November 5, 2010, 4:16 PM

Amazon agrees to pay $1.5 million to settle a U.S. Postal Service claim

The U.S. Postal Service said Amazon shipped non-qualified products via Media Mail.

Lead Photo Inc. has agreed to pay $1.5 million to settle an investigation filed by the U.S. Postal Service that alleged the e-retailer shipped products using Media Mail rate that did not qualify for the service. Products that qualify for Media Mail include books, printed and recorded music, recorded video tapes and films and educational test materials.

The settlement documents signed by Amazon and the Postal Service in late September say the agreement does not constitute an admission of liability by Amazon or a concession on the part of the Postal Service about the merit of its claims.

A Postal Service spokesman today confirmed the settlement. did not respond to a request for comment.

The Postal Service contended that Amazon improperly mailed consumers video games and related products to customers at Media Mail rates from 2006 to 2009 even though those products were not eligible for the rate.

The difference between the Media and Priority Mail rates can be significant. For instance, a one pound parcel sent via Media Mail costs $2.38. The cost of the same item sent via parcel post or Priority Mail starts at $4.90.

The Postal Service claimed Amazon owed it compensation for the additional postage that should have been paid to properly ship the items. According to the settlement, Amazon agreed to pay the Postal Service $1.5 million to “avoid the delay, uncertainty, inconvenience and expense of protracted litigation” by Sept. 27. The settlement releases both parties from further claims about the matter. is the No. 1 e-retailer as ranked by Internet Retailer’s Top 500 Guide.

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