Details first are that  I requested three books on August 12th, the sender mailed them on August 14th. Then I received this pm today:

                 "I'm afraid I have bad news about the books I sent your way. I received a letter from the PO saying that they found a scrap of the parcel wrapping, which they included, and the contents were lost. They did give me the option of describing the contents, and then they could do a search, but there is no guarantee how long this will take."

The sender proceeded to apologize for the inconvenience and disappointment. He wants to know if I want them to do a search or cancel the transaction. I don't think he can cancel the transaction at this point. It does go lost on September 11th.

What should I tell him to do? If we wait until the books go lost then it will go against his record (and my, too) even though it is a PO problem, right?

He can contact PBS and let them cancel the transaction. That way, you will get your credits back right away.

He can let the post office search for the books, and get them sent back to himself, doesn't need to involve you after you get your credits back.

Good luck.

I wouldn't bother the site people myself.   The only recored would be one showing a book lost in the mail and that isn't considered to be a negative unless you get a lot of them.        I'd let it go lost, get my credits back and let the sender do whatever they choose on their end.

http://www.paperbackswap.com/help/help_item.php?id=243

It's OK to contact PBS about this, that is what they say to do in the Help Doc re: this topic.

The question becomes how soon do you want your credit?  To wait or not.   While the lost books show up in the statistics, one bunch of books being lost would not be an issue.  

It is helpful to file the search paperwork even if he cancels the order.  It shows up in the USPS statistics then.

Thanks everyone for your input. I did what Sara said to do and asked the sender to contact PBS along with contacting USPS with the info. I've never had this happen before and the link that Sara gave me really helped. Thanks alot, Sara! I'm sure it will help others, too, who may have this problem in the future.