Skirting Move Update Can Be Costly
Welcome to the U.S. Postal Service's Revenue Assurance Program. In a similar manner to the IRS, district-level USPS finance departments validate postage discount claims. For First-Class mailers, the department determines whether work share procedures are sufficient to qualify for the postage discounts obtained.
At issue is mailers' compliance with the 1997 USPS regulation Classification Reform/Move Update. The regulation requires First-Class mailers to update name and address elements of mailing files at least once every 180 days to qualify for postage discounts.
The postal service wants to change the 180-day frequency to 90 days. It proposed this change last month in the Federal Register and is hearing comments through Aug. 29.
The regulation was enacted to help stem the burgeoning cost of undeliverable-as-addressed mail. Yet while USPS pre-mail update services such as National Change of Address and post-mail services such as Address Change Service have seen increased use by mailers, UAA mail still costs the postal service well over $1 billion annually to process. Reducing costs, particularly today, has become a major priority to the postal service just as it has to private industry.
The Revenue Assurance Program's objectives are to protect the interests of the general mailing public, commercial mailers and the postal service. USPS has to assure the general mailing public, who pay full postage rates, that larger mailers are employing fair work share efforts to warrant the postage discounts they receive. Similarly, the program is meant to assure commercial mailers that all are adhering to one uniform standard, eliminating fraud attempts to the system and thereby keeping the viability of continued discounts.
Mailer compliance under the Move Update regulation is defined as having an active name/address update process in place and operative. Mailers found not to be in compliance can be assessed as much as the entire amount of postage discounts received for a full 180-day period. Using a discount of 6 cents per piece, this translates to $60 for every thousand pieces mailed. Therefore, the penalty amounts to $600 for 10,000 pieces, $6,000 for 100,000 pieces and $60,000 for 1 million pieces. Over 180 days, the payback of discounts can amount to a substantial cash penalty.
The process begins with RAP analysts reviewing undelivered, returned mail at Computer Forwarding System facilities. Returned pieces with forwarding order expired notices ranging from 12 to 18 months are examined and sent to the USPS district office for action. This usually leads to a meeting of company representatives and district finance and retail operations managers to determine the nature of the situation and review company update procedures.
The company under review must prove that an acceptable name/address update process exists and show that it was operative during the period in question. Based on this in-depth review, the USPS may choose not to seek return of discounts, limit the penalty to the discount received for the mailing in question or penalize back to the last update period, which might be the full 180 days.
First-Class mailers need to appreciate the ramifications of failing to be in compliance with the Move Update regulation. Consider the Revenue Assurance Program penalty potential in these situations:
o Mailer uses envelope endorsements but rarely applies changes.
o Mailer has multiple mailing units. Is the whole company penalized should one unit not be in compliance?
o Mailer rents prospecting list that has not been updated and experiences UAA situation.
o Your mail is consolidated at a presort bureau along with mail that has not been updated, resulting in multiple returns for that combined mailing.
The postal service is honestly structured to work in partnership with mailers, particularly at the district levels. Their cadre of account representatives, small-business specialists and customer service representatives are proactive in helping to ensure mail is properly prepared and entered at the best work share discounts. To be effective, partnerships must work both ways.