Postage Meters:

Risk of Significant Financial Loss But Controls Are Being Strengthened

GGD-94-148: Published: May 26, 1994. Publicly Released: Jun 14, 1994.

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Pursuant to a congressional request, GAO reviewed postage meter fraud, focusing on the: (1) extent and type of meter fraud; (2) conditions that allow fraud to occur; and (3) Postal Service's efforts to address meter fraud.

GAO found that: (1) since 1985, the Postal Inspection Service has resolved over 130 meter fraud cases with documented losses totalling about $25 million; (2) as of 1993, the Service had investigated 11 cases with potential losses amounting to nearly $11 million; (3) although the Postal Service estimates that potential annual losses from meter fraud could total $171 million, it does not have the data necessary to accurately estimate total losses; (4) postal revenue losses arise from criminal meter tampering, meter indicia counterfeiting, and criminal use of lost or stolen meters; (5) the Postal Service estimates that of the 1.4 million postage meters in use, 636,000 are vulnerable to tampering; (6) meter fraud revenue losses are high because of weaknesses in meter design and ineffective program controls; (7) the Postal Service has not timely responded to reported meter fraud because its investigation and corrections offices have not been adequately staffed and postal management have historically underestimated the losses attributable to meter fraud; (8) postal meters have remained vulnerable to tampering and abuse because the Postal Service has traditionally emphasized durability over meter security; and (9) although the Postal Service has attempted to address postal meter fraud problems by establishing a high-level management team to strengthen the meter program, it needs to implement substantive changes to reduce the risk of losing revenue to meter fraud.

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