• on May 18th, 2009 in Products & Services | 29 comments
    Do you know why some magazines include postcards in the middle? Or have you mailed a letter back to a company in their envelope without having to put a stamp on it? Did you ever wonder how this service works?

    The Postal Service offers a service called Business Reply Mail (BRM). By opening an account with the local Post Office, a business may supply their customers with return envelopes or labels. This allows customers to send a reply via First-Class Mail or Priority Mail. The business pays the postage and a per piece fee only for the pieces returned. To ensure the postage is collected, clerks at the delivery Post Office calculate the amount due and withdraw the money from a customer account. In some cases, carriers collect the postage when they deliver the pieces to the business. Generally, BRM pieces are identified through automation process; however, the Postal Service relies on clerks and carriers to identify and hold out any BRM pieces that have not been isolated through automation.

    Recent changes in the public’s mailing habits alongside increased use of the internet to communicate with customers have led to reductions in BRM volume. This coupled with a smaller workforce with greater responsibilities may increase the risk to the Postal Service of not collecting all revenue from BRM.

    Do you think a change in the way the Postal Service charges for these pieces would increase the mailing volume while also helping the Postal Service reduce work hours? Is a flat rate based on quarterly volume estimates a more attractive option? Share your thoughts on BRM.

    This blog topic is hosted by the OIG's Field Financial East directorate.

  • on May 11th, 2009 in Products & Services | 9 comments
    While 2008 was not a good year for mail volume in general, one source of optimism for the future is the continued growth in mail tied to spending on political campaigns. This is spending during political campaigns on direct mail to promote candidates or issues and to raise funds. Fundraising requests can also generate single-piece First-Class Mail responses. Although in the recent election there was much discussion of President Obama’s creative use of the Internet to communicate with supporters and raise funds electronically, for election campaigns below the national level direct mail is still the most effective tool for reaching localized areas. In an article in DMNews, William Berry, president of William Berry Campaigns, was quoted as saying, “Right now there’s just no effective way to really localize new media direct marketing. Remember, 98 percent of candidates are running for offices such as city council or state assembly and 85 percent of their ad budgets are still direct mail — it would be malpractice to recommend anything else.”

    The revenue potential of expanding voting by mail has received attention, but campaign direct mail may offer even greater opportunities for the Postal Service. Spending on campaigns has gone up every election year, even in years when there was not a national election. Campaign spending on election mail amounted to $648 million in 2004 and $707 million in 2006, before rising to just over $1 billion in 2008. While there have been efforts to market election mail (voting by mail), the revenue potential is not as significant as local campaign mail. For example, if the entire country were to adopt voting by mail, and even if as many as five mailpieces (registration, confirmation, voter guide, the ballot, and return of the ballot) went to or from each of 180 million registered voters, the number of mailpieces would not surpass a billion. The associated revenue would only be several hundred million dollars. Additionally, there is a risk that Congress could mandate that the Postal Service carry election ballots at a discounted rate or for free. The Postal Service has made a special effort to target official election mail, but a focus on campaign direct mail could have a higher revenue potential.

    How should the Postal Service reach out to campaign mailers and political advertisers to generate more revenue?

    This topic is hosted by the OIG's Sales & Service directorate.

  • on May 4th, 2009 in Ideas Worth Exploring | 26 comments
    Imagine an economic collapse in which millions of people lose half of their life savings and their trust in the country’s largest financial institutions is severely shaken. To help restore trust in the financial sector, the government creates a savings system operated by its postal administration. Sound unrealistic? Maybe so, until you remember that the U.S. Post Office Department offered a government-backed savings system to Americans for more than half the twentieth century.

    Searching for ways to raise revenue for a postal telegraph network and inspired by Great Britain’s postal savings system, Postmaster General John A.J. Creswell first recommended a postal savings bank for the United States in 1871. But it wasn’t until the Panic of 1907, which shook the public’s trust in private banks, that the concept really gathered widespread support. Finally, in 1910, the Congress passed the Postal Savings Act that authorized the Post Office Department “to establish postal savings depositories for depositing savings at interest with the security of the Government for repayment thereof, and for other purposes.”

    The creation of the postal savings system was intended to get money out of hiding and to provide safe depositories for people who had lost confidence in banks. It was also intended to provide a convenient means of saving for individuals throughout rural America.

    Initially, depositors in the system were limited to a balance of $500, but this was raised to $1,000 in 1916 and to $2,500 in 1918. The system paid depositors 2 percent annual interest. During the first two decades, the system had a natural advantage over private financial institutions, because the deposits were always backed by “the full faith and credit of the United States Government.” Even so, deposits were slow at first, but by 1929, $153 million was on deposit. Because of the bank failures during the Great Depression, the amount jumped to $1.2 billion in 1934, which was one-third the amount of the entire savings and loan industry. The system continued to flourish through World War II, but by 1948, proven banking reforms and higher interest rates caused a downward trend for the postal savings system. Congress abolished it in 1966 and the Post Office Department stopped accepting deposits on April 27th of that year.

    In a column for the New York Times this past October, Michael Lind proposed that a new postal savings system be created. Lind argued that “the current structure of public and private finance chronically fails to address four problems: the almost 10 percent of Americans without a bank account; the concerns of all Americans about the security of their savings, the growing indebtedness of the country to foreign governments and financial institutions, and underinvestment in public assets like sewer systems and bridges.” In his view, a postal savings bank would address these issues.

    Opponents of this idea argue there are plenty of private institutions that offer banking services, even in rural areas of the country, and that the Postal Service should concentrate their efforts on collecting, processing, and delivering the nation’s mail. They also argue that since the banking reforms created during the Great Depression (the FDIC is a prime example), there is no reason why the American people should ever feel their savings are not secure. After all, if the U.S. Government could not guarantee people’s savings through the FDIC, why would their money be any more secure in a postal savings system? The United States and Great Britain are not the only nations that have experience in combining postal services and banking. In more than 40 countries, posts provide some type of banking services (for example, China, Italy, Japan, Israel, Austria, Brazil, and India). In fact, during the current downturn, revenue from financial services has helped sustain some posts. The U.S. Postal Service, however, could not start offing savings services unilaterally. A change in current law would be required.

    What do you think about a new postal savings system? Do you believe such a system is needed? If so, what are the major benefits you foresee? If not, why not?

    This blog topic is hosted by the OIG's Risk Analysis Research Center (RARC).

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