversight and a formal decision authority to address this issue, and the volume of counterfeit labels remained high. We identified gaps in their ability to detect and intercept counterfeit labels, resulting in an estimated revenue loss of $3.1 billion from March 2024 through February 2026, with the additional risk of losing $520 million in unrecoverable revenue by February 2028. We also identified opportunities for USPS to collaborate with industry partners to explore the use of new label technology. Additionally, USPS incurs millions of dollars in re-processing costs for misidentified counterfeit labels and could recoup some of these costs from late paying mailers. Lastly, while the Postal Inspection Service made efforts to combat counterfeit labels, opportunities exist to improve case referral oversight, funds recovery, case tips analysis, and response to counterfeit labels advertised online.
Recommendations and Management’s Comments
We made 11 recommendations to address the issues identified in the report. Postal Service management agreed with eight recommendations and disagreed with three. Management’s comments and our evaluation are at the end of each finding and recommendation.
Our Work on USPS Postage Fraud
Counterfeiters can negatively impact organizations of all types, and the Postal Service is not exempt from the damage that fraud can cause. In 2025, we began fieldwork to review how the use of fake postage labels and stamps is defrauding USPS. Our work uncovered numerous fraud schemes, resulting in five reports to date — including this report — that have identified almost $5.8 billion in revenue loss to the Postal Service. To mitigate future losses, the Postal Service and Postal Inspection Service must address gaps to better detect and intercept these fraudulent package labels and stamps being generated both domestically and internationally.
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