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BIG COST OF UNDELIVERABLE MAIL IS UNINTENDED CONSEQUENCE OF PRIVACY REGULATION: USPS Should Pursue Use of Credit Header and DMV Data to Improve Address Accuracy
NEW YORK, September 5, 2002 – The Direct Marketing Association (The DMA) last week filed comments with the United States Postal Service (USPS) urging it to request changes in laws and regulations to allow mailers to use credit header and drivers license data as address correction tools. Such a step would reduce the USPS's huge cost of processing and re-handling undeliverable-as-addressed (UAA) mail. UAA mail is a persistent problem for both the mailing industry and the Postal Service.
In 2000, prior to the enactment of federal privacy regulations, UAA volume totaled 5.7 billion pieces and USPS costs associated with UAA mail were $1.8 billion, which would amount to almost two cents on the First Class stamp if the costs were passed along to consumers. Such costs also add upward pressure to already high postage prices and causing many mailers to consider alternative options to reduce costs.
In the past, mailers had relied on drivers license and credit header information to supplement National Change of Address (NCOA) data to reduce UAA mail. Today, mailers are left to rely solely on the USPS's NCOA file to reduce UAA mail in their mailings leaving up to 20% of changed addresses uncorrected.
Unfortunately, both drivers license and credit header data are no longer available to mailers as address correction tools. The use of drivers license data was halted in the Transportation Appropriations Bill of 2000, effective, June of 2000. The use of credit header information was halted in 2001 through regulations promulgated by the Federal Trade Commission in implementing the Gramm-Leach-Bliley Act. The enactment of these two laws exacerbated the existing problem of undeliverable mail. The DMA strongly believes that the recent increase in UAA in standard mail, in part, can be attributed to the loss of these sources of information to marketers.
"It is an unfortunate unintended consequence of over-broad privacy legislation that has contributed to the financial crisis at the Postal Service," said H. Robert Wientzen, president & CEO, The DMA. "The Postal Service needs to join industry in restoring the use of credit header and drivers license data as a way to verify and correct addresses, thereby stemming the growth of undeliverable mail."
"We applaud the Postal Service's attempts to reduce costs by addressing the problem of undeliverable mail, but the remedies it has recommended attempt to cure only one-half of the disease," said Jerry Cerasale, senior vice president, government affairs, The DMA. "The Postal Service's proposal to increase the frequency of use of the NCOA file is a first step toward cutting some of its costs, but it does not go nearly far enough toward making lists more accurate – the real problem causing the volume of undeliverable mail to skyrocket."
"Legislators looking at privacy policies, at the federal and state level, need to be more cognizant of the law of unintended consequences," said Cerasale.
The solution must come from a joint industry and USPS effort to sanction the use of credit header and drivers license data by NCOA licensees as additional checks on addresses. This practice would dramatically reduce the volume of mail going to stale addresses and reduce the costs that the USPS and industry faces for handling this undeliverable mail.
The DMA is the leading trade association for businesses interested in interactive and database marketing, with nearly 4,700 member companies from the United States and 53 other nations. Founded in 1917, its members include direct marketers from every business segment as well as the nonprofit and electronic marketing sectors. Included are catalogers, Internet retailers and service providers, financial services providers, book and magazine publishers, book and music clubs, retail stores, industrial manufacturers and a host of other vertical segments, including the service industries that support them. According to a DMA-commissioned study, direct and interactive marketing sales in the United States exceeded $1.86 trillion in 2001, including $118 billion in catalog sales and $30 billion in sales generated by the Internet. The DMA's Web site iswww.the-dma.org, and its consumer Web site is www.shopthenet.org.