Canada Post sues B.C. company for $500,000 over altered postage labels

Canada Post has filed a lawsuit against a B.C. man, seeking over $449,000 that it alleges it lost in revenue through a fraudulent scheme that involved altering prepaid mailing labels.

The federal Crown corporation alleges Jackson Lam manipulated over 11,000 prepaid return labels that companies provide to online customers and used them instead to make deliveries of an energy drink to his customers, according to the lawsuit filed in B.C. Supreme Court.

The lawsuit alleges Lam “operated an energy drink business under the moniker Prime Hydration Co.” through the now-defunct primehydrationco.ca website. The company’s address was a UPS Store in Burnaby.

The delivery scheme worked like this, Canada Post alleges: Lam went online to request return labels from companies like Bell Canada, Shaw Communications, Cogeco, Eastlink and others, it said. Then the labels were altered so instead of parcels with unwanted merchandise being returned to those companies, the mailed packages contained energy drinks and were delivered to Prime Hydration Co.’s customers, it said.

Canada Post normally gets paid for shipping costs after a return label is scanned during delivery. Canada Post is still trying to figure out how the system was gamed.

“Full particulars of the means used by the defendant to manipulate the return labels are within the exclusive knowledge of the defendant,” details of which will be revealed before the trial, it said in the lawsuit.

Lam used the fraudulent labels for nine months, from August 2022 to April 2023, the lawsuit alleged. He had registered his company for a Canada Post “small business solutions” account under the name Troublemakerz, it said.

The scheme was discovered when Bell Canada complained to Canada Post in January 2023 that it had been charged for numerous return labels for parcels that never arrived, according to the lawsuit.

And Bell Canada also discovered the return packages were being sent as the premium-priced priority service, which it doesn’t offer for returns, the lawsuit said.

Canada Post learned over the next four months that “large quantities” of packages bearing altered return labels were being dropped off at the Deer Lake post office in Burnaby, the Bridgeport post office in Richmond or a retailer called the Packaging Depot in Burnaby, the lawsuit said.

On April 26, 2023, Canada Post intercepted 13 parcels, all with return labels that scanned as belonging to Shaw Communications but were bound for Prime Hydration Co. customers, the lawsuit said.

The case is also under investigation by Burnaby RCMP. RCMP spokesman Cpl. Mike Kalanj in an email that charges are being considered.

Burnaby RCMP provided a spreadsheet with all the altered labels based on data recovered from Lam’s personal computer, according to the lawsuit.?Canada Post used that data to determine that 11,328 return labels totalling $449,439.71 in shipping costs had been diverted.

The lawsuit is claiming the lost revenue, investigation costs and other losses, as well as punitive and aggravated damages, it said.

Lam “knowingly and falsely represented himself as a legitimate customer of the merchants” and used the altered labels to induce Canada Post to deliver the parcels, it alleged.

None of the allegations have been proven in court.

A message left with Canada Post and its lawyer wasn’t returned.