There is a thread in SPAM for this.

I had to swing by our little local post office for something I had to sign for yesterday. There was a woman there exchanging hundreds of old stamps she had from home and the office clean ups. I never knew they did that, but apparently some do.

She said she was going to sell the forever stamps she was changing them for on e-bay, so that's another way some people make money from them. Taking stamps she wouldn't use and getting new ones.

I too wish the moderators would start getting rid of all the money grubbing affiliate, business, referral and whatever links people are posting all over the place in signatures and even worse, the posts themeslves. They are clearly a violation of the terms of service, but for whatever reason they have been letting them through.

+1

I am a stamp dealer, so I can shed some light on this.

The USPS is not supposed to exchange loose stamps in general. From their website:

"Stamps cannot be exchanged unless mistakes were made when originally purchased, or your stamps were defective when purchased."

Of course, there are some exceptions, this being the government. Read here:

http://pe.usps.com/text/dmm300/604.htm#wp1080980

This is not to say you can't find a Postmaster somewhere who might do it on some random stamps you found in the back of a desk, but they are not supposed to. There is one possible exception. When postal cards changed from about 7 to 8 cents each (in the 1970s, I think), they increased the minimum size for a postal card by 1/4 inch. Thus the old ones were effectively, though not statutorily, demonetized. My Postmaster has offered to exchange these, but you'd have to have a lot of them to make it worthwhile to mess with.

If you look at ebay, or in any stamp journal, or go to a stamp show, you will see offers for "discount postage." That consists of stamps, normally obsolete like 4, 5, 6, 8, 10, 13, 15, 20, 29, etc. cents each. The discount might be from about 10-25%.

Precisely because the USPS won't exchange stamps, people who own piles of non-collector-quality stamps and who want cash immediately must sell them at a discount. Dealers also buy large collections and dump the lesser stuff (maybe even below cost) and make their money on the better material.

Furthermore, it's easy for stamps to become slightly defective (rubbing, abrasions, gum or perforation damage, etc.), and that makes them even more likely to be sold at a discount.

This can be big business. I know a dealer who at all times has over $1,000,000 face material on hand. If you turn it fast enough, you can make some good money over the course of a year. If you are a dealer and can find someone who will sell postage to you and let you put it on a credit card for no surcharge, you can accrue VAST amounts of FF miles. But the margins are small, so that doesn't happen much if you are getting a good price.

Not to say that it's the case with the ebay seller cited above, but sometimes a business will buy a stack of postage and write off the purchase, then sell the stamps (usually for cash) at a discount. The difference between the tax rate and the discount is profit. It would be hard for the IRS to prove in an audit that you did not send out that 10000-piece mailing you say you did a couple years back, if you are in a business that plausibly might do such a thing.

I assume, but don't know firsthand, that New York City would be the main center for this, given the number of big dealers around there.

^^^