United Airlines Fined $49m Over Fraud On Postal Service Contracts

United Airlines has agreed to pay over $49 million to resolve criminal charges and civil claims in regards to postal service fraud for transporting international mail. This settlement relates to incidents between 2012 and 2015 when the operator charged for mail that it didn’t transport.

United Airlines Livery
United admitted that it concealed issues related to scanning and mail movements. Photo: Getty Images

The background

According to the Department of Justice (DOJ) Office of Public Affairs, between the aforementioned years, United “engaged in a scheme to defraud the USPS (United States Postal Service” by submitting false delivery scan data to make it appear that the airline and associated partner carriers were complying with the ICAIR (International Commercial Air) requirements.

The DOJ documents states that instead of providing USPS accurate delivery scans based on the shipment of the mail, United submitted automated delivery scans “based on aspirational delivery times.” These scans did not correspond to the actual transportation of the mail, as mandated by the contracts.

Therefore, since there was no movement of the post, the Chicago-based carrier was not entitled to payment. However, it still secured payments of millions of dollars from USPS.

United Airlines
The DOJ highlights that specific individuals at the airline worked to conceal the company’s automation efforts from the USPS, as they knew that “the data being transmitted was fabricated.” Photo: Getty Images

The penalties

As a result of these events, United has entered into a non-prosecution agreement (NPA) with the Criminal Division’s Fraud Section. Under the agreement, it will pay just over $17.2 million in criminal penalties. Meanwhile, the carrier has entered into a False Claims Act settlement with the Civil Division’s Commercial Litigation Branch, Fraud Section. Here, it has a requirement to pay just over $32.1 million

“United was entrusted by the U.S. Postal Service with fulfilling a critical government function – the transportation of U.S. mail abroad,” said Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division, as per the DOJ’s public release.

“Instead of performing this duty with transparency, 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. Today’s resolution emphasizes that companies that defraud the government – no matter the context, contract, or federal program – will be held accountable.”

United planes getty
The DOJ adds that efforts to cover up the automation practices included attempts to revise the falsified delivery times to make the automated scans appear less dubious to USPS. Photo: Getty Images

Further agreements

Altogether, United has agreed to continue to cooperate with the Criminal Division’s Fraud Section. It will report any evidence or allegation of violations. The legacy carrier will also bolster its compliance program. Moreover, it will adhere to certain reporting requirements, which will see it submit yearly reports to the Fraud Section.

Simple Flying reached out to United for comment about the fines. A spokesperson for the airline told Simple Flying the following:

“The U.S. Postal Service is a valued customer for United and we are glad to have remedied these procedures and look forward to serving the Postal Service in the future.”

United lost over $7 billion in 2020 amid the impact of the global health crisis. It is also trying to cut another $2 billion in costs by 2023. Despite the significant sum of $49 million, the fee doesn’t stand out compared to the considerably high figures that the carrier is already up against.

United isn’t the first major US carrier to face such a fine for this sort of activity in recent years. Notably, American Airlines was fined $22 million in 2019 over false mail records.

What are your thoughts about United Airlines agreeing to pay over $49 million to resolve these charges and civil claims? What do you make of the overall outcome? Let us know what you think of the situation in the comment section.

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