Chinese National Arrested in $60 Million Ecommerce Shipping Scheme
A Chinese national was arrested on May 23, 2023, for allegedly shipping over 9 million parcels from e-commerce companies in China in just over 6 months with fake USPS postage labels according to the United States Attorney Journal of California. The alleged scheme cost USPS over $60 million over that same period, according to the report.
What Was the Postage Scheme?
Lijuan “Angela” Chen was arrested on Tuesday, May 23, and charged with two different crimes: conspiracy to defraud the United States and possession and use of counterfeit postage.
What exactly was the scheme?
Essentially, Chen appears to have been offering e-commerce companies in China discounted postage for packages being sent to or within America. In other words, she was running a Chinese equivalent of Shipstation.
Companies like Shipstation use their volume to get discounted postage rates and then share these discounts with vendors. However, Chen is alleged to have been using fake USPS shipping labels. These packages with fake labels would still be delivered to customers, but Chen would not actually buy the postage from USPS. Chen would charge her clients for the packages and essentially keep the money at nearly 100% profit.
How Did the USPS Postage Scheme Work?
It may come as a surprise to readers that one can use a fake USPS label and actually have the item delivered. In a very simplified description, the scheme was akin to peeling used stamps off previously delivered letters and reusing them on new letters (in reality, it was slightly more complex, and Chen is alleged to have used “intelligent barcode data” from previously mailed items).
Shipping from China Is Often Legally Subsidized by USPS
The scheme to use fraudulent USPS labels is a federal crime with severe punishment for those convicted. However, Chinese companies have enjoyed subsidized shipping rates via USPS for years via a service known as “ePacket”.
With ePacket, companies in China are able to ship to America at costs that are often a fraction of what the domestic USPS shipping rates in America are. In other words, it is often cheaper for companies in China to ship something from Beijing to Buffalo than it is to ship something from New York City to Buffalo.
Chen's Husband and Previous Business Owner Fled to China
Chen’s shipping business was previously operated by her husband, who left for China two days after being interviewed by Postal inspectors in November 2019. The fact that the Attorney General's office has been investigating Chen's business as early as 2019 suggests the scheme had been running for years.
If convicted on both counts, Chen faces up to 10 years in prison.
