Background
In fiscal year (FY) 2024, the U.S. Postal Service handled more than 11.6 million undeliverable Parcel Select packages that were scanned as return-to-sender. The Postal Service must process these packages at the post offices that serve the original delivery address and the return address. To receive these returns, the addressee must pay postage, which totaled about $138 million in FY 2024. A U.S. Postal Service Office of Inspector General (OIG) investigation found these packages to be vulnerable to theft.
What We Did
Our objective was to evaluate the processes and execution around returned-to-sender Parcel Select packages. We interviewed staff, conducted site visits, and analyzed data for 26.4 million return-to-sender packages from October 2022 to February 2025.
What We Found
The Postal Service did not include the standard charges for large packages in its automated postage due calculations for 1.6 million large return-to-sender packages from October 2022 to February 2025. Despite policy requirements, management excluded charges due to an oversight. As a result, the Postal Service lost about $29 million in revenue during our scope period. We also estimate it lost $24 million for additional packages that shippers did not declare as being large packages.
Additionally, we found that the Postal Service processed return-to-sender packages inconsistently and inaccurately. Clerks made errors in postage due calculations, and only 39 percent of packages reached the sender. This occurred because management failed to create effective controls, such as automating processes to reduce human error. Without better controls, the Postal Service will not be able to determine if it collects all the postage it is owed. With over 60 percent of Parcel Select return-to-sender packages not making it back to the addressee, the Postal Service’s brand reputation is at risk.
Recommendations and Management’s Comments
We made nine recommendations to address the issues identified in the report. Postal Service management agreed with six recommendations and disagreed with three recommendations. Management’s comments and our evaluation are at the end of each finding and recommendation. The OIG considers management’s comments responsive to recommendations 1, 2, 4, and 5, as corrective action should resolve the issues identified. Recommendations 7 and 8 are closed with the issuance of this report based on our verification of actions taken. We will work with management through the audit resolution process on recommendations 3, 6, and 9.
