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GameFly Files USPS Complaint over Broken Discs, Claims Preferential Treatment for Competitor

by Chris Faylor, Apr 24, 2009 9:59am PDT

Online game rental service and Shacknews parent company GameFly today filed a formal complaint against the United States Postal Service, alleging that the USPS provides competitor Blockbuster with preferential treatment to cut down on broken discs.

"GameFly is not the only mailer to experience significant DVD breakage

rates on automated mail processing equipment," reads the filing. "In response...the

Postal Service has adopted a practice of manually culling out the DVD mailers of two

high-volume shippers of DVDs, Netflix and Blockbuster, for special processing."

The company said its request for manual processing "comparable" to that of the movie rental services was denied, which puts GameFly at a disadvantage as its "larger and longer established" rival Blockbuster plans to rent games by mail.

"Because of the preferential treatment given

by the Postal Service, [Blockbuster] enjoys a substantial cost advantage in the distribution of its DVDs," added GameFly.

The company noted its numerous efforts to reduce in-transit disc breakage, including standard protectors and tests with larger mailers, but said that breakage still occurred, even though the Postal Service charged higher rates for First-Class Mail.

GameFly claims it currently experiences a "breakage rate" of approximately 1%.

Another issue, GameFly explained, are the "substantial rates" of discs lost in transit. However, the company added that the USPS has "made vigorous efforts to control the problem," including the arrests of 19 USPS employees alleged of theft.

GameFly had no comment about the complaint when contacted by Shacknews, with the United States Postal Service yet to respond to our inquiry.




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