Potter: Standard, First-Class Rule Reinterpretation an 'Ethical' Issue

WASHINGTON — The U.S. Postal Service's decision to reinterpret a rule that will move many Standard mail pieces into the costlier First-Class category is an ethical one and has nothing to do with trying to generate extra revenue, postmaster general John E. Potter told DM News last week.

Another postal official said a change to the rule is expected to be placed in the Federal Register in a month or two and that mailers will get a phase-in period to follow the rule.

Several mailers — mainly financial institutions — have said they are being told by local acceptance clerks at postal business mail entry units that Standard mail they have sent for years now must go at the First-Class rate. First-Class mail is the agency's most profitable product but has been declining in volume in recent years.

However, Potter said the reinterpretation is not about trying to boost First-Class volume.

“It's not our strategy to make people who are mailing Standard Mail mail at First Class, but there have been people who have taken what has traditionally been mailed First-Class and attempted to mail it as Standard,” he said. “We have an ethical and moral obligation to create a level playing field so that everybody understands what the rules are, and they make choices based on those rules.”

Potter said the issue gets down to the definition of First-Class mail.

“A bill is First-Class mail, and if a letter has a certain amount of personal content it is considered to be a First-Class letter,” he said. “Over the course of time, the distinction between what's First-Class and what is Standard mail has blurred. And what we are trying to do is create a bright line so everybody understands where that line of demarcation is.”

Potter's comments were similar to those Steve Kearney, vice president of pricing and classification at the USPS, made at last week's Mailers Technical Advisory Committee meeting at postal headquarters, where much of the discussion was about the rule change.

“Consistency means a lot to me and to the postal service, as we know it does to all of you and to all of our customers,” Kearney said. “It is one of our top goals for this year and going forward.”

Basically, the reinterpretation means that any household-specific offer — including home equity lines of credit, pre-approved loans, pre-approved credit cards or anything that recognizes the household's credit status or other accounts in the household — must mail at First-Class rates. This includes Skip-A-Payment notices and convenience checks.

The difference between Standard and First Class for a typical bulk mailing is 8.8 cents per piece, or $88 per thousand. For large financial mailers sending 10 million pieces monthly, it could raise monthly mail costs by $880,000.

The existing rule has been in place a long time, Kearney said, but inconsistencies began appearing in the early 1980s when the USPS encouraged customers to add more customization to Standard mailings.

Kearney said a centralized process for appeals to prevent inconsistencies has been established. This is why the USPS transferred authority for final decisions from rates and classification service centers to the manager of mailing standards at postal headquarters. The mailing standards manager will rule when a mailer appeals a classification or revenue-deficiency decision.

Mailers at MTAC had mixed reactions on the issue. Some were pleased that the USPS is centralizing the complaint process.

“It will be good to know that one centralized office is in charge of the rulings as opposed to getting different interpretations from different RCSCs,” said Peter B. Glenn, vice president and director of postal affairs at Bank of America, Charlotte, NC.

The issue was hotly debated at a closed MTAC business meeting, a source told DM News, with 40 people in attendance saying they will be affected by the reclassification. Mailers also expressed concern that the USPS has pledged to look at other mail classes, such as Media Mail and Bound Printed Matter, the source said.

Bob McLean, executive director of the Mailers Council who did not attend MTAC, said mailers who have been loyal to the postal service might think that “if this is the way they are going to treat their best customers, we are going to move to the Internet.”

But Kearney said a main reason for the change is that more appeals were coming to Sherry Freda's office — the manager of mailing standards at USPS headquarters — of rulings that were done at the RCSCs.

“What causes that is speculative,” he said. “But that and many customers contacting me and [other postal officials] about the issue raised it to our attention.”

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