Last year, while the United States Postal Service was working its way through various reforms to make it profitable, Postmaster General Louis DeJoy started up a new pilot program that would allow Post Offices to offer check-cashing services to customers for a small fee. The plan was touted as another way to attract more customers and generate more revenue for the financially struggling service. That pilot program was extended on April 1st of this year. Now members of Congress are raising questions about the program. Not only was the check-cashing plan unpopular with the public, but as our colleague Joe Cunningham pointed out at Redstate yesterday, it appears to also have been illegal.
It appears that the U.S. Postal Service, under Biden’s Postmaster General, Louis DeJoy, violated federal law by trying to get the Postal Service into the check-cashing business. For years, it’s been something the postal workers union and progressive activists have long desired. House Republicans on the Financial Services Committee recently called DeJoy out for the scheme in an April 20 letter.
On or around April 1, 2022, the U.S. Postal Service (USPS) extended an unsuccessful pilot program for check cashing services. The pilot program—which allows customers to cash payroll and business checks up to $500—was launched in September 2021 without approval from Congress or the Postal Regulatory Commission (PRC). The program violated long-standing prohibitions that prevent USPS from offering or developing new non-postal products, and over the course of four months, it proved extremely unpopular. It is therefore unclear why, and on what basis, the program has been extended.
So it turns out that under existing regulations the USPS is barred from offering any new products that fall outside of the scope of USPS’s traditional postal delivery services without prior congressional approval. Compounding matters further, a new law that was part of the USPS reform effort and went into effect this month “specifically prohibits taxpayer funds for pilot programs related to non-banking financial services.”
The pilot program was only launched in a limited number of banks to test it out, but as mentioned above, it wasn’t exactly popular. Just how unpopular was it? Over the course of more than six months, the Post Office had cashed a grand total of six checks, raking in a profit of $35.70. Granted, the program was only set up in four Post Offices, but if people were crying out for a service where they could receive prepaid gift cards for their paychecks and business checks, you’d think more people would have shown up.
As I’ve written here in the past, I’m a fan of pretty much anything the Post Office can think of to make itself profitable and end the need for taxpayer bailouts to keep them going. But any such changes obviously need to be in accordance with the law and they need to actually produce results. Neither of those requirements appears to have been met by this check-cashing scheme.
So why extend a losing program like this even further, particularly after it was pointed out that the pilot program almost certainly violated the law? We just finished going through a round of reforms that allowed the USPS to raise postage rates, consolidate some services, and reduce the use of airlines to deliver the mail by extending delivery times. That was supposed to have put them in a position to return to profitability for the foreseeable future. This seems like a significant unforced error on the part of DeJoy and the Biden administration. Now somebody is going to have to come in and clean this mess up.
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