[Federal Register Volume 82, Number 59 (Wednesday, March 29, 2017)]
[Rules and Regulations]
[Pages 15464-15467]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-06167]



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POSTAL SERVICE

39 CFR Part 501


Revisions to the Requirements for Authority To Manufacture and 
Distribute Postage Evidencing Systems

AGENCY: Postal Service\TM\.

ACTION: Final rule.

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SUMMARY: The Postal Service is making further revisions to the rules 
concerning PC postage payment methodology. This change adds 
supplementary information to clarify the revenue assurance 
requirements.

DATES: Effective date: August 1, 2017.

FOR FURTHER INFORMATION CONTACT: Alfred Rodriguez, Jr., Industry 
Liaison, Payment Technology, U.S. Postal Service, (202) 268-5022.

SUPPLEMENTARY INFORMATION: On July 17, 2015, the United States Postal 
Service published a final rule to revise the rules concerning 
authorization to manufacture and distribute postage evidencing systems, 
and to reflect new revenue assurance practices (80 FR 42392). Postage 
collection under the new rules will start on August 1, 2017. On 
September 6, 2016, the Postal Service published a proposal for further 
revisions to the rules concerning revenue assurance in 39 CFR 501.16 to 
support our efforts to collect the appropriate revenue on mail pieces 
in a more automated fashion (81 FR 61159). If adopted, these additional 
changes were also to be implemented on August 1, 2017.
    In response to this further proposal, the Postal Service received a 
number of comments from the mailing industry. The Postal Service 
appreciates all of the comments that were provided, and has, where 
appropriate, modified the proposed rules in response. The industry 
comments and corresponding Postal Service responses are outlined as 
follows.

Summary of Industry Comments and USPS Responses

    Industry Comment: Because PC Postage providers (as defined in 
paragraph 501.16(i)(1)) are being asked to perform revenue assurance 
functions that the Postal Service would otherwise have to perform, PC 
Postage providers should be compensated for the costs imposed by the 
new system.
    USPS Response: The Postal Service has previously stated to the 
industry that there will be no compensation for costs imposed by the 
new system. These rules are narrowly tailored to resolve current 
revenue collection challenges posed by the PC Postage program. Serving 
as a PC Postage provider is a choice and a privilege. The Postal 
Service is providing notice to the industry that compliance with these 
rules is a necessary condition of serving as an authorized PC Postage 
provider, and there will be no compensation for implementing or 
maintaining necessary infrastructure to support the revenue assurance 
program.
    Industry Comment: The Postal Service should seek to minimize the 
costs imposed by the new system, including by permitting monthly 
payments and reconciliations.
    USPS Response: The Postal Service has sought to minimize costs by 
designing the system to take advantage of existing processes whenever 
possible. For example, the requirements will be phased in through the 
use of a postage adjustment threshold amount. While the PC Postage 
providers and their customers are adjusting to the revenue assurance 
program, the Postal Service will initially adopt appropriate threshold 
amounts to support the success of the program. The Postal Service will 
thereafter reduce the threshold amount as the Postal Service deems 
appropriate based on data and trends.
    With respect to allowing certain PC Postage providers to aggregate 
and reconcile postage adjustments (as defined in paragraph 
501.16(i)(2)(i)) on a monthly basis, the Postal Service does not agree 
with this approach and maintains that all collection and refund 
transactions and reconciliations must occur within the time frames set 
forth in paragraph 501.16(i)(2)(iii) . Currently, all postage payments 
in existing systems are reconciled daily; since we are taking advantage 
of existing processes it makes sense to reconcile the adjustments daily 
or else entire new processes would need to be put in place. Moreover, 
permitting payment plans or partial payments for certain PC Postage 
providers would only complicate the adjudication and reconciliation 
processes and put burdens on both of our accounting and finance teams.
    Industry Comment: PC Postage providers should not be required to 
adjudicate disputed postage assessments.
    USPS Response: The Postal Service acknowledges that the PC Postage 
providers cannot adjudicate disputes; the PC Postage providers, 
however, need to be the first line of interaction with their customers 
and educate them on root causes of short-paid assessments and how to 
avoid them in the future. Initially, the Postal Service will have a 
customer care center dedicated exclusively to this program, as we 
understand customers will need to adjust to our new policies and 
processes with respect to assessing postage in an automated manner.
    Industry Comment: The definition of a reseller should be further 
clarified. The proposed rule confuses the definition of a PC Postage 
provider by inconsistently expanding the definition in a way that would 
capture some (but not all) postage resellers.
    USPS Response: The definition of reseller in paragraph 501.16(i)(1) 
represents the current position of the Postal Service, that only 
resellers who pay postage directly to the Postal Service (and not 
through a PC Postage provider) shall be treated as a PC Postage 
provider under the regulations. Certain resellers are authorized to pay 
postage directly to the Postal Service instead of through a PC Postage 
provider, provided that they comply with certain processes and 
requirements that are akin to the processes and requirements that are 
imposed on PC Postage providers. Accordingly, such resellers already 
are treated separately in several ways. For example, they are required 
to submit transaction log files and comply with specific payment 
processes so that the Postal Service can reconcile and account for the 
payments. Since such resellers do not pay through a PC Postage 
provider, it is necessary that the reseller (and not the PC Postage 
provider) facilitate the collection and refund of postage adjustments 
under these regulations.
    Industry Comment: The final rule should also clarify that ePostage 
and eVS labels are subject to the revenue assurance practices.
    USPS Response: Each sales platform is unique and has different 
characteristics, including different price structures and acceptance 
procedures. The current application of revenue assurance for all 
platforms is varied, and predicated on what the Postal Service has 
deemed appropriate from a cost, risk, and workflow standpoint.
    Industry Comment: Allowing reciprocal adjustments for overpayments 
is an improvement. Additionally, the final rule should clarify the 
process and timing for the Postal Service to reimburse PC Postage 
providers or customers for postage adjustments in connection with 
overpayments. Proposed paragraph 501.16(i)(2)(iii)(C) states that the 
postage adjustment must be made within 60 days; the final rule should 
clarify that the Postal Service will provide payment within that time 
frame.
    USPS Response: The Postal Service will issue refunds only in cases 
where

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the customer has closed its Postage Evidencing System account. In all 
other cases, reimbursements for overpayments will be provided in the 
form of a credit to the Postage Evidencing System account or through a 
reconciliation performed by the PC Postage provider. We agree with this 
comment, and have clarified the process and time frames within this 
final rule.
    Industry Comment: The account suspension processes needs to be 
clarified.
    USPS Response: The Postal Service maintains that the suspension 
process is clear. When a PC Postage provider cannot immediately recover 
funds from a customer's account for any reason it must immediately 
suspend the customer's ability to produce postage until the postage 
adjustment has been paid in full. The customer can dispute any postage 
adjustments prior to or after making payment. The Postal Service 
maintains the discretion to instruct PC Postage providers to allow a 
customer to continue printing postage. Separately, the Postal Service 
reserves the discretion to compel PC Postage providers to suspend 
accounts upon request in certain instances, such as when fraud is 
suspected; this is a necessary function in support of revenue 
assurance. To satisfy due process concerns, the PC Postage providers 
are required to provide notice of the revenue assurance requirements, 
including the suspension terms, to their customers and ensure that the 
customers agree to the requirements before the customers complete 
another transaction.
    Industry Comment: The process for changing the revenue assurance 
rules should be clarified.
    USPS Response: The process and rules are described in the final 
rule. Any additional rules or updates, as needed, will be published in 
the Federal Register in accordance with paragraph 501.16(i)(2)(v).
    Industry Comment: The indemnity provision is overbroad.
    USPS Response: The Postal Service believes this provision is 
reasonable and appropriate. Serving as a PC Postage provider is a 
privilege, and companies that choose to participate in the PC Postage 
program are required to comply with certain rules that protect the 
Postal Service from legal, reputational and financial risk. A PC 
Postage provider that fails to comply with the rules should be liable 
for the damages the Postal Service suffers as a result of that failure.
    Industry Comment: The proposed rule sets an unrealistic deadline 
for implementation before the solution has been fully defined and ready 
for implementation.
    USPS Response: In response to this comment, the Postal Service has 
moved the implementation date to August 1, 2017. Any software that 
needs to be built should still be completed by the original 
implementation date of March 20, 2017, to allow ample time for a 
warning period. This is reasonable since the Postal Service has been 
working with all PC Postage providers for over two years on the 
planning and implementation of this project.
    Industry Comment: PC Postage providers should not be liable to pay 
the short-paid or unpaid amounts in instances where providers are 
unable to collect.
    USPS Response: The Postal Service agrees that as a general matter 
the customer, and not the PC Postage provider, should be held 
responsible for the postage adjustment. The PC Postage provider is 
responsible for either paying the adjustment or seeking to collect the 
postage adjustment from the customer and simultaneously prohibiting 
additional postage generation by said customer while postage is 
outstanding. The PC Postage provider must notify the customer of the 
details of the postage adjustment (including the dispute process), 
retain evidence that such notice was actually received by the customer, 
and attempt to collect the postage adjustment by adjusting the funds 
available to the customer in the Postage Evidencing System, or if funds 
are not available, facilitating customer payment by invoicing the 
customer or by pursuing other methods available to collect against the 
customer or access funds of the customer. Immediately upon receiving 
notice of the underpayment from the Postal Service, the PC Postage 
provider shall prohibit the customer from printing additional postage 
labels until the postage adjustment is satisfied or the customer 
disputes the adjustment and prevails. The final rule provides that the 
customer is responsible for short paid amounts except in certain cases 
where it is reasonable to hold the PC Postage provider accountable, 
such as in cases where the PC Postage provider caused the underpayment 
by incorrectly programming postage rates.
    Industry Comment: Provisions that regulate marketing practices of 
providers fall outside the jurisdiction of the Postal Service.
    USPS Response: Serving as a PC Postage provider is a privilege and 
comes with certain responsibilities that are aimed at protecting the 
Postal Service and customers. This provision is narrowly tailored to 
ensure that the PC Postage providers, when selling and marketing Postal 
Service products, comply with applicable laws and describe Postal 
Service products accurately. The purpose of this provision is to 
protect customers and limit the Postal Service's potential liability 
under consumer protection and other laws.

List of Subjects in 39 CFR Part 501

    Administrative practice and procedure.

    Accordingly, for the reasons stated, the Postal Service amends 39 
CFR part 501 as follows:

PART 501--AUTHORIZATION TO MANUFACTURE AND DISTRIBUTE POSTAGE 
EVIDENCING SYSTEMS

0
1. The authority citation for 39 CFR part 501 continues to read as 
follows:

    Authority:  5 U.S.C. 552(a); 39 U.S.C. 101, 401, 403, 404, 410, 
2601, 2605, Inspector General Act of 1978, as amended (Pub. L. 95-
452, as amended); 5 U.S.C. App. 3.


0
2. In Sec.  501.16, revise paragraph (i) to read as follows:


Sec.  501.16  PC postage payment methodology.

* * * * *
    (i) Revenue assurance. (1) The PC Postage provider must support 
business practices to assure Postal Service revenue and accurate 
payment from customers. For purposes of this paragraph, PC Postage 
provider shall mean: providers who offer PC Postage products (as such 
terms are defined in Sec.  501.1); Click-N-Ship[supreg] service; and 
postage resellers when such resellers transmit postage revenue to the 
Postal Service in any manner other than through a PC Postage provider. 
With respect to the reseller transactions described above, the 
resellers, and not the PC Postage providers who provide the labels, are 
responsible for complying with this paragraph. For the purpose of this 
paragraph, a reseller is an entity that obtains postage through a PC 
Postage provider and is authorized to resell such postage to its 
customers pursuant to an agreement with the Postal Service. For 
example, an entity that sells postage to its customers, but uses a PC 
Postage provider to enable its customers to print postage labels, is a 
reseller hereunder. If that entity collects postage revenue from its 
customers and transmits it to the Postal Service directly (instead of 
through the PC Postage provider) that entity shall be deemed a PC 
Postage provider hereunder. For the purpose of this paragraph, a 
customer is the person or entity that deposits the mail piece into the 
mail system. PC

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Postage providers must comply with these revenue assurance requirements 
regardless of whether they have a direct relationship with the customer 
or sell postage to the customer through one or more resellers.
    (2)(i) For the purposes of this paragraph, a postage adjustment is 
defined as the difference between the postage or fee actually paid to 
the Postal Service for a specific service, and the actual postage due 
to the Postal Service under the published or negotiated rate for that 
service, as applicable, which shall be calculated as of the time the 
mail piece is entered into the mailstream.
    (ii) When the collection of a postage adjustment or the provision 
of a refund is appropriate because a customer has underpaid or overpaid 
the amount of postage that should have been paid, and such postage 
adjustment exceeds a threshold amount to be set by the Postal Service 
from time to time in its discretion, the PC Postage provider must, upon 
receiving notice from the Postal Service, pay, attempt to collect, or 
refund, as applicable, the postage adjustment in accordance with 
paragraph (i)(2)(iii) of this section. The Postal Service will supply 
the PC Postage provider with the details necessary to explain the 
correction and the amount of the postage adjustment to be used in the 
adjustment process. As part of this process, the PC Postage provider 
shall enable customers to submit disputes concerning the postage 
adjustment to the Postal Service, in a method approved by the Postal 
Service, including via phone call to the customer care center or API in 
the PC Postage provider's user interface of postage collections. In 
addition, the PC Postage provider must convey the Postal Service's 
dispute decision to the customer. If the Postal Service determines the 
customer's dispute was valid, and the customer had already paid the 
postage adjustment, the PC Postage provider must return the postage 
adjustment to the customer when notified by the Postal Service 
according to the rules set forth in paragraph (i)(2)(iii)(B) of this 
section.
    (iii)(A) In the case of an underpayment that exceeds the threshold 
amount, within 14 business days of receiving notice of the underpayment 
from the Postal Service the PC Postage provider must pay the postage 
adjustment directly to the Postal Service, or seek to collect the 
postage adjustment from the customer in accordance with this paragraph. 
If the PC Postage provider opts to pursue collection activity, it must 
notify the customer of the details of the postage adjustment (including 
the dispute process), retain evidence that such notice was actually 
received by the customer, and attempt to collect the postage adjustment 
by adjusting the funds available to the customer in the Postage 
Evidencing System, or if funds are not available, facilitating customer 
payment by invoicing the customer or by pursuing other methods 
available to collect against the customer or access funds of the 
customer. If the customer has a Postage Evidencing System account, the 
PC Postage provider must process any refunds due to the customer under 
paragraph (i)(2)(iii)(B) of this section before processing any 
collections due to the Postal Service hereunder. If the PC Postage 
provider opts to pursue collection activity, it shall continue to make 
affirmative efforts to collect the postage adjustment from the customer 
until the postage adjustment is satisfied in whole or the collection 
period (as defined in paragraph (i)(2)(iii)(C) of this section) 
expires. Immediately upon receiving or securing access to funds of the 
customer, the PC Postage provider shall remit to the Postal Service any 
and all available funds from the customer's account from the Postage 
Evidencing System or that are otherwise recovered by the PC Postage 
provider to the extent necessary to satisfy the postage adjustment. The 
postage adjustment must be paid in full; no partial payments will be 
accepted by the Postal Service, except for payments made under 
paragraph paragraph (i)(2)(iii)(C) of this section.
    (B) In the case of an overpayment that exceeds the threshold 
amount, the Postal Service shall within 14 business days of identifying 
the overpayment, provide notice of the postage adjustment to the PC 
Postage provider and instruct the PC Postage provider to give the 
customer a credit and adjust the funds available to the customer in the 
Postage Evidencing System. If the Postage Evidencing System account has 
been closed or for customers who do not have individual Postage 
Evidencing System accounts, the Postal Service shall instruct the PC 
Postage provider to issue a refund to the customer and the Postal 
Service shall either refund the postage adjustment to the PC Postage 
provider or permit the PC Postage provider to submit a reconciliation 
to the Postal Service. The PC Postage provider must immediately upon 
receiving notice of the overpayment from the Postal Service, notify the 
customer and, consistent with the Postal Service's instructions, adjust 
the funds available to the customer in the Postage Evidencing System, 
refund the postage adjustment to the customer, or provide a credit to 
the customer. If the PC Postage provider is unable to comply with the 
above requirements within 2 business days, the PC Postage provider must 
immediately notify the Postal Service.
    (C) The collection period is a time period to be set by the Postal 
Service not to exceed 60 calendar days after initial notification by 
the Postal Service, subject to any applicable notification periods and 
dispute mechanisms that may be available to customers for these 
corrections. If an underpayment has not been satisfied within this 
collection period, the PC Postage provider shall adjust any funds 
available to the customer in the Postage Evidencing System to satisfy 
the postage adjustment to the greatest extent possible, and assist the 
Postal Service in its efforts to pursue any remedies that may be 
available in law or equity, including seeking payment directly from the 
customer.
    (iv)(A) In the case of an underpayment that exceeds the threshold 
amount, immediately upon receiving notice of the underpayment from the 
Postal Service the PC Postage provider shall prohibit the customer from 
printing additional postage labels until the postage adjustment is 
satisfied in accordance with paragraph (i)(2)(iii)(A) of this section, 
or the customer disputes the adjustment and prevails. The Postal 
Service may, in its discretion, waive or delay this prohibition in 
specific instances.
    (B) Separately, without regard to any threshold, in certain cases 
(such as where a customer is suspected of having intentionally or 
repeatedly underpaid postage) the Postal Service may, in its 
discretion, instruct the PC Postage provider to shut down temporarily 
or permanently a customer's ability to print PC Postage, and the PC 
Postage provider shall promptly comply with such instruction.
    (C) In no event shall the Postal Service be liable to any PC 
Postage provider, customer or other party for any direct, indirect, 
exemplary, special, consequential, or punitive damages (including 
without limitation damages relating to loss of profit or business 
interruption) arising from or related to any customer's permanent or 
temporary inability to print postage labels in accordance with this 
paragraph (i)(2)(iv) or as a result of funds offset in accordance with 
this paragraph.
    (v) The Postal Service, in its discretion, may adopt and modify 
from time to time, and the PC Postage providers shall comply with, 
business rules setting forth processes (including

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time constraints) for payments, refunds, account suspensions, 
collections, notifications, dispute resolutions and other activities to 
be performed hereunder. Such business rules will be published in the 
Federal Register.
    (3)(i) Without regard to any threshold, if the PC Postage provider 
incorrectly programmed postage rates, delayed programming postage rate 
changes, or otherwise provided systems or software which caused 
customers to pay incorrect postage amounts, then within two calendar 
weeks of the PC Postage provider being made aware of such error, the PC 
Postage provider shall:
    (A) Correct the programming error;
    (B) Provide the Postal Service with a detailed breakdown of how the 
error affected the PC Postage provider's collection of revenue; and
    (C) Pay the Postal Service for the postage deficiency caused by the 
programming error, except in instances where the error was caused by 
the Postal Service or as a direct result of incorrect specifications 
provided by the Postal Service.
    (4) The PC Postage provider is responsible for ensuring that:
    (i) All customers pay (and the Postal Service receives) the current 
published prices that are available to customers who purchase postage 
through an approved PC Postage provider, or negotiated contracted 
prices where applicable in accordance with this paragraph; and
    (ii) All payments to the Postal Service (or the log files necessary 
for the Postal Service to collect payments directly from customers) are 
complete and accurate and are initiated or transmitted, as applicable, 
to the Postal Service each day.
    (5) Each PC Postage provider shall:
    (i) Before each customer's first transaction following the 
implementation date of August 1, 2017, provide notice to such customer 
of the terms, conditions and processes described in this paragraph--
including, without limitation, that the customer may be charged for 
deficient payments and prevented from printing additional postage 
labels while a postage adjustment remains unpaid--and obtain a 
certification from each customer that the customer has read, 
understands and agrees to such terms, conditions and processes, as they 
may be amended or supplemented from time to time;
    (ii) Ensure that each customer certifies that it:
    (A) Will comply with all laws and regulations applicable to Postal 
Service services, including, without limitation, the provisions of the 
Domestic Mail Manual and the International Mail Manual,
    (B) Does not owe any money to the Postal Service and is not a 
controlling member or officer of an entity that owes money to the 
Postal Service, and
    (C) Authorizes the PC Postage provider to disclose the customer's 
personal information to the Postal Service and such other information 
retained by the PC Postage provider that may enable the Postal Service 
to collect debts owed to it;
    (iii) Maintain a complete and accurate record for each customer, 
which includes such customer's current name and a valid U.S. address 
that is sufficient for service of process under the law, as well as a 
copy of all terms agreed to by the customer and the date of such 
agreements;
    (iv) Comply with applicable laws, rules, regulations and guidelines 
and ensure that its Postage Evidencing Systems, software, interfaces, 
communications and other properties that are used to sell or market 
Postal Service products accurately describe such products;
    (v) Cover any costs or damages that the Postal Service may incur as 
a result of such PC Postage provider or its employees, contractors, or 
representatives failing to comply with the terms of this section, or 
any applicable law, regulation, rule, or government policy; and
    (vi) In performing its obligations hereunder, comply with the 
business rules that shall be published in the Federal Register from 
time to time and provide all agreed-upon interface documentation (as 
updated from time to time).
    (6) In the event that the Postal Service fails to exercise or 
delays exercising any right, remedy, or privilege under this paragraph, 
such failure or delay shall not operate as a waiver thereof or of any 
other provision hereof, nor shall any single or partial exercise of any 
right, remedy, or privilege preclude any further exercise of the same. 
The rights and remedies available to the Postal Service under this 
paragraph are cumulative and in addition to, and do not diminish, any 
rights or remedies otherwise available to the Postal Service.

Stanley F. Mires,
Attorney, Federal Compliance.
[FR Doc. 2017-06167 Filed 3-28-17; 8:45 am]
 BILLING CODE 7710-12-P