The United States Postal Service moves more than 108 billion pieces of mail a year, and every one of them is supposed to carry proof that postage was paid. According to a new audit from the agency’s Office of Inspector General, the Postal Service has no reliable way of knowing how many of those pieces are riding on fakes.
The report, titled simply “Counterfeit Stamps” and published June 16 (Report No. 25-121-R26), concluded that the Postal Service and its law-enforcement arm, the U.S. Postal Inspection Service, have “no substantive approach to identify counterfeit stamps in the Postal Service network.” Auditors estimated the resulting shortfall at more than $349 million in lost revenue, with $1.7 billion of revenue at risk, in fiscal year 2026 alone — for an agency that, the report notes, is already financially strapped.
The finding did not come out of nowhere. It was the culmination of a year in which the inspector general repeatedly warned Postal Service leadership that bad actors were exploiting gaps in its revenue defenses — warnings that, the documents show, grew louder and more expensive with each filing.
A machine that cannot see the fakes
At the center of the audit is a piece of equipment most mail cannot escape: the Advanced Facer Canceller System 200, or AFCS 200. The Postal Service operates roughly 500 of the machines nationwide, and in fiscal 2025 they processed nearly 7 billion mailpieces — canceling stamps, orienting envelopes and, in theory, checking whether the postage is genuine.
To test that last function, OIG investigators coordinated with postal inspectors to run 800 stamps through an AFCS 200, mixing authentic stamps the auditors had purchased with counterfeits supplied by the Inspection Service. The result, according to the report, was lopsided. The machine correctly handled genuine stamps but “was unable to accurately identify any counterfeit stamps” of a particular type that the OIG redacted from the public version of the document. Every counterfeit in that category “passed.”
Why it passed comes down to a setting. The AFCS 200 can run in a “high-revenue protection mode,” which rejects a mailpiece if a stamp fails either an image or a luminescence test, or in a “low-revenue protection mode,” which rejects mail only when a stamp fails both. The Postal Service runs the machines in the low setting, the report says, because of cost and service considerations: low mode rejects an estimated 3 to 4 percent of mail, while high mode kicks out as much as 20 percent. A broader test the Postal Service ran in late April 2026, covering more than 327 million pieces, produced rejection rates of about 7 percent and 22 percent, respectively.
The auditors did not dispute that running every machine in high mode would be disruptive. Their objection was that the Postal Service chose the cheaper setting and then, in the OIG’s words, “failed to implement other interim controls,” such as sampling mailings to measure how many counterfeits were slipping through. From that gap the OIG derived the bulk of its headline number: an estimated $337 million in potential fiscal 2026 revenue loss tied to the AFCS 200’s “limited performance and selected operational setting.” A second gap — stamped and precanceled mail that never passes through an AFCS 200 at all, covering billions of additional pieces — accounted for the $1.7 billion the report classified as revenue at risk.
A year of escalating alarms
The counterfeit-stamp audit was the fourth time in roughly eight months that the inspector general formally flagged revenue leaking out of the mail system. The earlier three arrived as “management alerts,” a category the OIG reserves for problems urgent enough to report before an audit is complete.
The sequence, laid out in the audit’s own record of prior coverage, reads as a steadily rising tab. On Oct. 15, 2025, the OIG warned of deficiencies in detecting counterfeit postage and attached a $485.9 million monetary impact. On Feb. 10, 2026, a second alert — this one on fraud in the Postal Service’s Enterprise Payment Account system, used by businesses to pay for shipping — carried a $1.8 billion figure. On April 8, 2026, a third alert described an “emerging counterfeit label trend.”
That April alert is worth pausing on, because it documents the problem accelerating in real time. Between Nov. 1, 2025, and Feb. 28, 2026, the OIG identified roughly 8 million additional packages moving through the mail on counterfeit labels — an increase it pegged at about 609 percent — and estimated $46.3 million in lost revenue over those four months, “including a surge of $28.3 million in February 2026 alone.” Postal management, the alert notes, disagreed with the finding but agreed with the recommendation and the dollar figure.
Taken together, the June audit states, the three alerts identified “more than $666 million in revenue losses” and projected “additional potential losses exceeding $1.7 billion if corrective actions were not taken.” The counterfeit-stamp report was, in effect, the OIG widening a lens it had already trained on packages to take in the humble postage stamp.
An on-demand supply chain, much of it overseas
Where do the fakes come from? To find out, the OIG hired an outside cyber- and information-security firm to map the online trade. Over a period of just under two months, the report says, the contractor logged 8,895 instances of counterfeit stamps being marketed or sold across websites, phishing pages, dark-web forums and social media. Many of the operations, it found, originate outside the United States, print “on demand,” typically mimic Forever stamps and sell in bulk “at steep discounts — from 20 to 50 percent below face value.”
That discount is the tell the Postal Inspection Service has been trying to publicize. In a standing consumer warning, the agency notes that under Title 18, Section 501 of the U.S. Code it is a crime to sell or use counterfeit postage, and that mail bearing it “may not be processed or delivered” — meaning a consumer who buys cut-rate stamps online can lose both the money and the mail. “Fraudsters beware,” Chief Postal Inspector Gary Barksdale said in that notice, vowing the service would “exhaust all its efforts to disrupt your scheme, find you, and bring you to justice.”
The physical seizures point in a consistent direction. The audit cites a February 2025 interdiction in Birmingham, Alabama, in which postal inspectors and U.S. Customs and Border Protection found more than 200,000 counterfeit Forever stamps originating from Hong Kong. Days earlier, CBP officers at Chicago’s international mail branch had stopped eight shipments from China containing 161,860 counterfeit stamps with a face value of about $118,000. In one earlier case, the Inspection Service said it had seized $2.5 million in counterfeit stamps arriving from China. Across fiscal 2025, according to the audit, the service seized more than 21.6 million stamps worth roughly $18.1 million.
The enforcement bottleneck
Seizing fakes at the border is one thing; shutting down the websites that sell them is another, and here the audit identifies a structural drag. The Postal Service takes “more than twice as long” to disable an online threat as comparable companies do, the report found — more than 30 days, against eight days for the OIG’s contractor. Postal officials attributed the lag to legal requirements: under Section 501, prosecutors generally must prove a seller knew the stamps were counterfeit, a higher bar than a routine trademark complaint.
The OIG’s suggested remedy is a tool the Postal Service already uses elsewhere — the Lanham Act, the federal trademark statute the agency regularly invokes against vendors hawking unauthorized USPS-branded t-shirts and hats, but applies “less often” against online sellers of counterfeit stamps. The enforcement that does occur is real but modest in scale: the Inspection Service reported seizing 11 websites in 2025 and sending takedown letters that removed nearly 190 more between October and December. Between fiscal 2020 and 2025 it closed 31 counterfeit-stamp cases identifying nearly $21 million in known losses, and as of December 2025 it had 35 cases open. Over fiscal years 2023 through 2025 it issued one cease-and-desist order and secured 538 voluntary-discontinuance agreements, most of them in 2025. The service has also taken its case to the public, reporting $16.2 million in counterfeit stamps seized since October 2024 and launching a campaign warning consumers away from deep-discount stamps and “work-from-home” reshipping schemes.
Individual prosecutions show what the high end of the problem looks like. In the largest case on record, the Justice Department announced in April 2024 that Lijuan “Angela” Chen of Walnut, California, had pleaded guilty to a scheme that mailed more than 34 million parcels bearing counterfeit postage between January 2020 and May 2023, causing more than $150 million in losses to USPS. Her co-defendant, Chuanhua “Hugh” Hu — who prosecutors say fled to China in 2019 and remains a fugitive — is charged but, as the department notes, “presumed innocent unless and until proven guilty.” A smaller case cited in the audit ended in April 2026 with the owner of a direct-mail business pleading guilty to using nearly 400,000 counterfeit Forever stamps for more than $441,000 in losses.
Why a stamp leak matters
The numbers land on an institution with little cushion to absorb them. The Postal Service is self-funded, drawing its revenue from postage rather than taxpayer appropriations, and in fiscal 2025 it took in more than $4.4 billion from stamp sales, the audit reports — about $3.8 billion of it from Forever stamps. A nine-figure leak in that stream is not a rounding error for an agency that has posted years of operating losses.
Nor is the problem uniquely American. The audit notes that as far back as 2018, the Universal Postal Union — the United Nations body that coordinates the world’s mail systems — estimated counterfeit stamps were costing postal administrations and their customers more than $500 million a year worldwide. What has changed since, the report argues, is the technology: cheap, high-quality printing and the reach of online marketplaces have made fakes both easier to produce and harder to spot. The consumer cost is quiet but real — buyers of discounted fakes can find their mail seized or destroyed, and, the OIG warns, repeated experiences of that kind “would erode confidence in the Postal Service and its reputation as a secure and trusted entity.”
An open question
For its part, Postal Service management did not wholly accept the audit. It “partially agreed” with the finding, agreed with all four recommendations, and disagreed with the monetary impacts, arguing among other things that the cost of building systems to sample every stamp “would far exceed the realistic benefit.” It told auditors it had begun assembling an enterprise-wide Counterfeit Postage National Strategy, with a target completion date of May 31, 2027, and pointed to equipment pilots and coordination with postal inspectors already under way. The OIG considered management’s responses adequate, closed one of its four recommendations on issuance and left the other three open pending corrective action.
The throughline of the documents is less a single villain than a question of timing: a self-funded agency weighing the cost of rejecting legitimate mail against the cost of letting fraudulent mail through, while a fast-moving and largely overseas counterfeiting market exploits the difference. The inspector general has now put a dollar figure on that gap four times in eight months. Whether the Postal Service’s 2027 strategy closes it — or whether the next audit records another nine-figure estimate — is the question the paper trail leaves open.
The findings and dollar figures in this article are drawn from public reports issued by the U.S. Postal Service Office of Inspector General and from federal court records; Postal Service management’s responses are reproduced within the audit itself. Criminal charges against defendants who have not pleaded guilty are allegations, and those defendants are presumed innocent unless and until proven otherwise.
Sources
- U.S. Postal Service Office of Inspector General, “Counterfeit Stamps,” Report No. 25-121-R26, June 16, 2026 — report page / full PDF
- USPS OIG, “Management Alert — Emerging Counterfeit Label Trend,” Report No. 25-072-3-R26, April 8, 2026 — PDF
- USPS OIG, “Management Alert — Enterprise Payment Account Fraud,” Report No. 25-072-2-R26, Feb. 10, 2026 — report page
- USPS OIG, “Management Alert — Issues Identified with Counterfeit Postage,” Report No. 25-072-1-R26, Oct. 15, 2025 — report page
- U.S. Department of Justice, Central District of California, “San Gabriel Valley Woman Pleads Guilty to Counterfeit Postage Fraud,” April 26, 2024 — press release
- U.S. Postal Inspection Service, “Postal Inspection Service Warns Consumers About Counterfeit Postage” — consumer alert
- USPS, “Inspection Service to consumers: Don’t fall for fake stamp schemes,” Sept. 29, 2025 — USPS news
- U.S. Customs and Border Protection / Chicago seizure, Feb. 13, 2025 — report
- 18 U.S. Code § 501 (counterfeit postage) — statute; the Lanham Act, 15 U.S. Code § 1051 — statute
- The Investigative Journal, “Public Records Roundup: Week of June 15, 2026,” which first flagged the audit — digest