The Postal Rate Commission has thrown out a request by a mailer coalition to quash a proposed market test of increased rates for marketers who use repositionable notes or “yellow stickies” on the outside of direct mail.
In an order issued Aug. 30, the PRC rejected the coalition’s argument that the market test should be stopped because the proposed rate increase violates postal laws and years of established U.S. Postal Service practice. The coalition included the Association for Postal Commerce, Direct Marketing Association and Mailing & Fulfillment Service Association.
The groups argued that the USPS wanted to raise rates for repositionable notes, or RPNs, not because they cost more to process but because they increase response rates and mailers would be willing to pay more for them. However, the Postal Reorganization Act states that “value” can be a factor in the ratemaking process, the PRC noted.
“Accordingly, whether RPN mail has ‘value’ or ‘desirability’ that should be reflected in classifications and rates is something that should be examined in a proceeding where there is an opportunity to make a record, rather than be determined in summary fashion at the outset,” the PRC said in its decision.
The PRC ruling is not a final approval, but it will allow the USPS to make its case for the market test. If the test receives approval, the PRC will set parameters for the test and criteria for judging its success.
Leo Raymond, director of postal affairs at the MFSA, said he was disappointed with the ruling. If the USPS is successful in establishing a higher rate for RPNs, it may seek to increase rates for anything mailers use to increase response, he said.
“As soon as the postal service sees mailers taking advantage of a device or strategy to improve response, the postal service may want to join in the benefits of this factor and charge more, even if there are no more costs associated with it,” Raymond said.
The USPS is assuming mailers will use RPNs despite the added charges as long as they increase response, Raymond said. However, the higher rates could cause less usage of RPNs and lead to reduced revenue potential.
The DMA is still reviewing the PRC decision and will decide what action it will take through the remainder of the rate proceeding, DMA spokesman Louis Mastria said.
The USPS would charge an extra 0.5 cents per piece bearing RPNs for three categories of First-Class mail, including presorted, automation letters and automation flats. It would charge an extra 1.5 cents per piece bearing RPNs for Standard mail, including regular and nonprofit presorted, automation and enhanced carrier route mail.
In-county and regular periodicals also would see an added 1.5 cents per piece for RPNs.
RPNs are currently free, but allowed only on automation-rate letter-size mail.