Australia Post 'Underpaid Postage' Dispute: Small Merchants Pay for System Errors Behind a Shield of Commercial Confidentiality

Australia Post's (hereinafter "AusPost") automated billing system is forcing a group of small businesses into an impossible position. According to a report by the Australian Broadcasting Corporation (ABC), more than 170 surveyed merchants said they had been chased for 'underpaid postage' fees ranging from AUD 100 to AUD 30,000; if unpaid, subsequent parcels cannot be sent, and merchant operations could grind to a halt at any moment.

"We've absorbed these costs within the business... it's quietly strangling small businesses," Sam Kemp, owner of a clothing store in regional Victoria, told ABC.

This is no ordinary billing dispute. Merchants have already paid postage at the quoted rate and parcels have been delivered, yet the 'underpaid' bills subsequently issued by AusPost amount closer to a 'second charge.' Kemp asked: "I've already paid postage at the quoted rate, and you turn around to say I didn't pay enough and want to charge me again—is that fair?"

AusPost stated in a declaration that its automated size and weight scanning technology is 'highly accurate, checked daily, and independently verified in accordance with the National Measurement Act.' However, when ABC requested it disclose error rates, AusPost refused, citing 'commercial confidentiality.'

This response of 'claiming accuracy while not allowing outside verification' strikes at the heart of public accountability. Jeannie Paterson, a professor of consumer protection law at the University of Melbourne, told ABC that if AusPost has no right to levy the relevant charges, its conduct 'could constitute breach of contract, fraud, or at the very least misleading conduct toward consumers.' She stressed that automated systems require 'good governance, safeguards, and human oversight,' and that 'monitoring false positives and false negatives' is a critical element.

Internal Emails Acknowledge Reading Errors

After Emma Kenney, a women's and children's clothing merchant on the Sunshine Coast, challenged dozens of 'underpaid postage' charges, an internal AusPost email acknowledged: 'I have reviewed the scan records and can see two different sets of size and weight data... I believe the proximity of another parcel caused a reading error.' The relevant charges were subsequently waived.

This internal communication acknowledges, from one angle, the existence of system errors. However, the frequency, mechanism, and remediation path of such errors remain a black box to the outside world.

Complaints Received by the Ombudsman Account for Less Than 0.5%

Kemp has lodged a complaint with the Commonwealth Ombudsman and is awaiting the outcome. The Ombudsman's office told ABC that the number of relevant complaints received in the 2025-26 financial year is small, accounting for less than 0.5 percent of its total annual postal industry complaints. 'Given the low volume of complaints, this office is not currently conducting or considering a systemic investigation into the matter, but is aware of community concerns,' an Ombudsman spokesperson said.

Professor Paterson noted that a low complaint share does not necessarily mean the problem is minor: 'Either underpaid postage is not a systemic issue, or small businesses consider complaints pointless, or they are entirely unaware they have been wrongly charged.' In the absence of public data, none of these three possibilities can be ruled out.

In 2024, the Ombudsman applied pressure to AusPost over billing issues affecting business customers. AusPost subsequently implemented a series of operational improvements: adjusting scanner equipment tolerances, introducing controls to prevent multiple parcels from being weighed simultaneously, and strengthening calibration and record-keeping processes. But merchants' experience is that the pace of improvement has not kept up with the speed at which they are being chased for fees.

Who Bears the Systemic Risk

AusPost is a government business enterprise wholly owned by the Australian federal government and legally enjoys a postal monopoly. Under this legal arrangement, small businesses are both customers and, in effect, have no alternative option—private courier networks fall well short of covering AusPost's delivery endpoints.

When a public institution wielding market coercion uses automation as an efficiency tool and commercial confidentiality as an accountability shield to shift billing-error costs and cash-flow risks onto the party with the weakest bargaining power, the arrangement itself merits scrutiny. Outside the system, merchants have almost no way to verify whether a parcel was truly 'underpaid'; all they can do is dispute charges one by one, hope their emails are reviewed manually, or simply grit their teeth and pay to avoid their operations grinding to a halt.

For Kemp, change does not come automatically. 'I've changed my satchels, changed how I send parcels, and I'm still being charged underpaid postage fees,' she told ABC. As of now, AusPost has neither disclosed its error rates nor has the Ombudsman launched a systemic investigation. The controversy surrounding this automated billing system will, in all likelihood, continue to be faced one by one by scattered small businesses on their own.