NCOA
Big Brother is Watching-direct mailers beware, you are not safe even when postage is paid
PostCom’s general counsel has communicated the following to the association:
The United States Postal Service, which appears headed for a multi-billion dollar loss this year, has quietly launched a major new initiative to collect more postage from mail that already has been paid for and delivered.
The primary targets of the initiative are business mailers—the mailers that use large volumes of First-Class and Standard Mail for marketing, billing, account statements, and other customer communications and the mail service providers that help prepare these mailings.
The Postal Service’s strategy is to investigate recent mailings for violations of the complex and arcane mail preparation requirements for discounted postage rates. Evidence of violation can lead to demands for additional postage, or enforcement actions under the False Claims Act. The potential financial exposure for big national mailers can be seven or eight figures.
The Postal Service seems to be looking for violations of Move Update (address updating) requirements, other addressing requirements, and other mail preparation and content requirements that could lead to large revenue deficiencies. In some cases, the investigators seek evidence that the mailer entered improper mailings knowingly or intentionally, states of mind that can support a claim under the False Claims Act.
Violation of the False Claims Act can expose a mailer to double or treble damages—i.e., liability equal to two or three times the amount of the underlying revenue deficiency—as well as civil penalties of approximately $11,000 per violation. The Postal Service typically rules that each mailing statement constitutes a separate violation; hence, total civil penalties sometimes can be ten or more times the underlying revenue deficiency. Criminal liability under the False Claims Act is also possible, but unlikely except in extreme cases. The firm has provided tips on how to deal with postal inspectors.
USPS: Ve Haf Vays of Making You Use Our Barcode
Wednesday, May 6, 2009 From the Dead Tree Edition
The Postal Service’s Intelligent Mail program might fail because it is not sufficiently attractive to mailers, the Government Accounting Office warned today.
Not to worry, the Postal Service responded. If the tiny Intelligent Mail barcode (IMb) discounts scheduled for later this year are not enough to entice mailers, it said, two years from now the huge penalties for not using IMbs will force mailers to change their ways. Starting in May 2011, mail without IMbs will be ineligible for automation discounts, which typically are at least several cents per mail piece.
“Some mailers have said they find the pricing incentives insufficient to recover their investment in the program,” said the GAO report. “For example, some large mailers said they invested millions of dollars to update and purchase hardware and software, while some smaller mailers expected to invest tens of thousands of dollars.”
Other highlights of the report and the Postal Service’s response:
The Intelligent Mail program “lacks a comprehensive strategy” that includes a detailed plan or “goals and measures of success”, the GAO said. The Postal Service agreed to beef up its planning but said the approach recommended by the GAO would drag out implementation too long.
“USPS and mailers may not be ready for implementation given USPS’s short-time period in which to simultaneously design, develop, test, and implement the Intelligent Mail program,” the report said. Amen to that!
An odd statement from the Postal Service: “Despite an extremely compressed schedule, the successful implementation of the Operating System environment on May 11 and the Test Environment for Mailers on May 18 demonstrates how well this effort works.” May 11 and 18 haven’t occurred yet, and mailers are reporting that the Postal Service is not ready for those key dates. See “Another Delay for Intelligent Mail?”
USPS “lacks information on costs and savings attributable to the Intelligent Mail program,” the GAO said. USPS responded that the program will give it valuable information enabling it to become more efficient but that “there is no sound financial method to specifically attribute these reductions to Intelligent Mail.”
“According to USPS, Intelligent Mail is the most complex project it has undertaken,” the GAO report said.
Environmental Impact of Direct Mail
Below I have attached a link to an interesting study that was done on the environmental impact of direct mail. It is actually amazing how little impact direct mail has on the environment, especially when compared to other sources of pollutants, like cars.
Another fallacy this study addresses is that all forests will be lost to make paper for direct mailings. Let’s think about this seriously, manufacturing paper and paper products is a huge industry. Do you really think that paper manufacturers want to put themselves out of business by destroying the very source of their product? Let’s get real. Tremendous effort is put into renewing their raw materials and significant dollars are spent on R&D to develope new products that can be manufactured cleaner than recycled paper products.
Take a look, it is quite interesting.
Mail delivery 5 days a week is positive
One can be reasonably sure that when you drop a letter in the mail, it will arrive across the street or across the state or even across the country within a few days. In addition, whole industries rely on direct mail to generate income. Direct mail has helped fund the humanitarian efforts of The American Red Cross and The Salvation Army, just to name a few, as well as generated revenue that contributes to the research of depilating diseases and illnesses that afflict millions of people around the world.
The postal service’s operation is quite impressive when you consider that it has become an intrinsic part of our every day lives.
My personal opinion is that it makes perfect sense for the post office to deliver mail 5 days a week. With many people converting to online payments, companies will not be affected as much by the one day reduction in delivery. It is just another new schedule to get used to and in a few months people will adapt, as we having been adapting to change for thousands of years.
A Modest Proposal for the United States Postal Service
By Mark Fallon
The United States Postal Service is in trouble.
It seems whenever and wherever you turn to for news, another large organization is announcing bad news. Banks, insurance companies, and car manufacturers are reporting record losses and requesting assistance from the federal government. Is it really surprising that the United States Postal Service (“USPS”) is in trouble, too?
Faced with a weakened economy and the diversion of bills and payments to the Internet, the USPS saw mail volumes drop by 4.5% in Fiscal Year (FY) 2008. (The USPS follows the same FY as the federal government, October to September). Against revenues of $75 billion, the USPS posted expenses of $77.8 billion, a $2.8 billion loss.
The first quarter of FY2009 brought more bad news. Volumes continued to decline, and the USPS posted a $348 million loss. And the news was worse in January, with an estimated $751 million loss. Even with the modest postage rate increases this year and continued cost-cutting plans, the USPS is on track to lose over $5 billion in FY2009.
Postmaster General Jack Potter testified before a Senate subcommittee in late January and outlined the challenges facing the USPS. Mr. Potter explained the cost-cutting measures that management had implemented by streamlining operations. He then requested assistance in two areas: that Congress remove the requirement for the USPS to deliver mail 6 days per week, and that Congress adjust the schedule that the USPS must follow to prepay future retiree health benefits.
The second request – adjusting the schedule for the prepayment of future retirees’ health benefits – would have an immediate positive impact to the USPS and no impact on the American public. Last year, the USPS paid $5.6 billion to pre-fund future premiums. Without this payment, the USPS would have posted a net profit for FY2008.
Of course, that wasn’t the point that the Senators, or the news agencies, seized upon. Just the suggestion of cutting mail delivery services by one day produced a backlash that the USPS was unprepared for. For the next several days, the USPS was on the front page of major newspapers and the homepage of news websites. If Mr. Potter was trying to draw attention to his agency, he succeeded.
To add fuel to the fire, 2 weeks later, the USPS announced its annual postage rate increase, 2 cents for First-Class Mail®. At the same time, it was made public that Mr. Potter and other postal executives had received almost 40% in pay raises since 2006, and significant bonuses for their pensions. These pay increases took place while the USPS was losing money.
Another Congressional hearing is scheduled for March. The chairman of the House subcommittee is Stephen Lynch (D-MA). His mother was a postal clerk for 25 years and his two sisters work for the USPS (my father was also a postal clerk for 25 years). It should be an interesting hearing.
Despite all this bad news, I remain a staunch supporter of the USPS. Outside of the military, it’s the only government agency included in the US Constitution. For the 5th year in a row, it was named the “Most Trusted Government Agency” in a survey of 7,000 Americans. And, the USPS is the lynchpin of a nearly $1 trillion print and mail industry that employees 9 million people.
The USPS does need to change. Some of the decline in mail volume is temporary, and an improved economy will help. But much of the mail volumes, especially bills and payments are gone, forever. Lower volumes don’t mean lower expenses, as the number of delivery points – homes and businesses – continues to expand.
To be successful, the USPS needs to bring in new leadership with a renewed focus on service, employee morale, and an efficient operating model. These challenges aren’t competing priorities, but complementary issues. And bringing in an outsider may be the only way to be successful.
On-time delivery of First-Class Mail® has risen over the last several years. But that is only one measure of service. New regulatory guidelines and proposed changes to mailing requirements have put additional pressure on mailers – the people and businesses who are the primary source of revenue for the USPS. Recently, there’s been a significant increase in fines and penalties on mailers in apparent attempt by the USPS to find other ways to collect new income.
Many of the recent proposals and changes reveal that the USPS doesn’t understand “mail”. The USPS doesn’t know how companies create, manufacture and process mail. That would be okay, if the USPS would understand that it’s not in the “mailing” business. Rather, the USPS is in the logistics and delivery business.
As a logistics and delivery business, the USPS needs to expand services, not cut back on services. The USPS is the only organization that delivers to every address in the country, including Saturdays. The largest competitors, UPS and FedEx, don’t want to deliver to all addresses, especially on weekends. The USPS has already partnered with FedEx and UPS on certain delivery and return products. These partnerships need to be further exploited, especially with the continued growth of people purchasing merchandise over the Internet.
The announcement of record losses, the cutbacks in staffing through attrition, and the announcement of massive pay raises for executives have had a negative effect on employee morale. The tensions between management staff and union employees have increased. To get a small sample of the bad blood, check out some of the comments posted by both sides on sites like www.postalnews.com.
From an outsider’s point of view, the USPS is top-heavy. Automated reporting from equipment, information gathered from barcodes on letters, and better business practices have eliminated the need for so many supervisors. Mr. Potter has cut the size of the staff at the USPS headquarters, but more cuts are needed.
At the same time, the unions need to support some of the hard changes proposed by USPS management, especially in the area of consolidating processing facilities. The unions have a responsibility to their members to question changes and validate management’s assumptions. But, the unions also have a responsibility to make sure the USPS remains a viable organization.
Which leads to the current business model for the USPS. Since 2001, the USPS has consistently worked to improve efficiencies and reduce costs. While successful, the current financial situation calls for even bolder changes.
Most of those changes will require further consolidation of sorting facilities and closing small post offices. That means job cuts, which will be opposed by the unions and members of Congress. But those cuts must be made. And closing post offices is harder than you may think.
I’m not recommending closing post offices in rural areas. In many of these places, the local post office is often the center of the community, and the nearest post office may be 15 or 20 miles away. A better target is where there are many post offices in a smaller geographic area.
For example, the city of Newton, Massachusetts. There are 8 post offices in an area less than 19 square miles, and located on some of the most expensive real estate in Greater Boston. But to close those post offices would require confronting two powerful US Senators and a very powerful US Representative. A difficult proposition.
Where do you find a leader willing to take on these challenges? Where would you find someone whose organization has gone through such significant changes during tumultuous times? The same place where many postal workers began their government career – the military.
The last several years have seen the retirement of generals and admirals whose service began during, or immediately after, the Vietnam War. These people were leaders during the 1970s, a decade requiring major organizational restructuring, changing focus and overcoming morale issues. Challenges that have only increased over the past decade with the changing political environment, at home and abroad.
Most importantly, these men and women are committed to public service. The spirit of service to our country must be the preeminent requirement for the leader of the USPS. The USPS is an important part of our government and provides an invaluable service to our citizens. The USPS isn’t a business, but a government agency that should be run like a business.
Even if you don’t work in the mailing industry, the future of the USPS will impact you and your business. Get involved and write, email and call the President, your Senator and your Representative. Express your concerns about the one government agency that touches every American, six days a week.
Our United States Postal Service is in trouble.
From CNN: Postal Service draws criticism for $1.2 million home buy
By Abbie Boudreau, Scott Zamost and Jessi Joseph
Special Investigations Unit
LAKE WATEREE, South Carolina (CNN) — At a time when the U.S. Postal Service says it is experiencing a financial crisis, it purchased a $1.2 million home from an employee so he could relocate, a CNN investigation has found.
The Postal Service bought this 8,400-square-foot South Carolina home so an employee could relocate.
Postal Service spokesman Greg Frey said the home will be resold, as others have been.
“It’s not like we threw away a million dollars,” Frey told CNN. “We are hoping it’s going to go for the appraised value.”
But a real estate agent in the area said the home could be a tough sell in a depressed housing market — and the USPS said it lost an average of more than $58,000 on the 500-plus homes its relocation program bought and sold in 2008.
The 8,400-square-foot, six-bedroom home on Lake Wateree, about 30 miles north of Columbia, is likely to be the last million-dollar home purchased by the Postal Service. A $1 million cap on homes eligible for the relocation program took effect in February, Frey said.
But the program has raised eyebrows among critics and is under scrutiny by the USPS inspector-general’s office in the wake of a CNN investigation.
The South Carolina home belonged to Ronald Hopson, the former postmaster in Lexington, South Carolina, and his wife, Evelyn. The property includes five acres, four bathrooms, two half-baths and an indoor swimming pool.
Hopson is now the customer service manager for the USPS branch in Carrollton, Texas. He would not discuss the house and referred CNN to the service’s press office for additional questions. But property records show that the house was purchased by the Postal Service’s relocation contractor, Connecticut-based Cartus Relocation, in February.
Just weeks earlier, Postmaster General John Potter told a congressional subcommittee that the post office was considering cutting back mail delivery because of the economy.
“The Postal Service, like the rest of the economy, is experiencing a severe financial crisis, and I’m here today to ask for your help to protect America’s postal system,” Potter said.
He added that the post office has cut travel expenses and frozen executive salaries.
Faced with those cutbacks, Billie Bierer — who owns the lot next door to Hopson’s old home — called the purchase “crazy.”
“I mean, this should not be allowed in any company, and in this economy, things need to change,” Bierer said.
The Postal Service is a semipublic corporation, chartered by the U.S. government but not supported by taxpayer funds. Corporate relocation services are a common executive perk in the corporate world, where companies typically buy a property from an employee who is transferring to another city and resell it later.
Some U.S. government agencies do the same thing, but with limits on how much they will spend. For example, the Food and Drug Administration limits its relocation assistance to homes under $330,000.
Frey said the average cost of the 1,022 homes purchased through the USPS relocation program in 2007 and 2008 was $257,874. Fifteen of those remain on the market, he said.
Of the 1,022, 14 cost between $1 million and $2.8 million. All of those have been sold, Frey said, but typically at a loss once closing costs, attorneys fees and commissions are paid.
In 2007, after the U.S. housing boom peaked, the USPS lost an average of $50,542 on each deal, he said. In 2008, with the market in full retreat, the average loss climbed to $58,397.
And in Lake Wateree, real estate agent David Beckroge said, buyers for million-dollar properties are hard to come by right now.
“That would be very tough,” he said.
The purchase of Hopson’s home drew criticism from Pete Sepp, vice president of the National Taxpayers Union, a Washington-based government watchdog group.
“At a time when the Postal Service is considering cutting back on delivery, raising stamp prices, perhaps even going to the federal government for a taxpayer bailout, this sends the wrong signal. It is likely to make customers very angry,” Sepp said.
And Sen. Chuck Grassley, who has been a critic of the Postal Service relocation policy, has asked Postal Service Inspector-General David Williams to investigate the deal. A spokesman for Williams’ office said it was conducting a preliminary review of the case.
“We need to know that the Postal Service is for the patrons of the Postal Service, the people that are buying stamps, the people that are supporting it, that they’re getting their money’s worth,” said Grassley, R-Iowa.
Are you meeting the new Move Update Standards yet?
As we all know by now (or hopefully we all do) the USPS, as of November 23rd, extended the Move Update standards to include Standard Mail as well First Class Mail. As we discussed in the last “News You Need” (http://blog.fmidm.com/?p=23) there are a variety of options to stay in compliance with these new standards.
What happens if you are not meeting these new standards? First Class Mail customers seeking presorted rates are subject to the single piece prices if found not to be using one of the USPS-approved Move Update methods. For Standard Class customers found to be in noncompliance, the penalty is and additional .07¢ per piece. The USPS has established a transition period for Standard Mail ONLY, which extends until May 2009. At that time the penalty will take effect for any mailing submitted not meeting the Move Update requirements.
How will the USPS validate whether my mail is in compliance? The first check point happens when the postage statement is presented to the USPS. There is a section that lists the different Move Update methods and one of those methods must be checked; depending on which was performed on those addresses contained in the mailing. The next step involves checking a sampling of live addresses from the mailing and verifying that they are not UAA (Undeliverable As Addressed) mail. This process is similar to how they verify mailings currently using MERLIN® and PostalOne®. Mail is scanned and checked for presort accuracy, barcode readability and address placement. Checking for deliverability is jsut one more step. The USPS has not yet disclosed specific details of this process, but Going Postal will certianly let everyone know when they do.
If you are a mailer and have not yet started to implement the necessary steps to stay in compliance, then you must start immediately. Here are some postal links to help with the process:
ribbs.usps.gov (click “Move Updateâ€)
New Move Update Requirements
Don’t risk huge penalties or worse because your mailing list is not updated!
New Move Update Requirements are just around the corner. Starting November 23rd, the Post office will require mailers to certify that they have updated their mailing list within 95 days of mailing.
Are you ready?
You need to be! The USPS is serious about cutting down on the approximated 9.7 BILLION undeliverable mail pieces that cost the post office millions of dollars to process. High penalties await those mailers who do not meet MoveUpdate requirements. You could be charged first class rates for your standard mail. Don’t worry, FMI can help!
What are your options?
The USPS has approved the following options to meet the MoveUpdate Requirements:
1. Ancillary Service Endorsements
2. Address Change Service, used in conjunction with the Intelligent Mail Barcode
3. National Change of Address Linkage System (NCOA®)
4. FASTforward®
Watch our Videocast for more information.Â
What does FMI suggest? Be proactive instead of reactive. Marketing dollars are a precious commodity in today’s tough economic climate. We are advising our clients to perform a full 48 month NCOA® on their database if they never executed any previous form of data hygiene. After this we suggest utilizing FMI’s less expensive ExpressCOA™ option, an 18 month NCOA, for future mailings. We believe this processing is preferred because of multiple cost factors. If the processing is done on the front-end, then the mailer will know the exact amount spent on updating their list. The total cost of the other options is unknown until after the mail has been processed by the USPS. Also, if change of address processing is done first, then any undeliverable mail will be detected before precious marketing dollars are spent on postage and printing. At just $1 per thousand with a LOW $100 minimum; you can’t beat the price of ExpressCOA™! Call us today and we will help you put a maintenance plan in place for your data. Contact Lisa Formica at 215-464-0111 or email LFormica@fmidm.com. Don’t wait, this is too important to put off.
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