OK, so I used to ship a lot, and I know the USPS provides free Priority packaging, but solely for the purpose of shipping Priority Mail. You're legally not allowed to use it to ship any other way.

But occasionally I do receive packages where people use Priority packaging to ship with other method (First Class, Media Mail, etc). It's not really my place to report or chastise them, so I just let it pass. The question I have now is what should I do with the packaging material? (Usually it's blank and brand new. People just flip the inside out so that it doesn't show Priority on the outside).

If I throw it away into the trash, I feel like I'm wasting something that can still be reused/recycled.

But I use it again, then it feels like I'm perpetuating the fraud (the practice is considered fraud by the USPS). I'm also concerned the next person might think I'm the one who started it, even though I'm simply trying to do good for the planet.

Either way I feel like I'm not doing the right thing (ethically speaking) here. What do you suggest?

You can use the packaging to ship Priority Mail.  You CAN NOT use it to package and then disguise it to get by for a cheaper rate.  It doesn't matter if someone else has done it.  It is WRONG.  

Another thing to mention on this is Media Mail is subject to inspection.  Meaning they can open that package at any point along the path from acceptance to delivery.  If Priority Mail packaging is found inside, it will get marked up for the Priority Rate and be attempted as Postage Due.  Other types of mail could also be discovered and marked up.  For example if the packaging would get damaged and they see the Priority packaging inside, it will be marked up at the priority rate.  The person on the receiving end is not going to be happy.

OK, but what if I don't have a need to mail Priority Mail anytime soon? It sounds like the only way out is to throw them in the trash then, right? (If it's still clean and in good conditions, I figure I can bring back to the post office, but "good conditions" is a bit hard to achieve when it's already been used as packaging).

I received one of these once. I was not happy about it either. Being fairly new to the site, slowly wading my way through the help docs, and having barely discovered the forums at that time, I went ahead and paid the postage due. Although I did not  RWAP at that time, I did send the sender a pm informing them of their "mistake" and what it cost me. Surprisingly, she refunded my credit with no problem. I think she, like many people I've discovered, just didn't know that was wrong and appreciated having someone inform her of it.

Now, unless it was a hard-to-find-book I had been waiting forever for and it would cost more than $20 for a used copy, I would refuse to accept the book and postage due. Then I would notify PBS.

Pam

Put it in the recycling bin.

I use those boxes for many things around my house.  Even put presents on them and wrap sometimes.  You can use them for anything you want EXCEPT mail a class other than Priority. 

I share your commitment to re-using packing materials.  In this case tho, I agree with Cozette...

I'm with Cozette I stash them in a closet and use them for wrapping small presents in. I have empty dvd cases in a couple large boxes I've gotten from on here, We ended up putting dvd's that we watch a lot in a binder so we could just pull it out and it takes up less space.  My mom uses the larger ones too for my niece, she puts barbies & littlest pets & my little ponies in them and puts them on bookshelves.  Eventually for her the end up getting a hole too many and have to get recycled, but she's always got a new one or new shoe box to fill its place.