- The Washington Times - Wednesday, October 12, 2011

It might have been the first piece of mail you got after your recent move. And if you’re still unpacking, look for it. You can’t miss it. It’s the “welcome kit” from the U.S. Postal Service — stuffed into the mailboxes of tens of millions of Americans who have filled out change-of-address forms.

The change-of-address confirmation letter comes in an official-looking USPS envelope with the words “verification required” and “do not discard,” but it contains mostly ads and coupons from companies selling cellphone service, insurance, home security systems, appliances, mattresses, bottled water, banking services, electronics and other move-related products and services.

“Double bonus! Free use of a dispenser,” one ad for bottled water declares.

While these welcome kits may provide a targeted marketing opportunity for advertisers and much-needed revenue for the USPS, federal agencies aren’t allowed to sell or rent personal information such as names and addresses under the federal Privacy Act.

For years, the USPS has given a Massachusetts company, Imagitas, exclusive rights to manage its change-of-address process, called MoverSource. As part of the deal, which was based on an unsolicited proposal sent to the USPS in the 1990s, the company sells advertising to major retailers. The ads then are sent to millions of homes along with the change-of-address letter.

For retailers, it’s a one-of-a-kind marketing tool because the ads will be included with official USPS correspondence almost certain to be opened and not tossed into the trash. But the arrangement, which USPS and Imagitas call perfectly legal, raises serious concerns among privacy analysts who question how using personal name and address information for marketing purposes squares with USPS and federal privacy rules.

“This fails to live up to the standards that Congress set up when it passed the Privacy Act,” said John Verdi, senior counsel at the Electronic Privacy Information Center in Washington. “The intent is to allow citizens control over how their information is used when collected by government agencies.

“In this case, you have a federal agency collecting information for one purpose, forwarding mail, and using it for a wholly different purpose, direct marketing.”

Paul Stephens, director of policy and advocacy at the Privacy Rights Clearinghouse, added that while USPS is in dire need of revenue, “Obviously we as a privacy organization are going to take issue with any revenue schemes that could infringe on the privacy rights of postal customers.”

The Postal Service, in a statement to The Washington Times, defended the program.

“This program allows postal customers who are moving to change their address with ease while also receiving access to move-related special offers and information that will make their move a more pleasant and rewarding experience,” USPS said.

“We believe this program, which is provided through an innovative public/private partnership, is well within the Postal Service’s legal authority. The Postal Service does not sell or rent name and address information.”

The welcome kit contains contact information for local government resources, as well as a number to call if mail isn’t being forwarded, but most of the material inside consists of advertising.

The Postal Service declined to respond to other questions about the program, including whether the USPS general counsel’s office has ruled on the legality of the program and what federal statute permits the practice.

Pitney Bowes, which owns Imagitas, called the change-of-address program a “model public-private partnership” that has helped reduce postal operating costs by “millions of dollars a year while connecting countless Americans to valuable discounts from local businesses,” according to a statement provided to The Times.

“We and the Postal Service run this program with integrity and consistent with all our legal obligations.”

10-year renewal

Imagitas and the USPS announced in January the renewal of their MoverSource Alliance service for 10 years, marked by a “celebratory event” in the State Room, an upscale corporate conference spot in downtown Boston. The announcement noted that since its inception, the program had provided the postal service with more than $300 million in revenue.

But redacted contract records provided to The Times through the Freedom of Information Act give no indication how much money the USPS receives nor how it and Imagitas split advertising profits. It’s also not clear why the contract runs for an entire decade.

“Imagitas was chosen because they have expertise in administering the change of address process,” USPS said. “The 10-year term was to ensure stability in the change-of-address program so that there are no sudden interruptions in the service.”

Contract records include a host of guidelines on what is allowed and what is off-limits in the advertising material sent to movers. Ads are supposed be related to moving, but the words “junk mail” aren’t permitted.

Also prohibited, along with violence and suggestive or sexually explicit imagery or words, is advertising that:

• Implies any views concerning abortion, birth control or family planning.

• Implies or declares an endorsement of a product or service by USPS or any of its agencies or officials, except as authorized by law.

• “Includes content that either explicitly or implicitly promotes, opposes or otherwise refers to any social, political, religious moral or other ‘public forum’ issues.”

Despite the apparent ban on religious references, a movers’ guide packet included sample address labels for sale that included passages from the Bible, citing the Gospel of Matthew: “Seek First His Kingdom” and “With God All Things are Possible.” Another sample address says, “What the World Needs is Jesus.”

Privacy rules

A 1999 audit of the change-of-address program by the USPS Office of Inspector General said the profits were split 50/50 between the USPS and the “strategic alliance.” The audit also said management conducted random tests to protect against unauthorized use of change-of-address listings.

At the time, a bulk mail association had raised concerns about the change-of-address program, saying USPS was getting “into businesses that are marginally related to its mission of delivering mail,” according to the report.

But the inspector general concluded “the inclusion of advertising to reduce costs and potentially create revenue is not a change in mission, but just good business sense.”

Still, privacy analysts say concerns remain.

USPS privacy policies state, “If you have provided personal information to register or purchase a product or service, we will not use that information to contact you about another product or service unless you have provided express consent.” But it’s unclear how anybody who signs up for the change-of-address program can opt out of receiving commercial advertisements.

“I don’t know how they’re getting around the Privacy Act. It certainly seems like a violation of the spirit of the act,” said Robert Ellis Smith, publisher of Privacy Journal.

When movers fill out a change-of-address form, a privacy notice on the form states that the information supplied will be used to forward mail. Although the form is voluntary, USPS says it can’t forward mail without it.

USPS also informs movers that it does not disclose personal information except in “limited circumstances,” including to “contractors who help fulfill the service.”

Imagitas has come under scrutiny over privacy issues in recent years. In lawsuits, it has been sued over accusations that it violated the federal Drivers Privacy Protection Act, according to Securities and Exchange Commission filings by Pitney Bowes. The lawsuits stemmed from a program called DriverSource, in which Imagitas entered into contracts with states to mail out auto registration renewal notices along with third-party advertisements.

In December 2009, a federal appeals court upheld a lower-court ruling in favor of Imagitas, but other state lawsuits remain pending. In SEC filings, Pitney Bowes said Imagitas had filed motions to dismiss the lawsuits and that the DriverSource program did not “reveal the personal information of any state resident to any advertiser.”

Postal ties

Among those who have served on the Imagitas board of directors is Mary Elcano, former general counsel for the USPS, now the top lawyer at the American Red Cross. In response to questions about Ms. Elcano’s work for Imagitas after leaving USPS, a statement provided through a Red Cross spokeswoman confirmed that she left her position with USPS in 2000.

“After receiving approval in a USPS ethics opinion in August 2004, she joined the Imagitas board of directors in September 2004 and served for less than a year until May 2005, when the company was sold and her involvement in Imagitas ended,” the statement said. “As a board member at Imagitas, she performed the normal fiduciary and oversight duties expected of a board member.”

Imagitas also has past ties to the Carlyle Group, where the chairman of the USPS Board of Governors, Louis J. Giuliano, is a senior adviser. In 2000, the Carlyle Group announced it made a $20 million investment in Imagitas to “broaden its e-commerce offerings for government agencies.” Imagitas was sold in 2005 to Pitney Bowes, and a USPS spokesman said the board has not voted on any matters related to the Imagitas agreement.

Mr. Giuliano was appointed to the USPS board in June 2005.

• Jim McElhatton can be reached at jmcelhatton@washingtontimes.com.

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