First class mail seems pretty standard..
in processing means..
I don't know why UPS wont just allow different sort of packing that is better then paper and retail it to large companies who uses their service..

but thats why it is Gamefly's fault more then Postal services'
Gamefly could purchase those plastic cases instead of using the paper containers..

plastic containers.. which UPS does have a protective system but thats is only for Bulkier items..
but you have to purchase that..

im sure blockbusters online has received broken discs as of like netflix..
but you have to keep in mind
a movie costs.. 15 dollars.. on shelf.. and about 10 dollars in retail.. thats chump change compared to a 40 dollar game..

Gamefly will possibly lose the court run.. because the terms of service frm UPS has .. which only applies that the package will make it on time.. damages will have to be investigated.. and in trend will deal into mass postage hauling/weight which UPS has no power to control that.. which will turn to the UPS terms of agreements that they only refund delivery problems.. companies fine print.. always sucks..
if its automated.. its not liable..

Gamefly should deal with this on their own terms.. which means.. If Gamefly can.. create a packaging, plastic/paper/cardboard that weighs under a certain percentage.. that can be delivered with mail.. UPS is guaranteed to ship it.. as long as it meets requirements..

measurements.. and weight.. is basically all..

If gamefly makes this package they could even patent it.. sale it to all the other companies..
and on "Keep it" choices, request the user to send back the plastic package or try an trade in games that way..? ..