Gamefly Wins Ruling Against US Post Office

Well, it turns out sometimes maybe you can fight city hall, or at least the Government.

You might recall that nearly 2 years ago to the day, video game rental service Gamefly filed a formal complaint with the Postal Regulatory Commission against the United States Post Office. They alleged that USPS gave preferential treatment to Blockbuster and Netflix DVD shipments, including culling those retailers’ dvds from normal mail processing to ensure they weren’t damaged (and corresponding frequent damage to Gamefly’s own shipments) and reduced postal rates for the two mail order giants.

It gets worse. Just one month ago, in a letter to the PRC (which you can read for yourself here), Gamefly made the startling accusation that the amount of money the USPS bilked from them exceeded their yearly profits:

At the company’s current volume of approximately 1.2 million shipments per month, the difference between the two-ounce flats rate of $1.05 that GameFly must pay to avoid automated letter processing for most of its DVD mailers, and the one-ounce letter rate of $0.44 that Netflix pays to avoid automated letter processing of return mailers, amounts to about $730,000. This amount represents more than 100% of GameFly’s monthly net income in 2011.

Suffice to say, 2 years is a long time to wait for a ruling, a point Gamefly made last year. Luckily for them, it turns out the overseers at the PRC aren’t asleep on the job (that much.) Today, they finally issued their decision and the verdict is a total Victory for Gamefly: The United States Postal Service is indeed guilty as charged, and have been ordered to remedy the situation post-haste. From the ruling:

[T]he Commission confirms evidentiary rulings made by the Presiding Officer; finds that GameFly is similarly situated to Netflix and Blockbuster; concludes that Netflix and Blockbuster have been given a number of preferences, including various forms of manual processing coupled with the avoidance of the non-machinable surcharge; and determines that the Postal Service has failed to present adequate and legitimate justifications for these preferences.

(Click to read the entire ruling.)

Ouch indeed. I’m personally a big fan of our postal service. It’s proof that the government can actually provide services reliably, effectively, universally and relatively inexpensively. Which is why this case is so disturbing. It’s sad to see agents of the public trust behaving so corruptly (particularly for pennies on the dollar. If you’re going to grift, grift big!)

This ruling only deals with Gamefly’s specific allegations, which gives us no indication that this kind of malfeasance is a widespread problem. But one would be wise to assume Gamefly isn’t the only entity to get the shaft, just the first to notice it. We might be seeing more cases like this. That said? It’s nice to see a regulatory agency actually taking their job seriously. Now if you’ll excuse me, I need to place a few orders.

(Via GamePolitics)

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