GAO Blasts USPS E-Commerce Initiatives

December 28, 2001

Washington, DC- The U.S. General Accounting Office (GAO) released a report this week harshly criticizing the U.S. Postal Service’s (USPS) management, accounting, and operation of its Internet-related ventures. The report was conducted in response to a request by Senator Thad Cochran (R-Mississippi).

Among the findings of the GAO:

  • USPS continues to have difficulty defining and determining which of its Internet-related initiatives are e-commerce initiatives;
  • Financial information provided by the USPS on its e-commerce ventures is inaccurate, incomplete, and inconsistent;
  • USPS must address persistent concerns that USPS’ e-commerce initiatives are being cross-subsidized by other postal products and services;
  • Performance of USPS’ e-commerce initiatives has fallen far short of expectations (e.g., FY 2001 projections for e-commerce revenues was $104 million; actual revenues through first three quarters of FY 2001 are less than 1% of this);
  • Disparate requirements in the application of various Federal privacy laws — including Gramm-Leach-Bliley, COPPA, and the FTC Act — expose private-sector e-commerce competitors to potential liability from which the USPS is exempt.

In reaction to the GAO’s findings, CCIA President and CEO Ed Black said, “the GAO has made clear what we have long suspected about the Postal Service’s wanton ventures into electronic commerce. The USPS’ e-commerce initiatives have no accountability, are losing millions of taxpayer dollars, and are draining money away from core postal activities.” Black continued, “it is unconscionable for this Federal agency to continue to seek rate hikes from American consumers to pay for their failed efforts to compete against private-sector businesses. We would like to thank Senator Cochran for his interest in these important matters and his initiative in stimulating this significant report.”

“It is critical for the Postal Service to remain focused on the essential service that it provides to all Americans — delivering the mail,” said Black. “The Postal Monopoly should not be used as a club against struggling e-commerce companies but should be dedicated to the important purpose for which Congress created it.”

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