| Inspection Service Revenue Protection Program 1 Revenue Protection Program US Postal Inspection Service Mailers Technical Advisory Committee November 19, 2008

| Inspection Service Revenue Protection Program 2  Protect USPS and ratepayer by ensuring protection against revenue fraud and loss  Identify revenue loss vulnerability and prevention by performing risk assessments of revenue systems  Ensure fair competitive environment for mailers via deterrence, detection and enforcement

| Inspection Service Revenue Protection Program 3 FY 2008 Results  Over 400 open investigations  $52.5 million in losses identified  $17 million recovered  90 prosecutions

| Inspection Service Revenue Protection Program 4 Historical Revenue Risk Areas By-Pass Mailings  Bulk Mail Entry  Mail circumvents verification and acceptance  Mailing statement/payment information not recorded  PVDS  Additional volumes added post acceptance  Altered Form 8125 at destination  Collusion  Bribery  Gratuity

| Inspection Service Revenue Protection Program 5 Historical Revenue Risk Areas Postage Meters  Tampering – manipulation of mechanical meters  Cloning – stolen meter with altered serial number PC Postage  Duplication – photocopying of IBI  Short Paid – deliberate underpayment

| Inspection Service Revenue Protection Program 6 Historical Revenue Risk Areas Stamps  Counterfeiting Retail Fraud  Returned Checks – non-sufficient funds, account closed  Credit Cards – Skimmed, ID takeover

| Inspection Service Revenue Protection Program 7 Historical Revenue Risk Areas Eligibility Fraud  Non-Profit  Must be authorized by USPS at non-profit rates  Periodicals  Must be authorized by USPS at periodical rates  Presort  Accurate sortation  Correct postage  Move Update  Mailers must use approved Move Update method  COA matches must be corrected

| Inspection Service Revenue Protection Program 8 Move Update Case History Case Example 1  “Whistleblower” reveals deliberate noncompliance  $6.2 million settlement based on lost automation discount  $4.6 million to USPS  $1.2 million to whistleblower Case Example 2  Corporation reports non-compliance for 2 subsidiaries  $8 million settlement  $5 million settlement

| Inspection Service Revenue Protection Program 9 Inspection Service Follow-up  Established a Move Update non-compliance detection methodology using USPS technology  Initiated investigative attention based on results