Strategies: R.R. Donnelley to pay $22 million

Printer R.R. Donnelley & Sons agreed in late August to pay the Postal Service an estimated $22 million to settle charges of fraud stemming from postage underpayment, primarily for catalogs and magazines mailed from several of its plants over the past 10 years. According to company spokesman William Lowe, the figure represents approximately $6 million in back postage and $16 million in penalties.

Lowe says the underpayments occurred when errors at the bindery required items to be taken out of the order in which they were sorted for postal discounts and the “reorders” were not replaced. “Some of our plants were not getting reorders back into sequence to qualify for the lowest discounts,” Lowe says. “More postage was due, but mistakes aren’t fraud.” He estimates that reorders represent 0.4% of a typical bindery job, depending on complexity.

The USPS has given Donnelley a four-month grace period to solve the reorder problem. “We’ll work with the USPS to find a solution that benefits the industry,” Lowe vows.

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