[Federal Register Volume 60, Number 20 (Tuesday, January 31, 1995)]
[Proposed Rules]
[Pages 5964-5995]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2130]
[[Page 5963]]
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Part II
Postal Service
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39 CFR Parts 111 and 501
Manufacture, Distribution, and Use of Postage Meters; Proposed Rule
Federal Register / Vol. 60, No. 20 / Tuesday, January 31, 1995 /
Proposed Rules
[[Page 5964]]
POSTAL SERVICE
39 CFR Parts 111 and 501
Manufacture, Distribution, and Use of Postage Meters
AGENCY: Postal Service.
ACTION: Proposed rule.
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SUMMARY: This proposal would revise existing Domestic Mail Manual (DMM)
and Domestic Mail Manual Transition Book (DMMT) standards regarding the
manufacture, distribution, and use of postage meters and would
introduce new regulations in title 39, Code of Federal Regulations
(CFR), to clarify postal standards concerning the manufacture and
distribution of postage meters.
Currently all meter standards pertaining to the manufacturer and
distribution of meters and postal internal instructions regarding
meters are contained in the DMMT, an interim handbook for postal
standards. Postal standards regarding meter manufacturers are being
revised and published in 39 CFR part 501. The proposed rules would
allow the Postal Service to tighten controls over the manufacture,
distribution, and use of meters with the goal of better protecting
postal revenues. These changes are designed to increase the amount of
information available to the Postal Service to facilitate effective
management and control of the meter program. In addition, security
controls are being supplemented to ensure that proper postage is being
paid and that the risk of postage meter misuse is minimized.
DATES: Comments must be received on or before March 17, 1995.
ADDRESSES: Written comments should be mailed or delivered to the
Manager, Mailing Systems Development, Room 8406, 475 L'Enfant Plaza
SW., Washington, DC 20260-6807. Copies of all written comments will be
available for inspection and photocopying between 9 a.m. and 4 p.m.,
Monday through Friday, in Room 8430, at the above address.
FOR FURTHER INFORMATION CONTACT: Nicholas S. Stankosky, (202) 268-5311.
SUPPLEMENTARY INFORMATION: Postage meters represent a widely accepted
means for payment of postage. There are approximately 1.4 million
postage meters in use, which accounted for approximately $18 billion of
Postal Service revenues in FY 1994. The widespread use of meters can be
attributed to the flexibility and convenience they convey to postal
customers, including:
Printing variable amounts of postage on virtually any
class of mail to allow use of exact postage.
Facilitating automated mail preparation operations for
customers.
Providing flexibility to comply with postage rate changes
by affixing correct postage with a simple resetting procedure.
Allowing licensees to purchase larger amounts of postage
at a single resetting to reduce trips to the local post office.
Providing a secure means for licensees to keep more
accurate accounting records of postage utilized.
Reducing the cost of applying postage for licensees.
Providing remote ``telephonic'' resetting for licensee
convenience.
Postage meters are available to Postal Service licensees only by
lease from authorized manufacturers. The Postal Service holds
manufacturers responsible for the control, operation, maintenance, and
replacement (when necessary) of their meters. Traditionally, record-
keeping of meters and meter licenses has been handled in a
decentralized manner, primarily by local postmasters.
In 1991, the Postal Service identified opportunities for improving
the efficiency and effectiveness of the Postal Service postage meter
program. Three specific recommendations for improving the management of
the meter program were identified:
1. Establishment of a central management group and development of
meter control systems to manage the meter program.
2. Development of increased security mechanisms.
3. Introduction of new technology to improve the tracking and
control of meters and the financial transactions associated with their
use.
Further study by the Postal Service supported these initial
recommendations, and independent investigations by the Postal
Inspection Service also uncovered instances of postage meter fraud and
identified a substantial risk of loss of postal revenues. In the past 2
years, the United States Postal Service (USPS) Inspection Service has
uncovered 16 cases in which mailers have used varying techniques to
duplicate or force the application of postage meter impressions without
payment of postage. Although the nature of meter fraud is such that its
extent is unknowable, in these cases alone, it is estimated that the
Postal Service sustained losses in excess of $16 million. This estimate
is expected to grow following resolution of current cases. The USPS
Inspection Service has been aggressively pursuing these cases through
arrests, indictments, and administrative and civil remedies. The
problem was so critical that it drew the attention of Congress and
resulted in a General Accounting Office investigation and report that
supported earlier Postal Service findings. The results of these
investigations have mandated the Postal Service to enhance the
financial controls associated with the meter program.
After three joint meetings with authorized meter manufacturers to
discuss proposed regulatory changes, the Postal Service has considered
all and adopted many of the oral and written comments that were
provided in connection with these sessions. In conjunction with an
independent research firm, the Postal Service convened six groups of
meter licensees representing small-, medium-, and large-volume meter
licensees to solicit their comments. Revisions have been incorporated
in the proposed regulations to reflect many of the meter licensees'
suggestions. The Postal Service also gave notice of its intention to
publish this notice of proposed rulemaking and invited interested
parties to attend a public meeting held on December 13, 1994. 59 FR
61302 (November 30, 1994). The Postal Service presented a summary of
proposed regulations at the public meeting and solicited comments and
suggestions from attendees. The Postal Service responded to inquiries
made during the meeting and advised participants to provide additional
comments in writing. The Postal Service reviewed all inputs from
attendees and included suggestions in the final proposed regulations as
warranted. Transcripts of the public meeting and subsequent written
comments are available for review and photocopying at USPS
Headquarters, 475 L'Enfant Plaza, Room 8430, Washington DC 20260-6807.
The Postal Service has drafted proposed regulations and program
changes to tighten security and fiscal control of postage meters. The
following proposed regulations are designed to:
Reduce fraud associated with the misuse of postage meters.
Permit licensees to gain a better understanding of meter
use and Postal Service licensee requirements.
Develop an efficient system to capture and track meter
population data on a national basis to facilitate centralized
management decisions and to provide a means for dissemination of
information for decentralized program administration.
Provide a transition from a paper-based management system
to efficient [[Page 5965]] automated processes for management of the
meter program.
Provide the necessary mechanisms to recover lost and
stolen meters and therefore reduce the potential for meter misuse and
fraud.
The proposed regulations fall into four general categories: Meter
security, administrative controls, other issues, and Computerized Meter
Resetting System (CMRS). Each is discussed in turn.
I. Meter Security
A. Integrity Weakness and Design Deficiencies
The Postal Service has followed a practice of absorbing postage
revenue losses even if such losses occur after a meter manufacturer
knows or should have known of any defect that compromises meter
security and/or revenue protection and fails to notify the Postal
Service accordingly. Proper reporting of these instances would minimize
revenue losses both by establishing a dialogue leading to the early
identification of potential security weaknesses and by facilitating
development and implementation of corrective technical or
administrative actions.
Prompt notification of all potential security weaknesses identified
in a particular meter or class of meters is necessary to protect postal
revenues. The Postal Service depends on manufacturers to identify and
notify the Postal Service of any potential security weaknesses. Postal
Service notification of security concerns serves the following
objectives:
Problem Quantification--to determine whether similar
problems exist in other meters made by that manufacturer.
Commonality--to determine whether similar problems are
inherent to meters distributed by other manufacturers because there are
similarities in security features.
Meter Authorization--to facilitate development of a
database of known security issues to ensure systemic review of new
meters presented for evaluation to avoid similar weaknesses.
Historically, the Postal Service has relied on voluntary reporting
by the meter manufacturers to identify integrity weaknesses and design
deficiencies in their meters. Experience has shown that voluntary
reporting of this information has not been satisfactory. Recent
information received from outside sources has identified security
weaknesses and instances of abuse that, if known, would have alerted
the Postal Service to security weaknesses of meters used earlier in the
United States. This knowledge, regardless of whether the meter is
approved for use in the United States, would allow the Postal Service
to preserve the security and use of the postage meter payment process
and thereby protect Postal Service revenues. This measure would also
protect meter licensees. If the Postal Service is kept apprised of
security weaknesses in meters, it will be less likely to approve meters
that might be withdrawn later. Meter licensees will thus be less likely
to purchase mailing systems that are compatible with a single meter
that is withdrawn at a later date as a result of emergent security
issues.
The Postal Service proposes that 39 CFR 501.13, Reporting, specify
manufacturers' responsibilities in notifying the Postal Service of
security weaknesses of meters distributed in the United States and/or
foreign markets. Manufacturers must submit a preliminary report to the
manager of Mailing Systems Development (MSD), USPS Headquarters, within
21 calendar days of the date an authorized dealer, agent or employee of
such, or any employee of the manufacturer identifies a potential meter
security weakness. Potential security weaknesses that must be reported
include known or suspected equipment defects, suspected abuse by a
meter licensee or manufacturer employee, suspected security breaches of
Computerized Meter Resetting System (CMRS) information systems,
occurrences outside normal performance, or any repeatable deviation
from normal meter performance (within the same model family and/or by
the same licensee). Preliminary reports regarding meter security
weaknesses may be communicated by telephone; however, the
manufacturer's corporate headquarters must submit a formal written
report of each potential security weakness to USPS Headquarters within
45 days of the preliminary notification. Formal written notification
must include the circumstances, proposed investigative procedure, and
the expected completion date of the investigation. Periodic status
reports are to be submitted during the subsequent investigation, and a
summary of the findings is to be prepared and submitted on completion.
The Postal Service proposes to impose administrative sanctions
against manufacturers that do not comply with these reporting
requirements. Manufacturers are responsible for providing a timely and
efficient channel for internal reporting, and they are required to
provide the Postal Service with a copy of their internal policy and
instructions associated with these reporting procedures. Sanctions for
noncompliance with these reporting time frames include liability for
the costs of investigation and documented revenue losses that can be
traced to any meter for which the manufacturer failed to file a report
in accordance with prescribed procedures, net of any amount collected
from the meter users. Losses will be measured from the date that an
authorized dealer, agent or employee of such, or any employee of the
manufacturer knew or should have known of a potential meter security
weakness.
39 CFR Part 501 References:
Sec. 501.13, Reporting.
Sec. 501.14, Administrative sanction on reporting.
B. Meter Manufacturers' Inspections
The Postal Service recognizes the importance of periodic
inspections by manufacturer representatives. Such inspections provide
the following advantages:
Prevention--Because the meter licensee understands that
meters are subject to periodic unannounced on-site inspections by the
meter manufacturer (which include recording of interim register
readings and seal numbers, and visual inspection for signs of
tampering), meter users are deterred from misusing meters to avoid the
payment of postage.
Detection--Inspections provide a mechanism for uncovering
attempts to misuse meters. Inspections by meter-knowledgeable personnel
can uncover situations in which mailers are defrauding or misusing
meters to avoid payment of postage.
Uncovering Missing Meters--Periodic manufacturer on-site
meter inspections serve to minimize the number of meters that are
reported missing as a result of licensees relocating without notifying
the Postal Service or manufacturers. Periodic on-site visits ensure
that the location and identity of meters and meter users are updated
periodically, and any meters that cannot be located will be reported
promptly as lost or stolen.
Additional Meter Accountability--Visual inspections of
meters by manufacturer personnel provide the Postal Service with
verification of register readings (control totals), locking mechanisms,
and seal identification numbers, and these inspections also provide
assurance that the meter is being maintained in an appropriate manner
by the licensee. Because postage meters remain the property of the
meter [[Page 5966]] manufacturers, they benefit by inspecting their
``inventory'' to ensure its continued viability.
Identification of Malfunctioning Meters--Periodic
manufacturer inspections facilitate identification of malfunctioning
meters (e.g., not indicating or recording correct register readings,
worn or deteriorated plate imprints) and ensure that the tracking,
control, and operational mechanisms are functioning properly between
meter settings.
Complete Meter Inspection--On-site meter inspections are
the only means to inspect postage meters in a fully operational or
``live'' environment. When meters are examined by Postal Service
employees, they are unable to operate the meters (e.g., printing .00
indicia) because certain meters are not operational when unattached to
a meter base. Manufacturer inspections provide a mechanism for ensuring
that meters are functioning and printing indicia correctly.
Enhancement of Postal Service Examination Procedures and
Controls--Periodic manufacturer inspections supplement ordinary setting
and periodic Postal Service examinations in the joint manufacturer-
Postal Service effort to ensure that postage meters are accounted for
and functioning properly.
Increase in Manufacturers' Visibility--Periodic meter
inspections ensure that meter manufacturers maintain communication
channels with meter licensees and provide an opportunity to determine
licensees' meter requirements and disseminate meter changes to meter
users.
Assurance for Lessor of Compliance With Postal
Regulations--Periodic inspection of licensee equipment assures meter
users that their meters are properly maintained and that they are in
compliance with postal regulations. This serves to protect the
licensees from situations in which mail might be refused as a result of
deteriorated equipment.
Postal regulations require that manufacturers have all meters in
service inspected twice annually at approximately 6-month intervals.
Some manufacturers have not been able to comply with this requirement.
Over the past several years, meter manufacturers have asked the Postal
Service to consider alternatives to the semiannual inspection
requirements.
By definition, each postage meter must have an ascending counting
device (which registers the total amount of postage imprinted) and a
descending counting device (which registers the balance of unused
postage). Electronic meters have either nonvolatile registers or solid-
state memories to store the postage data. System meters contain the
printing die and registers for a mailing machine, but they are
detachable for setting and examination. Stand-alone meters are used
independently of any other mailing equipment. Experience and security
evaluations have shown that different models of meters and different
types of users of meters are subject to varying levels of risk;
therefore, all meters do not need to be inspected at the same
frequency.
As a consequence of the Postal Service's assessment of varying
levels of risk of fraud, the Postal Service proposes to revise
inspection schedules in 39 CFR 501.25, Inspection of Meters in Use. The
new schedules will be based on meter and licensee characteristics. The
inspection schedule better relates to the demonstrated security risks
associated with mechanical and electronic meters, system meters, and
the use of Computerized Meter Resetting System (CMRS). The Postal
Service will develop a central tracking system to monitor the
inspection of meters by manufacturers.
The Postal Service proposes to require less frequent inspections of
electronic meters and stand-alone meters, but more frequent inspections
of mechanical and system meters. Electronic, stand-alone, and CMRS
meters provide the Postal Service with a higher degree of security.
These meters generally possess additional security features (such as
redundant register memories). Stand-alone meters also have low volume
capacity. Therefore, inspection frequencies for these meters will be
decreased under the new inspection standards.
With respect to the meter licensee, inspection frequencies would
generally vary with the licensee's mailing volume level. Proposed
standard inspection intervals are shown in the table below; however,
the Postal Service may require more frequent inspections in special
circumstances. The revised inspection frequencies will concentrate on
the higher risk meters and users but will, in total, result in fewer
required inspections than were mandated by prior meter standards
published in the DMMT.
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Meter type Monthly Quarterly Semiannually Annually
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Mechanical........... Special Circumstances High-Volume Licensees Other Licensees Using Stand-Alone Meters.
Using System Meters. System Meters.
Electronic........... Special Circumstances ..................... High-Volume Licensees All CMRS and Other
Using Non-CMRS Electronic Meters.
System Meters.
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The Postal Service also proposes to impose sanctions in 39 CFR
501.23, Administrative sanction, against manufacturers who do not
perform 100 percent of the required inspections. The proposed sanctions
would permit the Postal Service to recover costs and revenue losses
(net of any amount collected from the meter users) that result from the
manufacturer's failure to conduct all required inspections. Imposition
of sanctions for noncompliance with Postal Service meter inspection
schedules does not affect the requirement that the manufacturer conduct
meter inspections that have not been completed. Additionally, the
Postal Service may suspend further distribution of meters by a
manufacturer that fails to comply with relevant inspection
requirements.
39 CFR Part 501 References
Sec. 501.5, Suspension and revocation of authorization.
Sec. 501.23, Administrative sanction.
Domestic Mail Manual Transition Book (DMMT) 144.962, redrafted as
Sec. 501.25, Inspection of meters in use.
C. Custody of Suspect Meters
Currently DMM P030.2.4, Licensee Responsibilities, provides that
meters in the licensee's custody and the records of meter transactions
or the latest Postal Service (PS) Form 3603, Receipt for Postage Meter
Setting, must be available for examination or audit on request by the
Postal Service or meter manufacturer. This section authorizes the
Postal Service to examine meters and meter records on-site, at the
licensee's place of business. However, there is no provision to allow
postal inspectors to withdraw from service meters suspected of being
manipulated for forensic examination. Inspectors must either obtain a
federal search warrant or request the meter [[Page 5967]] manufacturer
to withdraw the meter from service. In most instances, there is only
reasonable suspicion that a meter has been tampered with or has failed
to lock out, thus falling short of the probable cause necessary to
obtain a warrant. Requesting the meter manufacturer to take custody of
suspect meters might create problems in any resulting litigation.
The Postal Service proposes to amend DMM P030.2.4 and add section
P030.2.5, Custody of Suspect Meters, to authorize postal inspectors to
conduct unannounced on-site examinations of meters suspected of being
manipulated or failing to lock out. Postal inspectors will also be
authorized to withdraw a suspect meter from service without a warrant
for physical and/or laboratory examination, thus enhancing an
inspector's ability to uncover postage meter fraud and protect postal
revenues.
39 CFR Part 111 References:
Domestic Mail Manual (DMM) P030.1.3, Possession
DMM P030.2.2, Licensee Agreement
DMM P030.2.4, Licensee Responsibilities
DMM P030.2.5, Custody of Suspect Meters
D. Missing Meters
Current standards mandate that manufacturers must provide the
designated Information Systems Service Center (ISSC) with a compatible
computer tape of lost and stolen meters quarterly. Lost and Stolen
Meter Activity Reports are used by post offices and the Inspection
Service in locating/recovering missing meters. Meters that are actually
lost or stolen could be tampered with without detection because they
are not inspected by the Postal Service or the manufacturer. The Postal
Service is concerned that manufacturers do not always apply reasonable
efforts to ensure the accuracy of lost and stolen meter reports. The
Postal Service has found that, in some circumstances, the exercise of
reasonable effort would have permitted the manufacturer to locate a
significant portion of meters that were incorrectly reported as lost or
stolen. Additionally, the Postal Service has found that, in a number of
cases where meters were reported as lost or stolen and later located,
the manufacturer failed to notify the Postal Service. As a result, the
Postal Inspection Service has unnecessarily expended resources
investigating the disappearance of some meters reported to be lost or
stolen but in fact recovered by the manufacturer. Current recovery
procedures and reporting formats differ significantly among
manufacturers. As a result, the reliability and accuracy of lost and
stolen meter reports can vary with the level of each meter
manufacturer's effort and standard operating procedure.
Currently, meter manufacturers must notify designated postal
inspectors of missing and recovered meters through established
irregularity reporting procedures. Meter manufacturers are also
responsible for updating a national computerized quarterly lost and
stolen meter report that is distributed by the Minneapolis ISSC. The
Postal Service proposes implementation of a new standardized meter
incident reporting process that will provide the consistent and uniform
data and procedures necessary to improve the overall effectiveness of
the recovery process.
Standardized meter incident reports (shown in Exhibit A) will
supplement this notification process and will facilitate compilation of
monthly input for the manufacturers' national lost and stolen meter
reporting. Manufacturers will be required to complete lost and stolen
meter incident reports that will detail circumstances relating to the
loss, theft, or recovery of postage meters. The report must be filed
within 30 days after a meter is determined to be lost, stolen, or
subsequently recovered. The manufacturer will be required to follow
detailed instructions in attempting to locate a meter before that meter
may be reported as lost or stolen. The manufacturer's representative
must certify compliance. Distribution of the incident report will be
made to the licensing post office and the Inspection Service.
The Postal Service also proposes to impose an administrative
sanction against any manufacturer that without just cause fails to
comply with these standardized reporting procedures or that without
just cause fails to report a meter that is known to be lost or stolen.
This administrative sanction is also proposed against any manufacturer
that without just cause fails to report the recovery of a lost or
stolen meter. These administrative sanctions are designed to permit the
Postal Service to recover investigative and administrative costs for
lost and stolen meters and any documented revenue losses (net of any
amount collected from the meter users) that occur as a result of a
manufacturer's failure to follow standardized lost and stolen meter
incident reporting procedures. Proposed reporting procedures include
the monthly update of the national computerized lost and stolen meter
report.
39 CFR Part 111 References
DMM P030.2.8, Missing Meters
39 CFR Part 501 References
Sec. 501.22, Distribution controls.
DMMT 144.952(f), redrafted as Sec. 501.22(i), Distribution controls.
Sec. 501.22(j), Distribution controls.
Sec. 501.23, Administrative sanction.
DMMT 144.963, redrafted as Sec. 501.26, Meters not located.
E. Shipment of Meters
The loss or theft of postage meters represents a substantial risk
to postal revenues regardless of whether it is a live meter (with
postage set) or a meter that has not yet been checked into service.
Registered mail is one of the safest means of shipping postage meters,
and the Postal Service requires that all meters be shipped by
registered mail. Shipment of meters by private carrier does not
necessarily provide adequate security and control mechanisms and can
result in the loss or mishandling of postage meters. This, in turn, may
lead to meter misuse and significant revenue loss to the Postal
Service.
The Postal Service proposes to mandate that all meters be shipped
via registered mail. The Postal Service will, however, consider
requests by the manufacturers to ship meters via private carrier on a
case-by-case basis. Manufacturers that fail to comply with standards
for meter shipment will be subject to an administrative sanction.
Licensees that fail to comply with these standards will be subject to
license revocation.
39 CFR Part 111 References
DMM P030.2.9, Returning Meters
39 CFR Part 501 References
Sec. 501.22(q), Distribution controls.
Sec. 501.23, Administrative sanction.
F. Security Seals
Whenever a postage meter is checked into service or additional
postage is set into a non-CMRS meter, a postal employee must seal the
meter to prevent unauthorized personnel from tampering with the meter.
Currently, this task is accomplished using lead seals that are crimped
into place with pliers. These lead seals and sealing pliers are
supplied by authorized meter manufacturers.
Traditional lead seals are not adequately secure. The Postal
Service has been testing new security seals that offer greater
security. These new security seals have unique serial identification
numbers that can be recorded when the meter is sealed. Additionally,
these new meter seals are recyclable and are more environmentally
acceptable than the traditional lead composition. [[Page 5968]]
The Postal Service proposes to replace current meter seals with new
security seals. When meters are checked into service, or additional
postage is set on a non-CMRS meter, the serial identification numbers
on the new security seals will be appropriately documented to
facilitate subsequent verification that the meter has not been opened
or tampered with. It is the responsibility of the licensee to ensure
that the security seals and serial identification numbers remain intact
between meter settings and/or examinations.
Meter seals will now be requisitioned directly from Postal
Service's area supply centers rather than from the meter manufacturer's
headquarters. The proposed rule clarifies that the manufacture and
procurement process for the new seals will be under the control of the
Postal Service. The costs associated with these new seals will continue
to be the responsibility of the manufacturers. The Postal Service
recognizes that some meters do not use seals and that some meters will
require seals less frequently than others (such as CMRS meters, which
are sealed at check-in and resealed only after Postal Service
examinations). Seal costs will be computed based on the average seal
usage per meter type. All costs will be apportioned by the
manufacturer's installed base of meters. Manufacturers will be billed
for the seals semiannually. Seal costs are estimated to be $0.10 per
seal.
39 CFR Part 501 References
DMMT 144.341(d), redrafted as Sec. 501.22(e), Distribution controls.
DMMT 144.946, redrafted as Sec. 501.20, Keys and setting equipment.
G. Meter Labeling
The Postal Service proposes to require meter manufacturers to apply
two standardized information labels to each postage meter leased prior
to having a meter checked into service as outlined in 39 CFR 501.22(r).
A cautionary label must be applied that provides the meter user
with basic reminders on leasing, meter movement, and misuse. A second
label must be applied that contains a barcoded representation of the
meter serial number. Meters without the required labels will not be
placed into service if they are presented at a post office with the
labels missing. Manufacturers that fail to comply with labeling
requirements will be subject to administrative sanctions under
Sec. 501.23.
Cautionary labels will serve to deter fraud by advising licensees
of the penalties associated with using meters in a fraudulent manner.
The serial number barcode will increase the efficiency and accuracy of
examination, setting, and audits by postal employees.
Labeling of meters in this fashion provides clear and unequivocal
notice to the meter user that tampering or misuse of a postage meter is
a federal offense and disseminates the telephone number for providing
information concerning known or suspected abuses.
Exceptions to the formatting of required labeling will be
determined on a case-by-case basis. Any deviations from standardized
meter labeling requirements must be approved in writing by the manager
of Mailing Systems Development.
39 CFR Part 111 References
DMM P030.2.4g, Licensee Responsibilities
39 CFR Part 501 References
Sec. 501.22(r), Distribution controls.
Sec. 501.23, Administrative sanction.
H. Postage Meter Testing
In order for a postage meter to be approved by the Postal Service
it must be tested for reliability, durability, and security. With the
introduction of advanced technology, a greater emphasis is being placed
on testing by the manufacturers, or by certified laboratories on their
behalf, and in the manufacturer's submission of test plans and
supporting documentation. The Postal Service has arranged for
independent experts to assist in the evaluation of the security
features associated with these products. In order to ensure revenue
protection, a meter model may be examined for security by the Postal
Service anytime before or after approval. Suspension and revocation of
meter approval for security weaknesses is discussed in part II.E,
Suspension and Revocation, of this proposed rule. If requested by the
Postal Service, manufacturers are required to provide service manuals,
setting instructions, meter specifications, and additional
documentation. This documentation is necessary for the Postal Service
to conduct robust meter testing.
39 CFR Part 501 References
Sec. 501.7, Test plans.
Sec. 501.8, Submission of each model.
Sec. 501.9, Security testing.
Sec. 501.10, Meter approval.
Sec. 501.11, Conditions for approval.
Sec. 501.12, Suspension and revocation of approval.
Sec. 501.13, Reporting.
Sec. 501.14, Administrative sanction on reporting.
Sec. 501.16, Breakdown and endurance testing.
II. Administrative Controls
A. Postage Meter Refunds
The introduction of electronic meters brought new technology to the
market place, as well as new problems. Older mechanical meters used a
series of geared wheels with numbers on them (registers) to record the
ascending and descending cash values within the meter. Newer postage
meters have replaced the mechanical wheels with electronic registers.
(The term electronic register is a carryover from the mechanical geared
wheels, but it is more correctly referred to as electronic memory.)
When connected to digital displays, memory chips provide the same
functionality, without moving parts. The information retained in these
memories is generally powered by a small battery located within the
meter case. There are usually more than one of these electronic
registers within each meter to provide a redundant fail-safe mechanism.
If the values in the meter's memories become unreadable from either
a failure of the displays or a catastrophic failure of one or more of
the electronic registers, the meter is returned to the manufacturer's
plant for analysis and recommendation of the amount to be refunded to
the licensee. The manufacturer provides the Postal Service with
appropriate redundant electronic register documentation (e.g., a
register readout) that identifies which register values were
extractable from the meter. Experience has demonstrated that such
redundant electronic registers are a reliable source of information to
determine the amount of unused postage remaining in a meter.
There are some cases, however, where appropriate redundant
electronic register documentation will not reveal any information about
the descending register or the amount of funds remaining on the meter
before the failure. In these cases, the meter manufacturer provides a
recommendation regarding the amount to be refunded based on an analysis
of prior meter settings and daily meter usage from the licensee's PS
Form 3602-A, Record of Meter Register Readings, or electronic
equivalent. The meter manufacturer then submits its recommendation on
the amount to be refunded to the postmaster of the licensing post
office. Typically, the refund is issued by the post office for the
recommended amount with no further investigation. The Postal Service
proposes to strengthen and streamline controls over the refund process
by limiting the number of sites authorized to make refunds. In those
instances [[Page 5969]] where appropriate redundant electronic register
memory documentation cannot be retrieved, the Postal Service will
analyze historical information (e.g., mailing statements, PS Form 3602-
A or electronic equivalent, and PS Form 3610, Record of Postage Meter
Settings) to determine the amount to be refunded.
The Postal Service proposes to establish new procedures to enhance
control over electronic meter register refunds and expedite the refund
process as follows:
1. If an electronic meter register fails, the licensee must provide
the meter manufacturer's representative with the meter and a copy of
the completed PS Form 3602-A to have the meter checked out of service.
If the registers do not adequately document the correct postage
adjustment, the manufacturer's representative must return the meter to
the manufacturer's control facility for further analysis.
2. If appropriate redundant electronic register memory
documentation can be retrieved by the manufacturer's control facility,
the manufacturer will provide a refund recommendation and supporting
documentation to the licensing post office to initiate the appropriate
refund to the meter licensee.
3. If appropriate redundant electronic register memory
documentation cannot be retrieved, the manufacturer will send all
documents, including the refund request, to MSD, USPS Headquarters,
with a complete analysis of the licensee's recent mailing history
supported by the original PS Form 3602-A (or electronic equivalent) and
a copy of PS Form 3610. MSD will review the supporting documentation
and forward the package to the postmaster of the licensing post office
for determination of the correct postage adjustment, if any.
4. Licensees may appeal meter refunds to the manager of MSD, USPS
Headquarters.
39 CFR Part 111 References
DMM P030.3.8, Postage Adjustments, Misregistering Meters
39 CFR Part 501 References
Sec. 501.22(g), Distribution controls.
DMMT 144.364, redrafted as Sec. 501.22(h), Distribution controls.
B. Use of PS Form 3602-A
The Postal Service proposes to require meter users to maintain a PS
Form 3602-A or electronic equivalent for each meter in use. This form
documents helpful information to determine the appropriate postage
adjustment in the event of register failures. The licensee will be
required to enter the readings of the ascending and descending
registers each day of meter operation on PS Form 3602-A or maintain at
least 12 months' equivalent information electronically generated by the
meter. The licensee will be required to present PS Form 3602-A to the
post office when the meter is reset or examined.
PS Form 3602-A has been used as a primary document for supporting
the calculation of the descending register when there is a total loss
of register memory within the meter. However, because its use is
currently optional, in some instances manufacturers have had to
estimate average daily usage to recommend postage adjustments. If a
meter's registering mechanisms fail, and the PS Form 3602-A or
electronic equivalent is not available, the Postal Service will not
grant a postage adjustment without other valid supporting
documentation.
39 CFR Part 111 References
DMMT 144.212, redrafted as DMM P030.2.1, Procedures
DMM P030.2.4, Licensee Responsibilities
DMM P030.3.7, Transferring and Refunding Postage
DMM P030.3.8, Postage Adjustments, Misregistering Meters
39 CFR Part 501 References
DMMT 144.364, redrafted as Sec. 501.22(g), Distribution controls.
DMMT 144.383, redrafted as Sec. 501.22(h), Distribution controls.
C. Meter Licensing Procedures
Existing postage meter licensing procedures do not provide
sufficient information on the applicant and the applicant's business
for adequate administration of the meter program. The current
application process allows a mailer to obtain a meter prior to
obtaining a license, and without any verification by the Postal Service
of information provided about that licensee. Improved licensing
procedures will provide the following advantages:
Applicant Identification--Provides more detailed
information about the applicant prior to issuance of a meter license to
enable the Postal Service to identify licensees and maintain
centralized records of approved licenses.
Market Analysis--Facilitates the compilation of marketing
information to aid in the identification and assessment of licensees'
needs and requirements.
Automated Tracking--Promotes data capture and population
of an automated nationwide meter activity to support a tracking
database.
Continuous Update--Allows implementation of mechanisms to
update meter/licensee information.
The Postal Service proposes to change meter licensing procedures to
require that more comprehensive information be provided on the meter
application. This information will be verified concurrently with the
processing of the license by the Postal Service. The Postal Service
goal is to achieve a 24-hour turnaround for applications electronically
transmitted by a meter manufacturer. Receiving applications
electronically will minimize the time required to process a license
application and will permit the Postal Service to verify the
correctness of the address information contained therein.
The Postal Service is working with all the meter manufacturers to
develop a system to facilitate the electronic collection of licensee
application information to promote efficiency and minimize application
processing time. Applicants will still have the option to submit an
application directly to the post office where they intend to deposit
metered mail, but the processing will be completed at a Postal Service
designated central processing center. Applicants may appeal a decision
denying a license in accordance with DMM P030.1.9.
The license application (shown in Exhibit B) will request business
and mailing profile information to determine estimated volume and type
of mail that will be metered by the licensee. To ensure that the
manufacturers can maintain control of meters leased to licensees and
that Postal Service records reflect the correct location of these
meters, licensees will periodically be sent a preprinted document
reflecting the license and meter information currently on file with the
Postal Service. Licensees will be responsible for verifying, updating,
and returning this information to the Postal Service.
39 CFR Part 111 References
DMM P030.1.9, Appeals
DMM P030.2.1, Procedures
DMM P030.2.2, Licensee Agreement
DMM P030.2.3, Refusing to Issue a Meter License
DMM P030.2.4, Licensee Responsibilities
39 CFR Part 501 References
DMMT 144.21, redrafted as Sec. 501.22(b), Distribution controls.
DMMT 144.355(a), redrafted as Sec. 501.22(e), Distribution controls.
D. Performance Regulations
The Postal Service is aware of instances of noncompliance with
current control regulations by manufacturers. For example:
Meters have been shipped or leased to customers who do not
hold a valid license.
Meters have been supplied to licensees without having been
checked into service. [[Page 5970]]
Meters and accountable supplies have been found stored by
manufacturer branches or dealers in unsecured areas.
Manufacturers have failed to maintain a complete rental
history for meters, and they have failed to cancel leases or remove
meters when instructed to do so by the Postal Service.
The Postal Service proposes that any manufacturer that without just
cause fails to conduct or adequately implement the performance controls
detailed in 39 CFR 501.22 be subject to an administrative sanction.
Specific sanctions will be determined on a case-by-case basis and will
permit the Postal Service to collect administrative and investigative
costs, as well as documented revenue losses from the licensee or user.
These sanctions will be strictly remedial in nature to collect costs
and/or revenue losses (net of any amount collected from the meter
users) resulting from manufacturer noncompliance.
39 CFR Part 501 References
Sec. 501.5, Suspension and revocation of authorization.
DMMT 144.952, redrafted as Sec. 501.22, Distribution controls.
Sec. 501.23, Administrative sanction.
E. Suspension and Revocation
1. Policy and Procedure
Meter manufacturers must be authorized by the Postal Service to
manufacture and distribute postage meters. Violation of Postal Service
meter standards by a manufacturer can result in the suspension or
revocation of the manufacturer's authority to manufacture and
distribute meters. Additionally, if a certain meter model or meter
class is determined to possess a security weakness, the Postal Service
may suspend or revoke authorization for the manufacture or distribution
of that meter or class of meter, pending analysis of potential security
flaws.
The Postal Service proposes to clarify procedures pertaining to the
suspension and/or revocation of a manufacturer's authorization to
manufacture and distribute postage meters, a specific meter, or class
of meter.
Suspension of the authority to distribute any or all of a
manufacturer's postage meters will remain in effect for up to 90 days,
pending analysis of the potential security flaws, or, in the case of
suspension of a manufacturer's authorization to manufacture and
distribute meters, investigation of the specific circumstances and
violations, to determine whether authorization should be revoked. At
the end of the 90-day period, the manager of MSD may:
Extend the suspension in order to allow more time for
investigation or to allow the manufacturer to correct the problem.
Make a determination to revoke authorization to
manufacture and/or distribute a manufacturer's meters in part or in
whole or approval of a meter or class of meters.
Withdraw the suspension based on implementation of a
satisfactory solution to the problem.
2. Manufacturer's Authorization
The Postal Service, represented by the manager of MSD, retains the
right to suspend or revoke production and/or distribution of any or all
of a manufacturer's meters if the manufacturer engages in any unlawful
scheme or enterprise, or fails to comply with Postal Service meter
standards. In deciding to suspend or revoke the manufacturer's
authorization to manufacture and distribute meters, the manager will
take into account the nature and circumstances of the violation,
whether the violation was willful, whether the manufacturer voluntarily
admitted to the violation, whether the manufacturer cooperated with the
Postal Service, whether the manufacturer implemented successful
remedial measures, and the manufacturer's performance history.
The manufacturer will be issued a written notice setting forth the
facts of and reasons for the suspension or revocation, and will be
advised of the effective date of the suspension or revocation if a
written defense is not presented within 30 calendar days of the notice
(unless a shorter time frame is deemed necessary). Except in cases of
willful violation, the manufacturer will be given an opportunity to
correct deficiencies and achieve compliance with all requirements
within a reasonable time limit, as determined by the manager of MSD.
The manufacturer can appeal a decision suspending or revoking an
authorization to manufacture and distribute postage meters to the
manager of Customer Service Support, USPS Headquarters.
3. Specific Meters or Classes of Meters
The manager of MSD may also order suspension or revocation of
production and/or distribution of a manufacturer's specific model or
class of meter if such model or class poses an unreasonable risk to
postal revenues. The manufacturer will be issued a written notice
setting forth the facts of and reasons for the decision to suspend or
revoke authorization to manufacture and/or distribute a specific meter
or class of meter, and will be advised of the effective date if a
written defense is not presented within 30 calendar days of the notice
(unless a shorter time frame is deemed necessary). The manufacturer
will be given an opportunity to correct deficiencies and achieve
compliance with all requirements within a reasonable time limit, as
determined by the manager of MSD. The manufacturer can appeal the
decision to the manager of Customer Service Support.
39 CFR Part 501 References
Sec. 501.5, Suspension and revocation of authorization.
Sec. 501.12, Suspension and revocation of approval.
DMMT 144.933, redrafted as Sec. 501.9, Security testing.
F. Installations and Withdrawals
Meters being installed into service must be checked in and meters
being withdrawn from service must be checked out by a Postal Service
representative. Currently there are no standardized documentation
procedures to record the entry and exit of meters from service. The
introduction of a standardized reporting process will allow for greater
control of the entry and exit of meters and will provide an audit trail
for determining the assignment of specific postage meters.
The Postal Service has developed a standardized format for
recording the installation and withdrawal of postage meters from
service. PS Form 3601-C, Postage Meter Installation, Withdrawal, or
Replacement (shown in Exhibit C), will be used to record pertinent
information regarding meters that are introduced or withdrawn from
service. To install or withdraw a meter, the manufacturer will be
required to present to the licensing post office (or the Postal Service
representative at the manufacturer's direct distribution center) the
postage meter, a completed PS Form 3601-C, the mailer's license (PS
Form 3601-B), and a copy of the licensee's PS Form 3602-A (if the meter
is being checked out of service).
39 CFR Part 111 References
DMM P030.1.3, Possession
DMM P030.3.1, Initial Setting
DMM P030.3.2, Licensee Relocation
DMM P030.3.9, Computerized Meter Resetting System
39 CFR Part 501 References
DMMT 144.343, redrafted as Sec. 501.22(g), Distribution controls.
DMMT 144.355(a), redrafted as Sec. 501.22(e), Distribution controls.
DMMT 144.36, redrafted as Secs. 501.22(g) and 501.22(h),
Distribution controls. [[Page 5971]]
III. Other Issues
A. Taking a Meter Outside the United States
Licensees have attempted to take postage meters outside the United
States for purposes of preparing mail at a foreign location and
entering the mail into the United States. This presents a security
problem because the Postal Inspection Service does not have immediate
access to the meter when it is taken outside the United States, its
territories, or its possessions. The Postal Service has advised
licensees individually of its long-standing policy that meters may not
be taken outside the United States, its territories, or its
possessions. The Postal Service proposes to clarify its regulations
accordingly. Failure to comply with this standard is grounds for
revocation of the licensee's meter license.
39 CFR Part 111 References
DMM P030.2.7, Revocation of License
B. Licensee Reporting of Faulty or Defective Meters
Licensees are responsible for reporting misregistering or otherwise
defective meters to the meter manufacturer. If a meter's printing or
recording mechanism is faulty, or a meter fails to lock out properly
when all set postage has been metered, and the sum of the two register
values (control total) does not equal the control total on the PS Form
3602-A at the time of the last setting, the licensee must ensure that
the meter is not used. The licensee is required to contact the meter
manufacturer's representative in order to have the defective meter
presented at the licensing post office within 3 business days to have
the meter checked out of service.
39 CFR Part 111 References
DMM P030.2.5, redrafted as DMM P030.2.6, Defective Meters
39 CFR Part 501 References
DMMT 144.225, redrafted as Sec. 501.22(h), Distribution controls.
DMMT 144.361, redrafted as Sec. 501.22(h), Distribution controls.
C. Quarterly Meter Reports
Currently, authorized meter manufacturers are required to provide
the Postal Service with a computer magnetic tape listing of all
licensee meters in service, at the close of each reporting period, in a
Postal Service designated format. The Postal Service proposes to expand
reporting requirements so that each record must include the meter
serial number and model number, the user's name and address, and the
ZIP Code and finance number of the licensing post office. Manufacturers
are also responsible for reconciling differences with the Postal
Service, which result from meters that are not on Postal Service or
manufacturer's records. Manufacturers are required, under special
circumstances, to provide this data on a more frequent basis on request
by the Postal Service.
39 CFR Part 501 References
DMMT 144.952(g), redrafted as Sec. 501.22(j), Distribution controls.
D. Postal Service Examination of Meters
Current meter standards require non-CMRS meters not reset within a
6-month period to be brought to the setting or licensing post office
for an examination. Similarly, CMRS meters must be examined
semiannually. The Postal Service proposes to change the examination
requirements as described in the following two paragraphs.
A non-CMRS meter not reset within a 3-month period must be
presented for examination by the postal facility where it is regularly
set or examined. CMRS meters will need to be presented for examination
only annually if reset at least once every 3-month period. Less
frequent examinations of CMRS meters are made possible by the added
security features of the CMRS resetting process whereby the meter
resetting company (MRC) verifies the meter serial number, licensee's
account number, and the meter's ascending and descending register
readings at the time of each setting. In effect, this verification
checks the operational integrity of the meter. Manufacturers must
report all CMRS meters that have not been reset during the prior
quarter to the licensing post office, and they must contact licensees
to instruct them to present their meters for examination within 15 days
of being notified by the manufacturer. Failure to comply with this
standard is grounds for revocation of the licensee's meter license.
Information collected by the Postal Service during meter licensee
focus groups with small, medium, and large meter users suggests that
most meters are set on a quarterly or more frequent basis. Therefore,
although examination requirements under this new rule are more
stringent for licensees that do not have their meters set regularly,
the impact on licensees should be minimal. Meters that are not set or
examined on a frequent basis are more susceptible to meter tampering
without detection because the Postal Service cannot verify that the
meters are operating correctly and have not been tampered with to avoid
the payment of postage.
39 CFR Part 111 References
DMM P030.2.4, Licensee Responsibilities
DMM P030.3.11, Periodic Examination of CMRS Meters
39 CFR Part 501 References
DMMT 144.383, redrafted as Sec. 501.22(f), Distribution controls.
E. Training Media
Postal Service training publications and security guidelines have
not kept up with the introduction of new meter models, changes in
direct distribution plans, and turnover of Postal Service retail
clerks. Manufacturers have more specialized knowledge and expertise in
working with their meters than Postal Service employees. Therefore, the
Postal Service is clarifying existing manufacturer requirements for
providing documentation relating to training materials and operating
instructions for their meters.
The Postal Service proposes that, as a condition of approval,
manufacturers are responsible for providing licensing post offices with
resetting and inspection media for their meters prior to distribution.
The contents of this media must include an explanation of how the meter
is reset and an explanation of any special or unique features of the
meter. The manufacturer must also provide a training video for new
metering products that includes an explanation of how the device is
reset as well as recommended methods for detecting evidence of
tampering. Manufacturers are also responsible for ensuring that these
media are updated as necessary and for providing the Postal Service
with additional meter documentation on request.
39 CFR Part 501 References
Sec. 501.11(b), Conditions for approval.
Sec. 501.11(c), Conditions for approval.
IV. Computerized Remote Postage Meter Resetting System
The Computerized Meter Resetting System (CMRS) currently involves
four entities: the authorized meter manufacturer that offers CMRS
service (meter resetting company or MRC), a commercial bank providing a
lockbox service, a trustee bank, and the Postal Service. Licensee
payments are mailed to the commercial bank lockbox account and are then
wire-transferred to the trustee bank. Each business day, the trustee
bank wire-transfers the value of the previous day's meter settings to
the Postal Service fund at the New York Federal Reserve Bank. Under the
current financial arrangement, the Postal Service has no control over
the investment of licensee deposits by the [[Page 5972]] trustee bank
or the movement of those funds.
The Postal Service proposes changes to the current financial
arrangement to allow the Postal Service to have more direct control of
licensee payments and balances within CMRS. With developments in
banking technology, there is no valid reason for retaining licensee
funds in commercial bank trust accounts prior to transfer to the U.S.
Treasury account of the Postal Service. The practice of holding funds
in a commercial account exposes customer funds to an unnecessary risk.
The Postal Service has concluded that the commercial bank trust account
is not necessary to maintain the customer service provided by CMRS.
Proposed system changes will involve the following adjustments:
The commercial trustee bank account will be eliminated.
All advance meter resetting balances will be wired to the
Postal Service fund.
All future licensee trust fund balances will be maintained
in the Postal Service fund.
The commercial lockbox bank account will become a Postal
Service account.
The changes are likely to reduce substantially expenditures for
banking service of the MRC, especially because payment for the fees of
the lockbox bank would be absorbed by the Postal Service. In addition,
advances are costly and time consuming; these changes would benefit the
MRC because the number of advances is likely to decline owing to the
decline in mail float. Moreover, the current requirement for the
posting of a bond by the MRC is eliminated. The requirement that
manufacturers have on deposit 1 day's average resettings would be
amended to the manufacturer's advantage. If the MRC chooses to offer
advancement of funds to licensees, it is required to maintain a deposit
with the Postal Service equal to at least 1 day's average funds
advanced. The total amount of funds advanced to licensees on any given
day shall not exceed the amount the manufacturer has on deposit with
the Postal Service.
The Postal Service further believes that the cash management
improvements included in the revised procedures will improve service
for CMRS licensees. Upgrading the cash management arrangements to
reflect current banking technology will reduce significantly the amount
of time licensees must have their funds remaining idle in trust
accounts. The requirement for at least three strategically located
lockbox bank collection, processing, and clearing locations will reduce
mail-float time and the length of time before meters can be reset.
Electronic automated clearinghouse (ACH) debits/credits and electronic
funds transfer (or wire transfer) are to be offered at no cost to all
CMRS licensees. The combination of reduced mail-float time and the
addition of electronic payment options should reduce the need for
licensee fund advances from the MRC. These changes should reduce fund
advance fees paid by the licensee to the MRC. Customer service is
expected to improve because the amount of the total advance deposits
maintained for licensees will decline under the new arrangements.
Moreover, because the total cost of CMRS to licensees, including
interest forgone on their funds, will be reduced, the Postal Service
believes that more licensees will take advantage of the service.
These improvements also lessen the risk to funds on deposit for
postage. Because there is no longer a commercial bank trustee holding
those deposits, they could be on deposit in the Postal Service fund.
The funds in the Postal Service fund would be backed in full faith and
credit by U.S. Treasury securities, whereas that is not always the case
with investments by a commercial bank trustee.
39 CFR Part 111 References
DMM P030.3.12, Resetting CMRS Meters
39 CFR Part 501 References
DMMT 144.38, redrafted as Sec. 501.28, Computerized remote postage
meter resetting.
DMMT 144.97, redrafted as Sec. 501.28, Computerized remote postage
meter resetting.
In addition to the substantive changes concerning manufacture,
distribution, and use of meters discussed above, the Postal Service
also intends to reorganize and renumber standards pertaining to the
use, manufacture, and distribution of meters. Currently, standards
generally pertaining to the manufacture and distribution of meters are
set forth in the Domestic Mail Manual Transition Book (see 58 FR 34887
(June 30, 1993) and 59 FR 31655 (June 20, 1994)), while standards
generally pertaining to the use of meters are published in the Domestic
Mail Manual. The Postal Service proposes to renumber and publish the
former as amended as 39 CFR part 501. Part 144 of the Domestic Mail
Manual Transition Book would accordingly be rescinded with the
exception of Secs. 144.312, 144.313, 144.341, 144.342, 144.344,
144.345, 144.346, 144.347, 144.348, 144.349, 144.35, 144.363, 144.37,
144.382(b), 144.383(b), 144.383(c), 144.383(d), 144.384, 144.53,
144.54, 144.61, 144.62, 144.63, 144.64, 144.65, and 144.7. These
sections generally contain internal instructions for postal employees
and are to be amended and published in an internal handbook following
publication of final rules in connection with this rulemaking. Domestic
Mail Manual standards generally governing the use of meters would be
published as revised below. Editorial changes to the proposed standards
are not intended to create any substantive change. The following charts
show the proposed changes to 39 CFR parts 111 and 501 and cross-
references previous regulations.
BILLING CODE 7710-12-P
[[Page 5973]]
[GRAPHIC][TIFF OMITTED]TP31JA95.000
[[Page 5974]]
[GRAPHIC][TIFF OMITTED]TP31JA95.001
[[Page 5975]]
[GRAPHIC][TIFF OMITTED]TP31JA95.002
[[Page 5976]]
[GRAPHIC][TIFF OMITTED]TP31JA95.003
BILLING CODE 7710-12-C
[[Page 5977]]
List of Subjects in 39 CFR Part 111
Administrative practice and procedure, Postal Service.
Accordingly, although exempt from the notice and comment
requirements of the Administrative Procedure Act (5 U.S.C. 553(b), (c))
regarding proposed rulemaking by 39 U.S.C. 410(a), the Postal Service
invites public comment on the following proposed amendments to the
Domestic Mail Manual (DMM), incorporated by reference in the Code of
Federal Regulations. See 39 CFR 111.
PART 111--[AMENDED]
1. The authority citation for 39 CFR part 111 continues to read as
follows:
Authority: 5 U.S.C. 552(a); 39 U.S.C. 101, 401, 403, 404, 3001-
3011, 3201-3219, 3403-3406, 3621, 3626, 5001.
2. Revise the following sections of the DMM as noted below:
P030 Postage Meters and Meter Stamps
1.0 BASIC INFORMATION
1.1 Description of Meters
Postage meters print one or more denominations of postage. Their
mechanisms print postage and display the amount of postage used and
remaining. The meter locks when no postage or minimal postage remains,
and it generally must be brought to the licensing post office to be
reset by payment for additional postage. Avoiding the payment of
postage by misusing a meter is punishable by law.
1.2 Meter Manufacturers
Postage meters are available only by lease from authorized
manufacturers. The USPS holds manufacturers responsible for the
control, operation, maintenance, and replacement, when necessary, of
their meters. The following manufacturers are authorized to lease
meters:
ASCOM HASLER MAILING SYSTEMS INC
19 FOREST PKY
SHELTON CT 06484-0903
FRANCOTYP-POSTALIA INC
1980 UNIVERSITY LN
LISLE IL 60532-2152
FRIDEN NEOPOST
30955 HUNTWOOD
HAYWARD CA 94544-7005
PITNEY BOWES INC
1 ELMCROFT RD
STAMFORD CT 06926-0700
1.3 Possession
No one other than an authorized manufacturer may possess a postage
meter without a valid USPS postage meter license and a rental agreement
with the meter manufacturer and until the USPS sets, seals (if
applicable), and checks it into service. Other parties in possession of
a postage meter must immediately surrender it to the manufacturer or
USPS.
* * * * *
1.8 Meter Documentation, Markings, and Endorsements
Unless excepted by standard, a mailing bearing meter stamp postage
must be accompanied by documentation meeting the basic standards in
P012 if the mailing contains nonidentical-weight pieces or pieces
without the full correct postage at the applicable rate. Each mailpiece
bearing meter postage must show the markings and endorsements required
for the rate claimed or special services requested.
1.9 Appeals
Applicants who have been refused a meter license, or licensees who
have had a license revoked, may file a written appeal with the manager
of Mailing Systems Development within 10 calendar days of receipt of
the decision. Licensees who are appealing decisions on postage
adjustments may file their appeals with the same official, and must do
so within 60 days of the date that the postage recommendation was
submitted to the USPS by the manufacturer.
2.0 METER LICENSE
2.1 Procedures
An applicant wanting to be licensed to lease and use a postage
meter must provide an original signed Form 3601-A to the post office
where the applicant intends to deposit metered mail, or a meter
manufacturer may, on behalf of the applicant, electronically transmit
the information requested on the Form 3601-A to the designated USPS
license application central processing center in a USPS-specified
format. A single license covers all meters licensed to the same party
by the same post office, but a separate application must be submitted
for each post office where the applicant wants to deposit metered mail.
There is no fee for this application and license. After approving an
application, the USPS issues a license (Form 3601-B) and one Form 3602-
A for each meter checked into service. In those instances where a meter
manufacturer transmitted the application on behalf of the applicant,
the manufacturer is notified by the USPS when a license is issued.
2.2 Licensee Agreement
By submitting an application, the licensee agrees that the license
may be revoked immediately and the meter removed by the manufacturer or
the USPS if the meter is used in any fraudulent or unlawful scheme or
enterprise, if the meter is not used during any 12 consecutive months,
if the licensee fails to exercise sufficient control of the meter or
fails to comply with the standards for meter care or use, or if a meter
is taken outside the United States, or its territories, or its
possessions (without specific written permission by the manager of
Mailing Systems Development, USPS Headquarters).
2.3 Refusing to Issue a Meter License
The USPS may refuse to issue a meter license if the applicant
submitted false or fictitious information on the license application;
if, within 5 years preceding submission of the application, the
applicant violated any standard for the care or use of a meter that
resulted in the revocation of that applicant's meter license; or if
there is sufficient reason to believe that the meter is to be used in
violation of the applicable standards. When an application for a
license to lease and use postage meters is refused, the USPS notifies
the licensee of the reason in writing. If the license application was
electronically transmitted to the USPS by a manufacturer on behalf of
the applicant, the applicable manufacturer is notified of the refusal
by the USPS. An applicant who is refused a meter license may appeal the
decision according to the procedures in 1.9.
2.4 Licensee Responsibilities
The meter licensee's responsibilities include:
a. After delivery to a licensee, a meter must be kept in the
licensee's custody until it is returned to the authorized manufacturer
or the licensing post office.
b. Each day of operation, the licensee must record the readings of
the ascending and descending registers on Form 3602-A (except that
licensees using metering systems that record these readings
electronically may use system-generated printed records of the
preceding 12 months of meter activity as a substitute for manual entry
of daily readings on Form 3602-A). These records must be available for
inspection to the USPS on request. The licensee must bring Form 3602-A
to the post office when the meter is reset or examined.
c. Meters in the licensee's custody and records on meter
transactions must [[Page 5978]] be immediately available for review and
audit on request by the USPS or the meter manufacturer.
d. Meters not reset within a 3-month period must be presented with
Form 3602-A for examination at the licensing post office. Remote-set
meters that are reset at least once every 3 months need be presented
for examination only annually. Failure to present a meter for
examination on a timely basis following notification may result in
revocation of the licensee's authorization to lease and use postage
meters.
e. A licensee must immediately notify the licensing post office and
manufacturer's representative of any changes in the licensee's name,
address, or telephone number, or the location of the meter(s), or any
other information contained on the original Form 3601-A. The USPS
thereafter issues a modified meter license reflecting the updated
information. Licensees must verify and update their license information
on a periodic basis as well as following any event that would indicate
the need to update this information immediately (e.g., billings
returned to a meter manufacturer or failure of the manufacturer to
locate the meter for inspection).
f. The licensee must report a misregistering or otherwise defective
meter to the manufacturer according to 2.9 and must ensure that the
meter is not used.
g. Licensees must ensure that the cautionary and barcode labels
placed on each meter prior to its being placed into service are not
removed while the meter is in the licensee's possession. The cautionary
label provides the meter user with basic reminders on leasing, meter
movement, and misuse. The barcode label contains a barcoded
representation of the meter serial number. Meters without the required
labels may not be checked into service.
2.5 Custody of Suspect Meters
Postal inspectors are authorized to conduct unannounced on-site
examinations of meters reasonably suspected of being manipulated or
otherwise defective. An inspector may also immediately withdraw a
suspect meter from service for physical and/or laboratory examination.
The inspector issues a receipt for the meter to the licensee and
forwards a copy to the manufacturer and may assist in obtaining a
replacement meter from the meter manufacturer. Advance notice to the
manufacturer that a meter is to be inspected may be provided by the
Inspection Service where possible. Except where there is reason to
believe that the meter has been fraudulently set with postage, existing
postage in the meter to be examined is transferred to the replacement
meter.
2.6 Defective Meters
The manufacturer must pick up a defective meter and present it to
the licensing post office to be checked out of service within 3
business days of being notified by the licensee under 2.9. A faulty
meter must not be used under any circumstances, and it must be removed
from service when presented to the licensing post office. The
manufacturer will provide a replacement meter.
2.7 Revocation of License
The USPS notifies the licensee in writing if the meter license is
to be revoked, providing the reasons. In addition, the USPS notifies
the licensee's meter manufacturer of the revocation so that the
manufacturer can cancel the lease agreement and remove the meter from
service. Revocation is effective 10 days thereafter unless, within that
time, the licensee appeals the decision according to the procedures in
1.9. A license is subject to revocation for any of these reasons:
a. A meter is used for any illegal scheme or enterprise.
b. The license or licensee's meters are not used for 12 consecutive
months.
c. Any failure to exercise sufficient control of a meter or failure
to comply with the standards for its care or use.
d. The meter is kept or used outside the boundaries of the United
States or those U.S. territories and possessions where the USPS
operates (except as specified in 2.2).
e. Mail is deposited at other than the licensing post office
(except as permitted by 5.0 or D072).
2.8 Missing Meters
The licensee must immediately report to the licensing postmaster
and the manufacturer the loss or theft of any meter or the recovery of
any missing meter. Reports must include the meter model and serial
number; the date, location, and details of the loss, theft, or
recovery; and a copy of the police report, when applicable.
2.9 Returning Meters
After a meter is delivered to a licensee, the meter must be kept in
the licensee's custody until returned to the authorized manufacturer or
licensing post office. Licensees with a faulty misregistering meter, or
licensees no longer wanting to retain a meter, must notify the meter
manufacturer's representative of any meters that are to be returned to
the licensing post office to be checked out of service. Meters must be
shipped by registered mail unless specific written permission is given
to ship meters otherwise by the manager of MSD, USPS Headquarters.
3.0 SETTING METERS
3.1 Initial Setting
Before delivery to the licensee, the manufacturer must take a meter
to be set, sealed (if applicable), and checked into service by the post
office where it is to be regularly set or examined, unless the meter is
serviced through the on-site meter-setting program described in 3.5.
The meter manufacturer must present the postal representative with the
meter and a completed Form 3601-C when checking a meter into service.
3.2 Licensee Relocation
If a licensee changes the post office where metered mail is to be
deposited, the meter must be checked out of service by the licensing
post office. That meter or another meter must be licensed at the new
post office before it is reset or initial settings are made. For this
standard, a post office includes all subordinate branches and stations
of the licensing post office.
3.3 Location of Setting
Except as provided under 3.4 or 3.5, meter settings must be
performed at the licensing post office. Meters may not be set at
contract stations and branches.
Remote-set postage meters are subject to 3.10 through 3.13 and
related standards.
3.4 Alternative Meter Setting Location
The postmaster serving a licensee's location may set a meter used
to pay postage on mail presented at another post office, subject to
these conditions:
a. The licensee must obtain a meter license from the post office
where the mailing is to be deposited, and must present it to the
licensee's local post office with the meter and Form 3602-A (or
electronic equivalent) for setting.
b. The postmark die must show the name of the post office of
mailing (licensing post office).
c. A separate meter must be used for mailings made at each post
office.
d. Mail matter sent to another post office for mailing must be
shipped on private transportation, to be deposited at the time and
place designated by the postmaster. It may not be consigned to the USPS
in bulk by freight, express, or other carrier. The USPS has no
responsibility for the metered matter before it is accepted in the
mail.
e. When a meter is no longer used, the licensee must return the
meter to the manufacturer's representative or [[Page 5979]] licensing
post office to have it checked out of service.
3.5 On-Site Meter-Setting Program
The on-site meter-setting program allows USPS employees to set or
examine postage meters at a licensee's place of business within the
area served by the licensing post office. Only meters of licensees
participating in the program are set or examined at that location. The
program also provides for checking meters into or out of service at the
meter manufacturer's branch offices, including meters set for use at
another post office. A fee is charged for each meter set, examined, or
checked into or out of service at a licensee's place of business or at
a manufacturer's offices, unless a USPS employee (qualified to set
postage meters) is regularly assigned to that licensee's location for
postal administrative duties. Licensees must pay on-site setting or
examination fees and postage by check or advance deposit account at the
time of the setting or examination. For fees, see R900.
3.6 Payment for Postage
Payment must be made for postage when the meter is set. Payment may
be in cash or by check, money order, or withdrawal from an advance
deposit account established with the post office. Advance deposit
accounts may be established when the licensee's monthly metered postage
is $500 or more. Payment by check or advance deposit account is subject
to USPS standards and procedures.
3.7 Transferring and Refunding Postage
Upon verification by the USPS, unused postage in a meter being
checked out of service may be transferred to another of the licensee's
meters licensed at the same post office, or the licensee may request a
refund, which may include a refund for unused meter stamps according to
applicable standards. The meter and the Form 3602-A or system-generated
register documentation must be examined by the USPS before a refund or
credit is initiated for unused postage or additional postage is
collected, based on what is found.
3.8 Postage Adjustments, Misregistering Meters
To request a postage adjustment for a faulty misregistering meter,
the licensee must present the meter and the licensee's Form 3602-A to
the manufacturer. After examining a meter checked out of service for
apparent faulty operation affecting registration, the manufacturer must
furnish a report explaining the malfunction to the licensing post
office. That report must include all applicable meter documentation
(including a copy of the licensee's Form 3602-A and the licensee's Form
3610 provided by the USPS), and a recommendation about the appropriate
postage adjustment. If the electronic redundant memory data, as
examined by the manufacturer, is inconclusive about the appropriate
postage adjustment, the manufacturer must include an analysis of the
licensee's recent mailing history supporting the recommended postage
adjustment. In the absence of a completed Form 3602-A, the licensee
must submit some other reliable evidence showing that a postage
adjustment is warranted. A licensee may appeal a postage adjustment
according to the procedures in 1.9.
3.9 Computerized Meter Resetting System
The Computerized Meter Resetting System (CMRS) allows certain
postage meters to be reset electronically at the licensee's place of
business. CMRS meters must be set at the licensee's place of business,
except under 3.11. Before delivery to the licensee, the manufacturer
must bring the meter and a completed Form 3601-C to the licensing post
office to have it checked into service, unless the meter is initially
checked into service at the manufacturer's office under 3.5.
3.10 Postage Transfer for CMRS Meters
No postage is set by the licensing post office unless a CMRS meter
is checked out of service and the unused postage in it is transferred
to another CMRS meter leased by the same licensee for use at the same
post office.
3.11 Periodic Examination of CMRS Meters
CMRS meters must either be reset or examined every 3 months. CMRS
meters set at least once every 3 months need be presented only annually
for examination by a USPS employee. The licensee must bring a CMRS
meter and applicable Form 3602-A to the licensing post office when
notified by the manufacturer that an examination is required. Licensees
who do not comply with examination requirements may not reset their
meters via CMRS. Failure to have a meter examined on notification can
result in revocation of the licensee's meter license.
3.12 Resetting CMRS Meters
The following steps must be taken to reset a CMRS meter:
a. The licensee's account must have sufficient funds to cover the
desired postage increment or the manufacturer must agree to advance
funds to the licensee.
b. The licensee may deposit funds by check, electronic funds, or
automated clearinghouse transfer.
c. The licensee must provide the manufacturer or designated meter
resetting company (MRC) with the meter serial number, licensee's
account number, and the meter's ascending and descending registers.
d. After a meter is reset, the manufacturer must provide the
licensee with documentation of the transaction and the balance
remaining in the licensee's account, unless the manufacturer provides a
monthly statement documenting all transactions for the period and the
balance after each transaction.
3.13 CMRS Refunds
The USPS issues a refund to a licensee for any unused postage in a
meter. Refunds of licensee balances maintained by the USPS in the USPS
fund are made directly to the licensee by the USPS lockbox bank within
48 hours after receipt of a licensee's request.
4.0 METER STAMPS
4.1 Designs
Meter stamp designs (types, sizes, and styles) must be those
specified when a meter is approved by the USPS for manufacture (see
Exhibit 4.1).
* * * * *
6.0 METER MANUFACTURE AND DISTRIBUTION
Title 39, Code of Federal Regulations, part 501, contains
information about the authorization to manufacture and distribute
postage meters; the suspension and revocation of such authorization;
performance standards required in postage meters, test plans, testing,
and approval of postage meters; required manufacturing security
measures; and standards for the distribution and maintenance of postage
meters. Further information may be obtained from Mailing Systems
Development, USPS Headquarters.
List of Subjects in 39 CFR Part 501
Administrative practice and procedure, Postal Service.
Accordingly, although exempt from the notice and comment
requirements of the Administrative Procedure Act (5 U.S.C. 553(b), (c))
regarding proposed rulemaking by 39 U.S.C. 410(a), the Postal Service
invites public comment [[Page 5980]] on the following proposed
amendments to the Code of Federal Regulations.
3. For the reasons set out in this document, the Postal Service
proposes to add 39 CFR 501 as follows:
PART 501--AUTHORIZATION TO MANUFACTURE AND DISTRIBUTE POSTAGE
METERS
Sec.
501.1 Manufacturer authorization.
501.2 Manufacturer qualification.
501.3 Changes in ownership or control.
501.4 Burden of proof standard.
501.5 Suspension and revocation of authorization.
501.6 Specifications.
501.7 Test plans.
501.8 Submission of each model.
501.9 Security testing.
501.10 Meter approval.
501.11 Conditions for approval.
501.12 Suspension and revocation of approval.
501.13 Reporting.
501.14 Administrative sanction on reporting.
501.15 Materials and workmanship.
501.16 Breakdown and endurance testing.
501.17 Protection of printing dies and keys.
501.18 Destruction of meter stamps.
501.19 Inspection of new and rebuilt meters.
501.20 Keys and setting equipment.
501.21 Distribution facilities.
501.22 Distribution controls.
501.23 Administrative sanction.
501.24 Meter replacement.
501.25 Inspection of meters in use.
501.26 Meters not located.
501.27 Repair of internal mechanism.
501.28 Computerized remote postage meter resetting.
501.29 Notice of proposed changes in regulations.
Authority: 5 U.S.C. 552(a); 39 U.S.C. 101, 401, 403, 404, 410,
2610, 2605; Inspector General Act of 1978, as amended (Pub. L. 95-
452, as amended), 5 U.S.C. App. 3.
Sec. 501.1 Manufacturer authorization.
Any person or concern seeking authorization to manufacture and
distribute postage meters must submit a request to the Postal Service
in person or in writing. Upon qualification and approval, the applicant
is authorized in writing to manufacture postage meters and to lease
them to persons licensed accordingly by the Postal Service. The Postal
Service may specify the functional area charged with processing the
application and administering its meter program. [Currently, that area
is Mailing Systems Development, USPS Headquarters.]
Sec. 501.2 Manufacturer qualification.
Any concern wanting authorization to manufacture and/or lease
postage meters for use by licensees under Domestic Mail Manual (DMM)
P030.1.2 must:
(a) Satisfy the Postal Service of its integrity and financial
responsibility;
(b) Obtain approval of at least one postage meter model
incorporating all the features and safeguards specified in Sec. 501.6;
(c) Have, or establish, and keep under its supervision and control
adequate manufacturing facilities suitable to carry out the provisions
of Secs. 501.15 through 501.20 to the satisfaction of the Postal
Service (such facilities must be subject to unannounced inspection by
representatives of the Postal Service); and
(d) Have, or establish, and keep adequate facilities for the
control, distribution, and maintenance of postage meters and their
replacement when necessary.
Sec. 501.3 Changes in ownership or control.
Any person or concern wanting to acquire ownership or control of an
authorized meter manufacturer must provide the Postal Service with
satisfactory evidence of that person's or concern's integrity and
financial responsibility.
Sec. 501.4 Burden of proof standard.
The burden of proof is on the Postal Service in adjudications
concerning suspension and revocation under Secs. 501.5 and 501.12 and
administrative sanctions under Secs. 501.14 and 501.23. Except as
otherwise indicated in those sections, the standard of proof shall be
the preponderance-of-evidence standard.
Sec. 501.5 Suspension and revocation of authorization.
(a) The Postal Service may suspend and/or revoke authorization to
manufacture and/or distribute any or all of a manufacturer's postage
meters if the manufacturer engages in any unlawful scheme or
enterprise, fails to comply with any provision in this part 501, or
fails to implement instructions issued in accordance with any final
decision issued by the Postal Service within its authority over the
meter program.
(b) The decision to suspend or revoke a manufacturer's
authorization will be based on the nature and circumstances of the
violation, whether the violation was willful, whether the manufacturer
voluntarily admitted to the violation, whether the manufacturer
cooperated with the Postal Service, whether the manufacturer
implemented successful remedial measures, and the manufacturer's
performance history. Prior to determining whether a manufacturer's
authorization to manufacture and/or distribute postage meters should be
revoked, the procedures in paragraph (c) of this section will be
followed.
(c) Suspension in all cases shall be as follows:
(1) Upon determination by the Postal Service that a manufacturer is
in violation of the provisions in this part 501, the Postal Service
will issue a written notice of proposed suspension citing deficiencies
for which suspension of authorization to manufacture and/or distribute
a specific meter or class of meters may be imposed under paragraph
(c)(2) of this section. Except in cases of willful violation, the
manufacturer will be given an opportunity to correct deficiencies and
achieve compliance with all requirements within a time limit
corresponding to the potential risk to postal revenue.
(2) In cases of willful violation, or if the Postal Service
determines that the manufacturer has failed to correct cited
deficiencies within the specified time limit, the Postal Service will
issue a written notice setting forth the facts and reasons for the
decision to suspend and the effective date if a written defense is not
presented as provided in paragraph (d) of this section.
(3) If upon consideration of the defense as provided in paragraph
(e) of this section, the Postal Service deems that the suspension is
warranted, the suspension will remain in effect for up to 90 days
unless withdrawn by the Postal Service.
(4) At the end of the 90-day suspension period, the Postal Service
may:
(i) Extend the suspension in order to allow more time for
investigation or to allow the manufacturer to correct the problem;
(ii) Make a determination to revoke authorization to manufacture
and/or distribute the manufacturer's meters in part or in whole; or
(iii) Withdraw the suspension based on identification and
implementation of a satisfactory solution to the problem.
(d) The manufacturer may present the Postal Service with a written
defense to any suspension or revocation determination within 30
calendar days of receiving the written notice (unless a shorter time
frame is deemed necessary). The defense must include all supporting
evidence and state with specificity the reasons for which the order
should not be imposed.
(e) After receipt and consideration of the defense, the Postal
Service shall advise the manufacturer of the decision and the facts and
reasons for it. The decision shall be effective on receipt unless it
provides otherwise. The decision shall also advise the
[[Page 5981]] manufacturer that it may appeal that determination within
30 calendar days of receiving written notice (unless a shorter time
frame is deemed necessary), as specified therein. The appeal must
include all supporting evidence and state with specificity the reasons
the manufacturer believes the decision is erroneous.
(f) An order or final decision under this section does not preclude
any other criminal or civil statutory, common law, or administrative
remedy that is available by law to the Postal Service, the United
States, or any other person.
Sec. 501.6 Specifications.
Postage meters must incorporate all the following features and
safeguards:
(a) A postage meter is the postage printing die and postage
registering mechanism of a mailing machine. It may be integral with the
mailing machine or separable. In either case, the licensee must be able
to bring the meter to the post office for setting or examination.
(b) A postage meter may be capable of printing one denomination of
postage and registering the number of such impressions made (single
denomination), or it may be capable of printing varying denominations
and registering either multiples of the smallest unit printed
(multidenomination) or the currency value of the impressions made
(omnidenomination). The printing die or dies, counters, and
counteractuating mechanism must be inseparable from the meter, except
by the manufacturer.
(c) In each postage meter, there must be two accurate and
dependable counting devices: one ascending and registering the total
imprinted, the other descending and registering the unused postage
balance. The descending register must actuate a locking mechanism,
preventing further operation of the meter after the register has
reduced to an amount less than the largest denomination printable in
one operation or to zero. In electronic meters, the locking device must
prevent printing if the amount that would be printed would reduce the
descending register to less than zero. The descending register must be
so constructed as to be easily set at the post office for any amount of
postage or number of impressions within its capacity, prepaid by the
licensee.
(d) The entire meter must be encased in a substantial housing to
which unauthorized access cannot be gained without creating obvious
damage. The descending register must be accessible to the post office
by a door equipped with a suitable lock and with provision for a post
office seal. The requirement that accessibility to the descending
register be restricted does not apply to Computerized Remote Postage
Meter Resetting System electronic meters that have no access to the
descending register of the meter. Descending registers on this type of
meter are reset electronically by coded input only. The ascending
register and all other components must be so shielded as not to be
accessible even when the door is open. The readings of both registers
must be easily obtainable at any time between operations, by visibility
through closed windows, or by imprint on tape or card, or by a
combination of the two methods. The housing must be of such
construction that it is impossible to alter the readings of the
ascending register except by normal operation or to gain access to the
internal components, except for setting the descending register under
Sec. 501.20(c), without mutilation.
(e) The printing die must either conform in design to one already
in use or be approved by the Postal Service. The die must include the
serial number of the meter and identification of the manufacturer, and
the die must be so constructed or shielded that it is not practically
possible without proper registration in the ascending and descending
register to obtain imprints fraudulently. The die must be attached to
the meter in a manner (such as with breakoff screws) that it is not
practicable to remove or replace the die fraudulently.
(f) The meter die must include a postmark to print the name of the
city and state from which mail is dispatched and the date of mailing,
except as specified by the Postal Service. Information that must appear
in the meter postmark and the location of that postmark must be as
specified by the Postal Service.
(g) A meter may be designed to print a ``meter slogan'' or ``ad
plate'' to the left of, and next to, the postmark. The size and
position of a slogan or meter ad must be such that it does not
interfere with or obscure the meter stamp or postmark, and it must be
possible to install the plate easily without exposing the meter stamp
die. Plates must be made of suitable, durable material that does not
soften or disintegrate while in use. Plates must be well fitted and so
securely fastened to the printing mechanism that they do not become
loose or detached or otherwise interfere with proper operation of a
meter.
(h) The entire meter must be of sufficiently solid, substantial,
and dependable construction that protects the Postal Service amply
against loss of revenue from fraud, manipulation, misoperation, or
breakdown.
(i) In addition to the features and safeguards above, electronic
meters must:
(1) Have either nonvolatile ascending and descending registers or a
solid-state memory that stores the data for the ascending and
descending registers. Solid-state memories that rely on applied voltage
for memory retention must be powered by batteries with a minimum
support life of 5 years from date of battery renewal with no external
power applied and with sufficient redundancy to be self-checking.
(2) Be able to display the amounts in both the ascending and the
descending registers (not necessarily at the same time).
(3) Be able to display, free from accidental changes, the next
amount of postage to be printed.
(4) Be resettable by Postal Service employees, preferably without
customized equipment.
(5) Contain a fault-detection device for computational security
that automatically locks out the meter and prevents printing of
additional postage in the event of malfunction.
(6) Meet Postal Service test specifications in United States Postal
Service Specification, Postage Meters, Electronic, USPS-M-942 (RCD).
Persons wanting to manufacture electronic postage meters may obtain a
copy of this Postal Service test specification from USPS Headquarters.
(j) Auxiliary equipment required for the operation of the postage
meters must be part of the final production models submitted for Postal
Service approval. Failure of the auxiliary equipment, which could cause
malfunction in postage meter operation, is considered the same as a
postage meter failure.
Sec. 501.7 Test plans.
To receive Postal Service approval, a postage meter must be tested.
Manufacturers of electronic meters must submit a detailed test plan to
the Postal Service for approval at least 60 days before the conduct of
the tests.
The test plan must include tests that, if passed by a meter, prove
compliance by the meter with all postal requirements. The test plan
must list the parameters to be tested, test equipment, procedures, test
sample sizes, and test data formats. Also, the plan must include
detailed descriptions, specifications, design drawings, schematic
diagrams, and explanations of the purposes of all special test
equipment and nonstandard or noncommercial instrumentation.
[[Page 5982]]
Sec. 501.8 Submission of each model.
Each meter model proposed for manufacture must be approved by the
Postal Service after testing at the manufacturer's expense. A
preliminary working model that meets the specifications in Sec. 501.6
may be submitted for tentative approval. No meters of any model may be
distributed or used for postage payment until a complete unit made to
production drawings and specifications is submitted, tested, and
approved, except as may be authorized for preliminary field testing.
Sec. 501.9 Security testing.
The Postal Service reserves the right at any time to require or
conduct additional examination and testing, without cause, of any meter
submitted to the Postal Service for approval or approved by the Postal
Service for manufacture and distribution.
Sec. 501.10 Meter approval.
As provided in Sec. 501.13, the manufacturer has a duty to report
security weaknesses to the Postal Service to ensure that each meter
model and every meter in service protects the Postal Service against
loss of revenue at all times. A grant of approval of a model does not
constitute an irrevocable determination that the Postal Service is
satisfied with the revenue protection capabilities of the model. After
approval is granted to manufacture and distribute a meter, no changes
affecting the basic features or safeguards of a meter may be made
except as authorized or ordered by the Postal Service in writing.
Sec. 501.11 Conditions for approval.
(a) The Postal Service may require, and reserves future rights to
require, that production models of approved meters be deposited with
the Postal Service.
(b) The manufacturer must provide copies of resetting and
inspection media to each licensing post office prior to distribution.
The contents of this media must include an explanation of how the meter
is reset and an explanation of any special or unique features of the
meter. The manufacturer must also provide a training video for any new
metering product that includes an explanation of how the device is
reset as well as recommended methods for detecting evidence of
tampering.
(c) As a condition of approval, the manufacturer has a continuing
obligation to provide the Postal Service with copies of service manuals
and updates to setting instructions. The manufacturer must also
promptly provide Mailing Systems Development, USPS Headquarters, with
any additional documentation on request.
(d) Additional meters must be submitted to the Postal Service for
testing, at the expense of the manufacturer, on request by the Postal
Service.
Sec. 501.12 Suspension and revocation of approval.
(a) The Postal Service may suspend approval under Sec. 501.10 if
the Postal Service has probable cause to believe that a manufacturer's
meter or class of meters poses an unreasonable risk to postal revenues.
Suspension of approval to manufacture or distribute a meter or class of
meters in whole or in part will be based on the potential risk to
postal revenues. Prior to determining whether approval of a meter or
class of meters should be revoked, the procedures in paragraph (b) of
this section shall be followed.
(b) Suspension in all cases shall be as follows:
(1) Upon determination by the Postal Service that a meter poses an
unreasonable risk to postal revenues, the Postal Service will issue a
written notice of proposed suspension citing deficiencies for which
suspension may be imposed under paragraph (b)(2) of this section. The
manufacturer will be given an opportunity to correct deficiencies and
achieve compliance with all requirements within a time limit
corresponding to the potential risk to postal revenue.
(2) If the Postal Service determines that the manufacturer has
failed to correct cited deficiencies within the specified time limit,
the Postal Service will issue a written notice setting forth the facts
and reasons for the decision to suspend and the effective date if a
written defense is not presented as provided in paragraph (c) of this
section.
(3) If upon consideration of the defense as provided in paragraph
(d) of this section, the Postal Service deems that the suspension is
warranted, the suspension will remain in effect for up to 90 days
unless withdrawn by the Postal Service.
(4) At the end of the 90-day suspension period, the Postal Service
may:
(i) Extend the suspension in order to allow more time for
investigation or to allow the manufacturer to correct the problem;
(ii) Make a determination to revoke the approval of the
manufacturer's meter or class of meters; or
(iii) Withdraw the suspension based on identification and
implementation of a satisfactory solution to the problem.
(c) The manufacturer may present the Postal Service with a written
defense to any suspension or revocation determination within 30
calendar days of receiving the written notice (unless a shorter time
frame is deemed necessary). The defense must include all supporting
evidence and state with specificity the reasons for which the order
should not be imposed.
(d) After receipt and consideration of the defense, the Postal
Service shall advise the manufacturer of the decision and the facts and
reasons for it. The decision shall be effective on receipt unless it
provides otherwise. The decision shall also advise the manufacturer
that it may appeal that determination within 30 calendar days of
receiving written notice (unless a shorter time frame is deemed
necessary), as specified therein. The appeal must include all
supporting evidence and state with specificity the reasons the
manufacturer believes the decision is erroneous.
(e) An order or final decision under this section does not preclude
any other criminal or civil statutory, common law, or administrative
remedy that is available by law to the Postal Service, the United
States, or any other person.
Sec. 501.13 Reporting.
(a) For purposes of this section, ``manufacturer'' refers to the
authorized postage meter manufacturer in Sec. 501.1 and its foreign
affiliates, subsidiaries, assigns, dealers, independent dealers,
employees, and parent corporations.
(b) Each authorized postage meter manufacturer in Sec. 501.1 must
submit a preliminary report to notify the Postal Service promptly (in
no event more than 21 calendar days of discovery or 21 calendar days of
the effective date of this regulation) of the following:
(1) All findings or results of any testing known to the
manufacturer concerning the security or revenue protection-related
features, capabilities, or failings of any meters sold, leased, or
distributed by the manufacturer that have been approved for sale,
lease, or distribution by the Postal Service or any foreign postal
administration; or have been submitted for approval by the manufacturer
to the Postal Service or other foreign postal administration(s); and
(2) All potential security weaknesses or methods of meter tampering
of the meters the manufacturer distributes of which the manufacturer
knows or should know, and the meter(s) or model(s) subject to each
method. These potential security weaknesses include but are not limited
to suspected equipment defects, suspected abuse by [[Page 5983]] a
meter licensee or manufacturer employee, suspected security breaches of
CMRS information systems, occurrences outside normal performance, or
any repeatable deviation from normal meter performance (within the same
model family and/or by the same licensee).
(c) Within 45 days of the preliminary notification of the Postal
Service under Sec. 501.13(b), the manufacturer must submit a written
report to the Postal Service. The report must include the
circumstances, proposed investigative procedure, and the anticipated
completion date of the investigation. The manufacturer must also
provide periodic status reports to the Postal Service during subsequent
investigation and, on completion, must submit a summary of the
investigative findings.
(d) The manufacturer must establish and adhere to timely and
efficient procedures for internal reporting of potential security
weaknesses. The manufacturer is required to submit a copy of internal
reporting procedures and instructions to the Postal Service for review.
Sec. 501.14 Administrative sanction on reporting.
(a) Notwithstanding any act, admission, or omission by the Postal
Service prior to the effective date of this section, an authorized
postage meter manufacturer may be subject to an administrative sanction
for failing to comply with Sec. 501.13.
(b) The Postal Service shall determine all costs and revenue losses
measured from the date that the manufacturer knew or should have known
of a potential security weakness, including, but not limited to,
administrative and investigative costs and documented revenue losses
that result from any meter(s) for which the manufacturer failed to
comply with any provision in Sec. 501.13. The Postal Service shall
recover any and all such costs and losses (net of any amount collected
by the Postal Service from the licensees or meter users) with interest
by issuing a written notice to the manufacturer setting forth the facts
and reasons on which the determination to impose the sanction is based.
The notice shall advise the manufacturer of the date that the action
will take effect if a written defense is not presented within 30
calendar days of receipt of the notice.
(c) The manufacturer may present the Postal Service with a written
defense to the proposed action within 30 calendar days of receipt. The
defense must include all supporting evidence and state with specificity
the reasons for which the sanction should not be imposed.
(d) After receipt and consideration of the defense, the Postal
Service shall advise the manufacturer of the decision and the facts and
reasons for it; the decision shall be effective on receipt unless it
provides otherwise. The decision shall also advise the manufacturer
that it may, within 30 calendar days of receiving written notice,
appeal that determination as specified therein.
(e) The manufacturer may submit a written appeal to the Postal
Service within 30 calendar days of receipt of the decision. The appeal
must include all supporting evidence and state with specificity the
reasons that the manufacturer believes that the administrative sanction
was erroneously imposed. The submission of an appeal stays the
effectiveness of the sanction.
(f) The imposition of an administrative sanction under this section
does not preclude any other criminal or civil statutory, common law, or
administrative remedy that is available by law to the Postal Service,
the United States, or any other person.
Sec. 501.15 Materials and workmanship.
All meters must adhere to the quality in materials and workmanship
of the approved production model and must be manufactured with suitable
jigs, dies, tools, etc., to ensure proper maintenance and
interchangeability of parts.
Sec. 501.16 Breakdown and endurance testing.
Each meter model proposed for manufacturing must pass without error
or breakdown the following described printing cycle endurance test,
which includes operation of the printing mechanism with proper
registration of the selected postage value in both the ascending and
descending registers. At reasonably frequent intervals, the
manufacturer must take meters at random from production and subject
them to breakdown tests to make certain that quality and performance
standards are maintained.
(a) For meters that operate at 100 or more printing cycles per
minute--4 million cycles. For meters that operate at less than 100
printing cycles per minute (and cannot be used interchangeably on
power-base machines that operate at 100 or more printing cycles per
minute)--2 million cycles.
(b) For multidenomination and omnidenomination meters, postage
value selection elements must be tested for one-half million
operations. A complete operation includes selection of a value and
return to zero.
(c) Balance register lockout operation must be done at the start
of, at intervals during, and after the printing cycle test.
Sec. 501.17 Protection of printing dies and keys.
During the process of fabricating parts and assembling postage
meters, the manufacturer must exercise due care to prevent loss or
theft of keys or of serially numbered postage-printing dies or
component parts (such as denomination-printing dies, or auxiliary power
supply and meter-setting equipment for electronic meters) that might be
used in some manner to defraud the Postal Service of revenue. All
serially numbered printing dies produced should be accounted for by
assembly into meters or by evidence of mutilation or destruction.
Postage printing dies removed from meters and not suitable for
reassembly must also be mutilated so that they cannot be used or they
must be completely destroyed.
Sec. 501.18 Destruction of meter stamps.
All meter stamps printed in the process of testing dies or meters
must be collected and destroyed daily.
Sec. 501.19 Inspection of new and rebuilt meters.
All new and rebuilt meters must be inspected carefully before
leaving the manufacturer's meter service station.
Sec. 501.20 Keys and setting equipment.
The meter manufacturer must furnish keys and other essential
equipment for setting the meters to all post offices under whose
jurisdiction its meters are licensed for use. These items must be
protected and must not be furnished to persons not authorized by the
Postal Service to possess them. The Postal Service will maintain
control over the procurement, manufacture, and distribution of meter
security seals. Manufacturers must reimburse the Postal Service
promptly for the costs of the seals. All costs associated with meter
security seals will be apportioned twice annually to the meter
manufacturers by the installed base of each manufacturer.
Sec. 501.21 Distribution facilities.
Authorized manufacturers must keep adequate facilities for and
records concerning the distribution, control, and maintenance of
postage meters. All such facilities and records are subject to
inspection by Postal Service representatives. [[Page 5984]]
Sec. 501.22 Distribution controls.
Each authorized manufacturer must do the following:
(a) Hold title permanently to all meters of its manufacture except
those purchased by the Postal Service.
(b) On behalf of applicants, transmit electronically copies of
completed PS Forms 3601-A, Application for a License to Lease and Use
Postage Meters, to the designated Postal Service central processing
facility.
(c) Lease meters only to parties that have valid licenses issued by
the Postal Service.
(d) Supply only those meter slogan or ad plates that meet the
requirements of the Postal Service for suitable quality and content.
(e) Have all meters set, sealed (if applicable), and checked into
service by the appropriate Postal Service representative prior to
delivering them to licensees. Meters must be checked into service at
the licensing post office, unless the meter is serviced under the on-
site meter-setting program. The meter manufacturer must present the
meter and a completed PS Form 3601-C, Postage Meter Installation,
Withdrawal, or Replacement, to the appropriate Postal Service
representative when checking a meter into service. A postage meter
should show a zero in the descending register before being checked into
service. If it does not, the initial payment must include the residual
amount the locked-out meter could not imprint.
(f) Notify CMRS licensees of the dates on which meter examinations
are due, and notify the licensing post offices of CMRS meters that have
not been reset during the previous 3 months and/or are due for an
annual examination. Resetting transactions must not be completed by the
manufacturer if the meters are not brought to the post office for
examination by the due date. Licensees who do not bring in their meters
after the initial manufacturer notification must be approached again
within 15 days, preferably by personal contact. If no response is
received within another 15 days, the Postal Service shall notify the
licensee that the meter is to be removed from service and the meter
license revoked, following the procedures for revocation specified by
regulation. The Postal Service shall notify the manufacturer to remove
the meter from the licensee's location and present it to the licensing
post office to be checked out of service within 15 days.
(g) Present meters to the licensing post office to be checked out
of service if the licensee no longer wants the meter, or if the meter
is to be removed from service for any other reason. Take the meter to
the licensing post office for withdrawal, with a completed PS Form
3601-C, Postage Meter Installation, Withdrawal, or Replacement, and
copy of the applicable PS Form 3602-A, Record of Meter Register
Readings.
(h) Retrieve any misregistering, faulty, or defective meter and
present it to the licensing post office to have the meter checked out
of service within 3 business days of being notified by the licensee of
the defect. After examining a meter withdrawn for apparent faulty
operation affecting registration, the manufacturer must furnish a
report explaining the malfunction to the licensing post office. That
report must include all applicable meter documentation and a
recommendation for the appropriate postage adjustment, if applicable,
as follows:
(1) Mechanical meters. The manufacturer's postage adjustment
recommendation for a misregistering mechanical meter must be
accompanied by a refund request; a copy of the licensee's PS Form 3610,
Record of Postage Meter Settings, and PS Form 3602-A; and the
manufacturer's analysis of the licensee's recent mailing history
supporting the recommended postage adjustment.
(2) Electronic meters. The manufacturer's postage adjustment
recommendation for a misregistering electronic meter must be
accompanied by a manufacturer-generated summary report of the
appropriate redundant electronic register memory readouts for the
meter, clearly indicating the register readings; a letter of
instruction explaining the summary report; a copy of the licensee's PS
Form 3610, PS Form 3602-A, and applicable system-generated register
documentation (if the PS Form 3602-A is not maintained); and an
explanation of the meter malfunction that resulted in inaccurate
registration, if determined. If a summary report of the appropriate
redundant electronic register memory readouts cannot be retrieved, the
manufacturer's recommendation must be accompanied by a refund request;
a copy of the licensee's PS Form 3610, PS Form 3602-A, and applicable
system-generated register documentation (if the PS Form 3602-A is not
maintained); and the manufacturer's analysis of the licensee's recent
mailing history supporting the recommended postage adjustment.
(i) Report the loss or theft of any meter or the recovery of any
lost or stolen meter promptly. The manufacturer must complete a
standardized lost and stolen meter incident report notifying the Postal
Service of lost, stolen, or recovered meters within 30 calendar days of
the manufacturer's determination of a meter loss, theft, or recovery.
The manufacturer must complete all preliminary location activities
specified in Sec. 501.26 prior to submission of a Lost and Stolen Meter
Incident Report to the Postal Service.
(j) Provide the designated ISSC with a compatible computer magnetic
tape, computer diskette, or electronic transmission, listing all
licensee meters in service, at the close of business each postal
quarter. Include in each file record the meter serial number, model
number, the user's name and address, the date that the meter was placed
in service, and the ZIP Code or finance number of the licensing post
office. Manufacturers are responsible for reconciling differences and
keeping accurate records. This includes reconciliation of differences
with licensing post offices by the manufacturer's branches or dealers,
which results from meters that are not in Postal Service or
manufacturer records.
(k) Keep at manufacturer's headquarters a complete record by serial
number of all meters manufactured, showing all movements of each from
the time that the meter is produced until it is scrapped, and the
reading of the ascending register each time the meter is checked into
or out of service through a post office. These records must be
available for inspection by officials of the Postal Service at any time
during business hours. These records may be destroyed 3 years after the
meter is scrapped.
(l) Cancel a lease agreement with any lessee whose meter license is
revoked by the Postal Service, remove the meter within 15 calendar
days, and have the meter checked out of service.
(m) Promptly remove from service any meter that the Postal Service
indicates should be removed from service. When a meter license is
canceled, all meters in use by the licensee must be removed from
service.
(n) Keep a permanent record by serial number of all meter keys
issued to postmasters, as well as those sections of the manufacturer's
establishment in which their use is essential, preferably in the form
of signed receipt cards. The record must include the date, location,
and details of any losses, thefts, or recoveries of such keys.
(o) Examine each meter withdrawn from service for failure to record
its operations correctly and accurately, and report to the Postal
Service the mechanical condition or fault that caused the failure.
[[Page 5985]]
(p) Provide the designated ISSC with a compatible computer tape of
lost or stolen meters, monthly. The file is due on the first of each
month (for the preceding month's activity).
(q) Take reasonable precautions in the transportation and storage
of meters to prevent their reaching the hands of unauthorized
individuals. Manufacturers must ship all postage meters by Postal
Service registered mail unless given specific written permission to use
another carrier by the Postal Service. The manufacturer must
demonstrate that the alternative delivery carrier employs security
procedures equivalent to those for registered mail.
(r) Affix to all postage meters a cautionary label providing the
meter user with basic reminders on leasing, meter movement, and misuse
and a barcoded label containing a barcoded representation of the meter
serial number.
(1) The cautionary meter label must be placed on all meters in a
conspicuous and highly visible location. Words printed in capital
letters should be highlighted, preferably in red. The minimum width of
the label should be 3.25 inches, and the minimum height should be 1.75
inches. The label should read as follows:
----------------------------------------------------------------------
RENTED POSTAGE METER--NOT FOR SALE
PROPERTY OF [NAME OF MANUFACTURER]
Use of this meter is permissible only under U.S. Postal Service
license. Call [Name of Manufacturer] at (800) ###-#### to relocate/
return this meter.
WARNING! METER TAMPERING IS A FEDERAL OFFENSE
IF YOU SUSPECT METER TAMPERING,
CALL POSTAL INSPECTORS AT 1-800-654-8896 OR (202) 484-5480.
REWARD UP TO $50,000 for information leading to the conviction of
any person who misuses postage meters resulting in the Postal
Service not receiving correct postage payments.
----------------------------------------------------------------------
(2) The barcode label must be placed near the stamped serial number
and must meet the following specifications: Code 3 of 9, ten digits
long, with the first two digits being the manufacturer code (01--Ascom
Hasler, 02--Pitney Bowes, 03--Francotyp-Postalia, 04--Friden Neopost)
and the next eight digits being the meter serial number, zero-filled
right-justified. Additional barcode digits may be used for manufacturer
purposes if the Postal Service is notified of the information to be
encoded thereby.
(3) Exceptions to the formatting of required labeling will be
determined on a case-by-case basis. Any deviations from standardized
meter labeling requirements must be approved in writing by the Postal
Service.
Sec. 501.23 Administrative sanction.
(a) ``Meter'' for purposes of this section means any meter
manufactured by an authorized postage meter manufacturer under
Sec. 501.1 that is not owned or leased by the Postal Service.
(b) An authorized manufacturer that, without just cause, fails to
conduct or perform adequately any of the controls in Sec. 501.22, fails
to follow standardized lost and stolen meter incident reporting in
Sec. 501.26, or fails to conduct any of the inspections required by
Sec. 501.25 in a timely fashion may be subject to an administrative
sanction based on the investigative and administrative costs and
documented revenue losses (net of any amount collected by the Postal
Service from the licensee or meter user) with interest per occurrence
measured from the date on which the cost/loss occurred, as determined
by the Postal Service. Sanctions will be based on the costs and revenue
losses that result from the manufacturer's failure to comply with these
requirements.
(c) The Postal Service may impose an administrative sanction under
this section by issuing a written notice to the manufacturer setting
forth the facts and reasons on which the determination to impose the
sanction is based. The Postal Service shall determine all costs and
losses. The notice shall advise the manufacturer of the date the action
will take effect if a written defense is not presented within 30
calendar days of receipt of the notice.
(d) The manufacturer may present a written defense to the proposed
action within 30 calendar days of receipt of the notice to the Postal
Service. The defense must include all supporting evidence and state
with specificity the reasons for which the sanction should not be
imposed.
(e) After receipt and consideration of the defense, the Postal
Service shall advise the manufacturer of the decision and the facts and
reasons for it; the decision shall be effective on receipt unless it
provides otherwise.
(f) The manufacturer may submit a written appeal of the decision
within 30 calendar days of receipt of the decision, addressed to the
manager of Customer Service Support, USPS Headquarters. The appeal must
include all supporting evidence and state with specificity the reasons
that the manufacturer believes that the administrative sanction was
erroneously imposed. The submission of an appeal stays the
effectiveness of the sanction.
(g) The imposition of an administrative sanction under this section
does not preclude any other criminal or civil statutory, common law, or
administrative remedy that is available by law to the Postal Service,
the United States, or any other person.
Sec. 501.24 Meter replacement.
The manufacturer must keep its meters in proper operating condition
for licensees by replacing them when necessary or desirable to prevent
mechanical breakdown.
Sec. 501.25 Inspection of meters in use.
(a) The manufacturer must have all its meters in service with
licensees inspected according to the following schedule:
----------------------------------------------------------------------------------------------------------------
Meter type Monthly Quarterly Semiannually Annually
----------------------------------------------------------------------------------------------------------------
Mechanical........... Special Circumstances High-Volume Licensees Other Licensees Using Stand-Alone Meters.
Using System Meters. System Meters.
Electronic........... Special Circumstances ..................... High-Volume Licensees All CMRS and Other
Using Non-CMRS Electronic Meters.
System Meters.
----------------------------------------------------------------------------------------------------------------
(b) Manufacturer inspections must be sufficiently thorough to
determine that each meter is clean, in proper operating condition, and
recording its operations correctly and accurately. The manufacturers
must:
(1) Compare the meter serial number on the meter with the serial
number on the source document (manufacturer's records).
(2) Record the ascending and descending register readings and
calculate the total readings. Record the locking seal identification
number.
(3) Obtain the licensee's PS Form 3602-A and a copy of the most
recent [[Page 5986]] PS Form 3603, Receipt for Postage Meter Setting,
and verify the control total after the last setting with the control
total calculated during the proof of register procedure.
(4) Verify the accuracy of postage selection, denomination
indicator wheels or electronic display, and denomination printing
wheels following the proof of registers by printing a .00 meter stamp
and comparing the register readings after printing with the recorded
register readings.
(5) Check to determine that the post office locking seal is in
place and properly sealed and that the seal wire is properly wound and
tightly gripped by the seal-locking mechanism, and tightly pulled up to
the lock cover or post. Ensure that the locking seal identification
number matches the seal number recorded at the time of the last meter
resetting.
(6) Check to determine that the lock cover properly protects the
lock and has not been loosened, bent, or tampered with.
(7) Complete the following, as applicable to the specific meter
model:
(i) Check to ensure that the meter fits properly on the meter base.
(ii) Check all breakoff screws to determine that none is missing or
loose or shows signs of removal.
(iii) Operate the dater and meter ad selector dials to test the
dater, postmark die, and meter ad plate.
(iv) Check the alignment and condition of engraving on the
denomination printing wheels, when visible.
(v) Check the descending register door for damage, pry marks, or
scarring. Make certain that the door cannot be opened without unlocking
it.
(vi) Examine the meter drum for damage, pry marks, or scarring.
(vii) Examine the meter cover for pry marks or scarring near the
post office lock or breakoff screws, any drilled holes, or any signs of
attempted entry into the internal mechanism of the meter.
(viii) Examine the postage meter stamp die for excessive wear,
damage, breakage, or scars from prying, and the postage die retaining
screws for signs of wear to ensure that none is missing or shows signs
of removal.
(ix) Check the register, counter, and display windows for breakage
or cloudiness.
(x) Obtain the signature of the licensee to show that a meter
inspection has taken place.
(8) Report immediately to the licensee's licensing postmaster any
irregularities in the operation of the meter or signs of improper use,
and take steps to replace or remove the meter.
Sec. 501.26 Meters not located.
Upon learning that one or more of its meters in service cannot be
located, the manufacturer must undertake reasonable efforts to locate
the meter or meters by following a series of Postal Service-specified
actions designed to locate the postage meter. If these efforts are
unsuccessful and the meter is determined to be lost or stolen, the
manufacturer must notify the Postal Service within 30 days through
submission of a Lost and Stolen Meter Incident Report.
(a) If a licensee cannot be located, the manufacturer must, at a
minimum, complete the following actions:
(1) Call the licensee's last known telephone number.
(2) Call directory assistance for the licensee's new telephone
number.
(3) Contact the licensee's local post office for current change of
address information.
(4) Contact the local post office for a copy of the applicable PS
Form 3610 and PS Form 3601-C. Verify the location of the meter or
licensee currently maintained in those meter records.
(5) Contact the rental agency responsible for the property where
the licensee was located (if applicable).
(6) Visit the licensee's last known address to see whether the
building superintendent or a neighbor knows the meter licensee's new
address.
(7) Check the centralized meter inspection file for change of
address notation.
(8) Mail a certified letter to the licensee at the last known
address with the notation ``Forwarding and Address Correction
Requested'' with a return receipt requested.
(9) If new address information is obtained during these steps, any
scheduled meter inspections must be completed promptly.
(b) If a meter is reported to be lost or stolen by the licensee,
the manufacturer must, at a minimum, complete the actions listed below:
(1) Ensure that the meter licensee has filed a police report and
that copies have been provided to the appropriate Inspection Service
Contraband Postage Identification Program (CPIP) specialist.
(2) Withhold issuance of a replacement meter until the missing
meter has been properly reported to the police and to the appropriate
Inspection Service CPIP specialist.
(3) If the manufacturer later learns that the meter has been
located and/or recovered, the manufacturer must update lost and stolen
meter activity records, inspect the meter promptly, initiate a postage
adjustment or transfer if appropriate, and check the meter out of
service if a replacement meter has been supplied to the meter licensee.
(c) If a meter reported to the Postal Service as lost or stolen is
later located, the manufacturer is responsible for submitting a new
lost and stolen meter incident report that references the initial
report and outlines the details of how the meter was recovered. This
report must be submitted to the Postal Service within 30 days of
recovery of the meter. The meter manufacturer is also responsible for
removing located meters from the lost and stolen meter reports provided
on a periodic basis to the Postal Service ISSC.
(d) Any authorized manufacturer that fails to comply with
standardized lost and stolen reporting procedures and instructions may
be subject to an administrative sanction under Sec. 501.23, as
determined by the Postal Service.
Sec. 501.27 Repair of internal mechanism.
Repair or reconditioning of meters involving access to internal
mechanisms must be done only within a factory or suitable meter repair
department under the manufacturer's direct control and supervision.
Meters must be checked out of service by the post office of setting
before they are opened or any internal repairs are undertaken.
Sec. 501.28 Computerized remote postage meter resetting.
(a) Description. The Computerized Meter Resetting System (CMRS)
permits postal licensees using specially designed postage meters to
reset their meters at their places of business via telephonic
communications. Authorized meter manufacturers that offer CMRS services
are known as meter resetting companies (MRCs). To reset a meter, the
licensee telephones the MRC and provides identifying data. Prior to
proceeding with the setting transaction, the MRC must verify the data
and ascertain from its own files whether the licensee has sufficient
funds available on deposit with the Postal Service. If the funds are
available, or the manufacturer opts to provide a funds advance in
accordance with paragraph (b)(4) of this section, the MRC may complete
the setting transaction.
(b) Deposits with the Postal Service.
(1) A CMRS licensee is required to have funds available on deposit
with the Postal Service prior to resetting a meter or the manufacturer
may opt to provide a funds advance in accordance with paragraph (b)(4)
of this section. The details of this deposit requirement are
[[Page 5987]] covered within the Acknowledgment of Deposit Requirement
document. By signing this document, the licensee agrees to transfer
funds to the Postal Service through a lockbox bank, as specified by the
MRC, for the purpose of prepayment of postage. The MRC representative
must provide all new CMRS licensees with this document when a new
account is established. The document must be completed and signed by
the licensee and sent to the licensing post office by the MRC.
(2) The MRC is required to incorporate the following language into
its postage meter rental agreements:
----------------------------------------------------------------------
Acknowledgment of Deposit Requirement
By signing this meter rental agreement, you represent that you have
read the Acknowledgment of Deposit Requirement and are familiar with
its terms. You agree that, upon execution of this Agreement with
[the MRC], you will also be bound by all terms and conditions of the
Acknowledgment of Deposit Requirement, as it may be amended from
time to time.
----------------------------------------------------------------------
(3) The licensee is permitted to make deposits in one of three
ways: check, electronic funds transfer (or wire transfer), or automated
clearinghouse (ACH) transfer. These deposits are to be processed by the
lockbox bank. The lockbox bank must wire all available balances to the
Postal Service daily.
(4) If the MRC chooses to offer advancement of funds to licensees,
it is required to maintain a deposit with the Postal Service equal to
at least 1 day's average funds advanced. The total amount of funds
advanced to licensees on any given day may not exceed the amount the
manufacturer has on deposit with the Postal Service. The MRC is not
authorized to perform settings in excess of the licensee's balance in
any other circumstances. The Postal Service shall not be liable for any
payments made by the MRC on behalf of a licensee that are not
reimbursed by the licensee because the MRC is solely responsible for
the collection of advances.
(c) Revenue protection. The Postal Service shall conduct periodic
assessments of the revenue protection safeguards of each MRC system and
shall reserve the right to revoke an MRC's authorization if the CMRS
system does not meet all requirements set forth by the Postal Service.
In addition, the Postal Service shall reserve the right to suspend the
operation of the MRC for any serious operational deficiencies that are
likely to result in the loss of funds to the Postal Service as provided
in Sec. 501.12.
(d) Equipment. The postage meters used in the computerized
resetting system must conform to the specifications in Sec. 501.6. They
must be tested under Sec. 501.7, and conform to the safeguards,
distribution, and maintenance requirements of Secs. 501.15 through
501.23 to protect the Postal Service against loss of revenue from
fraud, manipulation, misoperation, or breakdown.
(e) Financial operation.
(1) Prior to the Postal Service's selection of a lockbox provider,
the MRC must establish a lockbox account in the name of the Postal
Service at a bank or banks approved by the Postal Service to handle the
deposits of licensees. The MRC must make arrangements with such banks
under which the banks are to inform the manufacturer of the amounts of
licensee funds received each banking day.
(2) The Postal Service lockbox bank(s) will process the CMRS
deposits daily, consolidate the data, and perform a direct file
transmission to each of the MRCs. The daily deposit processing cutoff
times and the automated file transmission times will be coordinated
independently with each of the MRCs. Manufacturers must ensure that
their data center computer is programmed to reflect each licensee
deposit and tracks all licensee activity.
(3) The MRC must require each licensee requesting that its meter be
reset to provide the meter serial number, the licensee account number,
and the meter's ascending and descending register readings. The
manufacturer must verify that the information provided to the licensee
is consistent with its records. The MRC must also verify that there are
enough funds in the licensee's account to cover the postage setting
requested before proceeding with the setting transaction (unless the
manufacturer opts to provide the licensee a funds advance). Immediately
following each such resetting, the MRC must charge the licensee's
account for the amount of the postage reset. After the completion of
each transaction, the manufacturer must promptly provide the licensee
with a statement documenting the transaction and the balance remaining
in the licensee's account. As an alternative, the manufacturer may
provide a statement monthly that documents all transactions for the
period and that shows the balance in the licensee's account after each
transaction.
(4) Each banking day, the lockbox bank(s) are to transfer, by 10
a.m. local lockbox bank time, amounts payable to the Postal Service
from the transactions during the previous day to a designated Federal
Reserve Bank. The MRC must maintain licensee service activity data to
accept and respond to inquiries from licensees concerning the status of
their payments. The lockbox bank must provide the MRCs with a
nationwide, toll-free telephone number for licensee service. The Postal
Service lockbox bank must assign a dedicated senior level licensee
service representative to handle all inquiries and investigations.
(5) The Postal Service requires that the MRCs publicize to all CMRS
licensees the following payment options (listed in order of
preference):
(i) Automated clearinghouse (ACH) debits/credits.
(ii) Electronic funds transfer (wire transfer).
(iii) Checks.
(6) Licensee check deposits must be mailed to a predetermined post
office box address specified by the lockbox bank and accompanied by a
pre-encoded deposit ticket. The Postal Service will provide the MRCs
with the deposit ticket format. The MRC must ensure that the deposit
tickets are distributed to licensees for inclusion with check payments.
At the time a new account is opened, a licensee not possessing a pre-
encoded deposit slip must present the initial payment to the MRC
representative who in turn assigns the licensee a new account number
and manually prepares a deposit ticket to be mailed to the lockbox bank
for processing.
(7) If a licensee prefers to use a payment form other than a check,
the licensee must contact the MRC representative for instructions, and
the MRC must provide the licensee with the appropriate information
regarding the use of automated clearinghouse debits/credits and
electronic funds transfers (wire transfers).
(8) Returned checks and ACH debits are the responsibility of the
Postal Service. In the case of a returned check, the Postal Service
lockbox bank, after an automatic second presentment, will advise the
MRC of the account in question so that the MRC data file can be locked.
The MRC must lock the licensee account immediately so that the licensee
is unable to reset the meter until the Postal Service receives payment
in full for the check returned. The lockbox bank will provide
collection services for returned checks on behalf of the Postal
Service. The Postal Service lockbox bank will notify the MRC once this
item is paid. The MRC will then release the account for activity.
(f) Refunds. The Postal Service will issue a refund to a licensee
for any unused postage in a meter. Refunds of [[Page 5988]] licensee
balances maintained by the Postal Service in the Postal Service fund
are intended to be made directly to the licensee by the lockbox bank
within 48 hours after receipt of a licensee's request.
(g) Reports. The manufacturer must provide reports according to the
following schedule:
------------------------------------------------------------------------
Report
description Contents Frequency Media
------------------------------------------------------------------------
MRC CMRS Daily Summary of Daily........... Paper (facsimile)
Activity Report. Business
Activity.
Revenue ZIP Code of Postal Electronic.
Allocation Licensing Post Accounting
Report. Office; Amount Period.
of Resettings.
Postage Refunds Customer ID; ZIP Daily (by Paper.
Report. Code; Amount of request only).
Refund.
Funds Advanced Customer ID; ZIP Daily (by Paper.
Report. Code; Amount of request only).
Funds Advanced.
------------------------------------------------------------------------
(h) Inspection of records and facilities. The manufacturer must
make its facilities handling the operation of the computerized
resetting system and all records about the operation of the system
available for inspection by representatives of the Postal Service at
all reasonable times.
Sec. 501.29 Notice of proposed changes in regulations.
Before changing the regulations in part 501, the Postal Service
must give an advance notice of any proposed changes to enable persons
who manufacture, or are interested in manufacturing, postage meters a
chance to be heard and to adjust their operations to accord with the
proposed changes if they are adopted.
Appropriate amendments to 39 CFR parts 111 and 501 to reflect these
changes will be published if the proposal is adopted.
Stanley F. Mires,
Chief Counsel, Legislative.
Note: The following draft report and PS Forms are published for
informational purposes only and will not be codified in the Code of
Federal Regulations.
BILLING CODE 7710-12-P
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[FR Doc. 95-2130 Filed 1-30-95; 8:45 am]
BILLING CODE 7710-12-C
