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Air France-KLM to pay $3.9M over alleged Postal Service scan scam

7 airlines have settled with US government over charges of faking delivery times

Air France-KLM are paying $3.9 million to the U.S. government to settle fraud charges related to a mail transport contract. (Photo: Shutterstock: Georges Hanna)

Air France-KLM has agreed to pay $3.9 million to resolve U.S. government claims of fudging performance information to prevent the U.S. Postal Service from assessing penalty charges for late delivery of international mail, the Department of Justice announced Friday.

Air France-KLM Group is the seventh airline to settle charges of falsely reporting delivery times in order to ensure full payment under transport contracts with the postal operator for civilian, military and diplomatic mail. Delta Air Lines (NYSE: DAL) on Thursday agreed to a $10.5 million payment to settle similar fraud charges. 

The Postal Service hired Air France-KLM to pick up mail at six U.S. locations and various Defense and State department locations overseas and deliver that mail to numerous destinations. The contract specified penalties for mail that was delivered late or to the wrong location, the Justice Department said.

The airline allegedly falsified barcode scans of mail containers delivered to Postal Service facilities or federal facilities to make it appear it was meeting requirements for on-time delivery, and ensure full payment, according to the federal allegations. 

“The Department of Justice is committed to ensuring that government contractors provide the services for which they are paid,” said Brian Boynton, the principal deputy assistant attorney general and head of the Justice Department’s Civil Division. “When contractors knowingly fail to meet their obligations, we will pursue appropriate remedies to redress the violations and deter future ones.”

This is the seventh civil settlement involving air carrier liability for false delivery scans under the Postal Service’s international commercial transportation services contract. 

The U.S. government has collected more than $84 million as a result of its investigation of international mail delivery, including $5.3 million from UPS (NYSE: UPS) in March; $49 million from United Airlines (NASDAQ: UAL) in 2021; $22 million from American Airlines (NASDAQ: AAL); $4.7 million from Northern Air Cargo; and $5.8 million from partners British Airways and Iberia Airlines.

The Justice Department’s Commercial Litigation Branch that specializes in fraud has worked closely with the U.S. Postal Service’s inspector general and general counsel on the investigations. 

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

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Eric Kulisch

Eric is the Supply Chain and Air Cargo Editor at FreightWaves. An award-winning business journalist with extensive experience covering the logistics sector, Eric spent nearly two years as the Washington, D.C., correspondent for Automotive News, where he focused on regulatory and policy issues surrounding autonomous vehicles, mobility, fuel economy and safety. He has won two regional Gold Medals from the American Society of Business Publication Editors for government coverage and news analysis, and was voted best for feature writing and commentary in the Trade/Newsletter category by the D.C. Chapter of the Society of Professional Journalists. As associate editor at American Shipper Magazine for more than a decade, he wrote about trade, freight transportation and supply chains. Eric is based in Portland, Oregon. He can be reached for comments and tips at [email protected]