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A Bodman Client Alert: United States Postal Service Intensifies Efforts to Enforce Move Update Compliance
5/20/2009High volume business mailers beware: the United States Postal Service (USPS) is intensifying its efforts to enforce the “Move Update” (address update) standards that govern the availability of postage discounts to business mailers. Noncompliance and potential associated deficiencies can result in substantial costs to businesses. Businesses at risk include significant users of discounted presorted first-class or standard (“bulk”) mail used for account statements and other customer communications.
USPS investigators are focusing on violations of the complex requirements that all large mailers must follow in order to qualify for discounted postage. Under those requirements, revised in November 2008, in order to qualify for discounted postage, mailers must verified the accuracy of all addresses used in bulk mailings within 95 days prior to the mailing using one of several approved methods. (More information on the approved methods of verification is available on the USPS Web site at http://www.usps.com/mailpro/2008/mayjune/page5.htm).
USPS is now actively investigating potential non-compliance and more aggressively seeking recovery of deficiencies. USPS will levy an assessment to recover lost revenue equivalent to the difference between the discounted postal rate used for the mailings and the full postal rate. For many businesses with large mailings, this can mean a deficiency totaling millions of dollars. In addition, if investigators determine the violation of Move Update to have been willful, they may refer the matter to the Department of Justice for possible prosecution under the False Claims Act, exposing a business to potential damages equal to three times the amount of the revenue deficiency plus additional monetary penalty for each violation. USPS recently announced that it has obtained settlements with two bulk mailers in the amounts of $6.2 million and $13 million.
According to the USPS, the new Move Update standards are designed to reduce the level of undeliverable mail, which the USPS states costs it billions of dollars each year. Some critics of the effort claim that the USPS, which lost nearly $400 million in the first quarter of 2009, is taking advantage of the new regulations to turn business mailers into a new revenue source.
High volume business mailers that currently use discounted, pre-sorted First Class or Standard Mail should take steps now to assure that they are in compliance with Move Update and to develop an action plan for responding to a potential USPS enforcement action. Bodman lawyers have experience responding to such actions and can assist in audits of internal compliance procedures. For more information, contact Alan Harris of our Ann Arbor office at 734-930-0236 or aharris@bodmanllp.com.