Ohio,
I am referring to the use of wadded paper as opposed to shredded. I could count on one hand the number of times I have received an item with shredded paper as packing material in 10 years on line.
I simply stated they "view it as unsatisfactory" material for packing, and in my area they do.
I have had several instances of breakage on items received through the years. Almost all of them used newspaper as packing (crumpled, not shredded). I had to go back to every seller for a refund, as the USPS simply referred to it as "inadequately protected" in shipment. I did have conversations with them on many occasions, and was told that although newspaper is not prohibited by specific language, that most claims (at least in my area) using crumpled newspaper are declined. They get around the absence of language banning any specific packing materials by simply stating that the item was "improperly packed" or "inadequately protected", therefore they are not liable. The same terms can be applied for using peanuts, but using way too few of them.
In my area, as a general rule, they just decline the insurance claims involving newspaper (crumpled), which protects the PO without banning certain packing materials.
Craig