United Airlines to pay $49 Million settlement in post fraud case
United Airlines has agreed to pay $49 million to settle post fraud claims. The airline was under a criminal investigation about defrauding the country’s postal service for three years.
“United defrauded the U.S. Postal Service by providing falsified parcel delivery information over a period of years and accepting millions of dollars of payments to which the company was not entitled,” Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division explained in a statement on February 26, 2021.
The United States Postal Service (USPS) has contracts with commercial airlines for mail delivery to foreign countries. United Airlines was one of these contractors and was transporting mail internationally.
To receive payment for its services, the air carrier had to provide USPS with bar code scans of mail receptacles when it got them and when the receptacles were delivered to foreign posts. United was entitled to full payment only if mail scans were accurate and mail was delivered on time, as highlighted by the Justice Department.
But between 2012 and 2015, United Airlines was giving USPS automated delivery scans, which were based on “aspirational” delivery times instead of the actual movement of mail. In fact, the scan data that United was submitting did not correspond to the actual movement of mail, the investigators found. “Through this data automation scheme, United secured millions of dollars in payments from the USPS to which United was not entitled [...].”
Besides using the automation scheme, the airline also admitted hiding information that would have subjected it to financial penalties, according to the authority. It added, that some of the airline’s employees knew that data transmitted to the USPS was fabricated and worked to conceal the automation efforts. “The attempts to hide the automation practices included efforts to revise the falsified delivery times to make the automated scans appear less suspicious to USPS.”
This is not the first time United signs a non-prosecution agreement to end a criminal investigation. In 2016, the airline was facing bribery and corruption allegations related to the opening and operations of its non-stop route between Newark Liberty International Airport and Columbia Metropolitan Airport.
On another hand, United is also not the only airline investigated for fraud delivery scan practices under the USPS ICAIR Contracts. The case is already the fourth civil settlement of the kind, bringing the total amount of these settlements to nearly $65 million.
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