"USPS's position appears to be that even if a mailer complies with 99 percent of the requirements and incurs substantial workshare expenses to bring its mail pieces into compliance, a single form of noncompliance - even accidental, even inconsequential - is sufficient to render a revenue-deficiency assessment for 100 percent of a mailer's discounted rates," wrote U.S. District Court Judge James Boasberg, according to Courthouse News, which has details of the ruling.
Violating postal regulations, even in subtle and unintentional ways, can cost business mailers millions of dollars, two recent lawsuits reveal.
The U.S. Postal Service assessed Southern California Edison $7.6 million in penalties for not keeping its address lists up to date and Sears $1.1 million for allegedly violating the rules governing how folded self-mailers should be sealed, according to the lawsuits.
The two companies filed appeals of the USPS decisions on June 18 with the U.S. District Court in Washington. Both are represented by Venable LLP, a major Washington, DC law firm.
SCE was dinged because of a “suspiciously high increase” in the amount of undeliverable and return-to-sender First Class Mail it sent between 2006 and 2008. The big utility acknowledges two minor errors in its address-correction procedures – regarding missing suite or apartment numbers and the handling of fractional-number street addresses (such as 29 ½ Elm Street) – but contends those did not cause an appreciable increase in bad addresses.
“A more plausible explanation is the upsurge of unemployment, bankruptcies, foreclosures and mortgage defaults that occurred in SCE's service area during that period,” the appeal states. USPS also objected to SCE manually overriding the Postal Service’s address-correction database – even though those overrides were based on customer communications indicating that the USPS data were out of date, the company contends.
“The Postal Service ordered SCE to refund to the Postal Service the entire $7.6 million in discounts that SCE earned for its mail preparation work on the 82 million pieces of presorted First-Class Mail that SCE mailed between May 14, 2007 and November 26, 2008.”
Loss of all discounts
Sears, like SCE, notes that its postal penalties exceed by many times the Postal Service’s estimated costs resulting from the alleged violations. (Generally speaking, the penalty for violating mailing standards is indeed the loss of discounts on the entire mailing and not based on USPS’s actual costs or on the portion of the mailing that was problematic.)
Sears ran into trouble with the USPS over the placement and type of seals on 6.3 million folded Standard Class self-mailers it sent for two 2009 promotions. Such mailers are sometimes called “fletters” because they have the dimensions of flat (e.g. catalog) mail but are folded and sealed so they can go through USPS’s letter-sorting equipment and mail at the lower letter rates.
Sears contends the mailings met postal regulations or were specifically approved by postal officials because they were designed not to jam letter-sorting machinery. But USPS ended up determining that the pieces needed an additional adhesive tab and that some were improperly sealed with glue instead of tabs.
“The Postal Service, after extensive empirical testing and analysis of alternative seal designs, soon afterwards adopted rule changes that explicitly authorized the same design features soon after the mailings occurred,” the Sears lawsuit contends.
Discussions and arguments over fletter mail were frequent a few years ago, partly because mailers and postal employees struggled to understand the regulations. That was complicated by frequent tweaks to the rules when USPS discovered that some mail pieces that met the standards were still gumming up the works.
- Intelisent's insightful commentary on this article includes this gem: "I am sure this gives companies like SCE and Sears a lot to think about – as far as how they can fast track diverting their communications out of the mail stream – permanently."
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