Financial Firms Investigated in Postal Discounts
Providian Financial, San Francisco, offers lending and deposit products. Total System Services, Columbus, GA, is a credit and debit, private-label card processing company.
Providian spokesman Alan Elias said that TSS mails statements for Providian, but he could not say whether a connection exists between the investigations.
A spokeswoman for the Office of the Inspector General of the U.S. Postal Service said it subpoenaed Providian and TSS on behalf of the U.S. Postal Inspection Service. She said Providian was subpoenaed in July but that she did not know when TSS was subpoenaed.
Providian said in its filing that "an individual has made a claim against us and one of our vendors, alleging that we and/or the vendor received discounted bulk mail postage rates from the U.S. Postal Service on certain mailings between 1997 and 2001 which were not eligible for the discounted rates."
To the best of its knowledge, "the allegations involve claims that such mailings were not eligible for bulk mail postage rates because requirements relating to the updating of mailing lists were not satisfied."
Providian could be subject to treble damages, penalties and other fines if it was not entitled to the discounted rates, according to the filing.
Providian said that it has provided documents related to the subpoena.
"We don't presently expect these matters to have any material financial impact on the company," Elias said.
TSS said in its annual report that it has produced the documents requested in the subpoena.
TSS's filing said that it was informed that the Justice Department is investigating whether the company or one of its large credit-card processing clients violated the False Claims Act, which imposes civil liability for false or fraudulent claims for payment to the government.
TSS said in the filing that it thinks the investigation relates to the postal service's Move Update requirements, in which mailers receive discounts for complying with the requirements. The possible violations may have occurred from July 1997 through November 2001, according to the filing.