39 C.F.R. PART 501—AUTHORIZATION TO MANUFACTURE AND DISTRIBUTE POSTAGE METERS
Title 39 - Postal Service
Authority: 5 U.S.C. 552(a); 39 U.S.C. 101, 401, 403, 404, 410, 2601, 2605; Inspector General Act of 1978, as amended (Pub. L. 95–452, as amended), 5 U.S.C. App. 3.
Source: 60 FR 30726, June 9, 1995, unless otherwise noted.
(a) Postage evidencing systems produce evidence of prepayment of U.S. postage by any method other than postage stamps or permit imprint. They include but are not limited to postage meters and PC Postage® systems. The Postal Service considers the infrastructure associated with such systems to be essential to the exercise of its specific powers to prescribe postage and provide evidence of payment of postage under 39 U.S.C. 404(a)(2) and (4). (b) Due to the potential for adverse impact upon Postal Service revenue, the following activities may not be engaged in by any person or concern without prior, written approval of the Postal Service: (1) Producing or distributing any postage evidencing system that generates U.S. postage. (2) Repairing, distributing, refurbishing, remanufacturing, or destroying any component of a postage evidencing system that accounts for or authorizes the printing of U.S. postage. (3) Owning or operating an infrastructure that maintains operating data for the production of U.S. postage, or accounts for U.S. postage purchased for distribution through a postage evidencing system. (4) Owning or operating an infrastructure that maintains operating data that is used to facilitate licensing or registration with the Postal Service of users of a postage evidencing system. (c) Any person or entity seeking authorization to perform any activity described in paragraph (b) of this section must submit a request to the Postal Service in person or in writing. (d) Approval shall be based upon satisfactory evidence of the applicant's integrity and financial responsibility, and commitment to the security of the postage evidencing system, and a determination that disclosure to the applicant of the Postal Service customer, financial, or other data of a commercial nature necessary to perform the function for which approval is sought would be appropriate and consistent with good business practices within the meaning of 39 U.S.C. 410 (c)(2). The Postal Service may condition its approval on the agreement to undertakings by the applicant that would give the Postal Service appropriate assurance of the applicant's ability to meet its obligations under this section, including but not limited to the method and manner of performing certain financial, security, and servicing functions and the need to maintain sufficient financial reserves to guarantee uninterrupted performance of not less than 3 months of operation. (e) Qualification and approval may be based upon conditions agreed to by the Postal Service and the applicant. The applicant is approved in writing to engage in the function(s) for which authorization was sought and approved. (f) The Postal Service functional area charged with administering authorization as described in this part 501 is the Postage Technology Management program office. All submissions cited throughout all sections of 39 CFR part 501 are to be made to this office in person or via U.S. mail to 1735 N. Lynn Street Room 5011, Rosslyn, VA 22209–6370 or via fax to 703–292–4073. Inquiries may be made via telephone to 703–292–3691, and information updates may be found on the U.S. Postal Service Web page at www.usps.com/postagesolutions/flash.htm. [69 FR 60090, Oct. 7, 2004; 69 FR 61085, Oct. 14, 2004, as amended at 69 FR 67508, Nov. 18, 2004] Any concern wanting authorization to manufacture and/or lease postage meters for use by licensees under Domestic Mail Manual P030 must: (a) Satisfy the Postal Service of its integrity and financial responsibility; (b) Obtain approval of at least one meter model incorporating all the features and safeguards specified in §501.6; (c) Have, or establish, and keep under its supervision and control, adequate production facilities suitable to carry out the provisions of §§501.15 through 501.21 to the satisfaction of the Postal Service. The production facilities must be subject to unannounced inspection by representatives of the Postal Service. If the provider's production facilities are located outside the continental United States, the provider will be responsible for all reasonable and necessary travel-related costs incurred by the Postal Service to conduct the inspections. Travel-related costs are determined in accordance with Postal Service Handbook F–15, Travel and Relocation. At its discretion, the Postal Service may continue to fund routine inspections outside the continental United States as it has in the past, provided the costs are not associated with particular security issues related to a manufacturer's product, or with the start-up or implementation of a new plant or of a new or substantially changed manufacturing process. (1) When conducting an inspection outside the continental United States, the Postal Service will make every effort to combine the inspection with other inspections in the same general geographic area in order to enable affected manufacturers to share the costs. The Postal Service team conducting such inspections will be limited to the minimum number necessary to conduct the inspection. All air travel will be contracted for at the rates for official government business, when available, under such rules respecting class of travel as apply to those Postal Service representatives inspecting the facility at the time the travel occurs. (2) If political or other impediments prevent the Postal Service from conducting security evaluations of meter manufacturing facilities in foreign countries, Postal Service approval to distribute meters produced in those facilities may be suspended until such time as satisfactory inspections may be conducted. (d) Have, or establish, and keep under its active supervision and control adequate facilities for the control, distribution, and maintenance of meters and their replacement or secure disposal or destruction when necessary. [60 FR 30726, June 9, 1995, as amended at 67 FR 69479, Nov. 18, 2002; 67 FR 71843, Dec. 3, 2002] (a) Any person or entity authorized under §501.1 must promptly notify the Postal Service when it has a reasonable expectation that there may be a change in its ownership or control including changes in the ownership of an affiliate which exercises control over its postage evidencing system operations in the United States. A change of ownership or control within the meaning of this section includes entry into a strategic alliance or other agreement whereby the third party has access to data related to the security of the system or the third party is a competitor to the Postal Service. Any person or entity seeking to acquire ownership or control of a person or entity authorized under §501.1 must provide the Postal Service satisfactory evidence that it satisfies the conditions for approval stated in §501.1. Early notification of a proposed change in ownership or control will facilitate expeditious review of an application to acquire ownership or control under this section. (b) Any person or entity authorized under §501.1 must promptly notify the Postal Service when it has a reasonable expectation that there may be a change in the status of its financial condition either through bankruptcy, insolvency, assignment for the benefit of creditors, or other similar financial action. Any person or entity authorized under §501.1 who experiences a change in the status of its financial condition may, at the discretion of the Postal Service, have its authorization under §501.1 modified or terminated. [69 FR 60091, Oct. 7, 2004] The burden of proof is on the Postal Service in adjudications of suspension and revocation under §§501.5 and 501.12 and administrative sanctions under §§501.14 and 501.23. Except as otherwise indicated in those sections, the standard of proof shall be the preponderance-of-evidence standard. (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 shall 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 on the manufacturer's performance history. Before determining whether a manufacturer's authorization to manufacture and/or distribute meters should be revoked, the procedures in paragraph (c) of this section shall 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 shall 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 shall 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 shall 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 shall remain in effect for up to 90 days unless withdrawn by the Postal Service, as provided in paragraph (c)(4)(iii) of this section. (4) At the end of the 90-day suspension, 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. Manufacturer suspensions may be withdrawn before the end of the 90-day period if the Postal Service determines that the manufacturer's solution and implementation are satisfactory. (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 period 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 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 that 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 or concern. 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 take the meter to the post office for setting or examination. (b) A 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 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 that prevents further operation of the meter after the register descends to zero or an amount less than the largest denomination printable in one operation. In electronic meters, the locking device must prevent printing if the amount to be printed reduces the descending register to less than zero. The construction of the descending register must allow the post office to set 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, by imprint on tape or card, or by a combination of the two methods. The construction of the housing must make it impossible to alter the readings of the ascending register except by normal operation or impossible to gain access to the internal components, except for setting the descending register under §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 meter slogan or ad plate must 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 the 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, Postal Service-M–942 (RDC). Persons wanting to manufacture electronic meters may obtain a copy of this Postal Service test specification from Postal Service Headquarters. (j) Auxiliary equipment required for the operation of the meters must be part of the final production models submitted for Postal Service approval. Failure of the auxiliary equipment, which could cause malfunction in meter operation, is considered the same as a meter failure. 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 conducting 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. 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 §501.6 may be submitted for tentative approval. No meter 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, unless authorized for preliminary field testing. The Postal Service reserves the right to require or conduct additional examination and testing at any time, without cause, of any meter submitted to the Postal Service for approval or approved by the Postal Service for manufacture and distribution. As provided in §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 change affecting the basic features or safeguards of a meter may be made except as authorized or ordered by the Postal Service in writing. (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 before distribution. The contents of the media must explain how the meter is reset and describe 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 Retail Systems and Equipment, Postal Service Headquarters, with any additional documentation on request. (d) On request by the Postal Service, additional meters must be submitted to the Postal Service for testing, at the expense of the manufacturer. (a) The Postal Service may suspend meter approval under §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 revenue. Suspension of approval to manufacture or distribute a meter or class of meters in whole or in part shall be based on the potential risk to postal revenue. Before 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 revenue, the Postal Service shall issue a written notice of proposed suspension citing deficiencies for which suspension may be imposed under paragraph (b)(2) of this section. The manufacturer shall 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 shall 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 shall remain in effect for up to 90 days unless withdrawn by the Postal Service, as provided in paragraph (b)(4)(iii) of this section. (4) At the end of the 90-day suspension, 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. Manufacturer suspensions may be withdrawn before the end of the 90-day period if the Postal Service determines that the manufacturer's solution and implementation are satisfactory. (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 period 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 written 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 period is deemed necessary), as specified therein. The appeal must include all supporting evidence and state with specificity the reasons that the manufacturer believes that 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 or concern. (a) For purposes of this section, “manufacturer” refers to the authorized postage meter manufacturer in §501.1 and its foreign affiliates, subsidiaries, assigns, dealers, independent dealers, employees, and parent corporations. (b) Each authorized meter manufacturer in §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 from June 30, 1995) of the following: (1) All findings or results of any testing known to the manufacturer concerning the security or revenue protection 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). (2) All potential security weaknesses or methods of meter tampering of the meters that the manufacturer distributes of which the manufacturer knows or should know, and the meter or model subject to each method. These potential security weaknesses include but are not limited to suspected equipment defects, suspected abuse by a meter licensee or manufacturer employee, suspected security breaches of the Computerized Remote Postage Meter Resetting System, 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 §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. (e) Authorized postage meter manufacturers and distributors, and their agents and employees, must not intentionally misrepresent to customers of the Postal Service decisions, actions, or proposed actions of the Postal Service respecting its regulation of postage meters in the United States. The Postal Service reserves the right to suspend and/or revoke the authorization to manufacture and/or distribute postage meters throughout the United States or in any part thereof under §501.5 when the manufacturer, distributor, or agent or employee of either fails to comply with this requirement. [60 FR 30726, June 9, 1995, as amended at 70 FR 1349, Jan. 7, 2005] (a) Notwithstanding any act, admission, or omission by the Postal Service before June 30, 1995, an authorized postage meter manufacturer may be subject to an administrative sanction for failing to comply with §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 for which the manufacturer failed to comply with any provision in §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 takes 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 or concern. 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. 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. 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 the dies cannot be used or they must be completely destroyed. (a) Authorized meter manufacturers/distributors may destroy meters, when required, in accordance with methods approved in advance by the manager of Postage Technology Management. The postage meter must be rendered completely inoperable by the destruction process and associated postage-printing dies must be destroyed in accordance with §501.17. Manufacturers/distributors must submit the proposed destruction method; a schedule listing the meters to be destroyed, by serial number and model; and the proposed time and place of destruction to the manager of Postage Technology Management for approval prior to any meter destruction. Manufacturers/distributors must record and retain the serial numbers of the meters to be destroyed, and provide the list in electronic form in accordance with Postal Service requirements for postage meter accounting and tracking systems. Manufacturers/distributors must give sufficient advance notice of the destruction to allow the manager of Postage Technology Management to schedule observation by Postage Technology Management or its designated representative. The Postal Service representative must ensure that the serial numbers of the meters destroyed are the same as the serial numbers recorded by the manufacturer/distributor on the list of destroyed meters, and that the destruction is performed in accordance with a Postal Service-approved method or process. (b) These requirements for meter destruction apply to all postage meters, postage evidencing systems, and postal security devices included as a component of a postage evidencing system. [66 FR 55097, Nov. 1, 2001] All meter stamps printed in the process of testing dies or meters must be collected and destroyed daily. [60 FR 30726, June 9, 1995. Redesignated at 66 FR 55097, Nov. 1, 2001] All new and rebuilt meters must be inspected carefully before leaving the manufacturer's meter service station. [60 FR 30726, June 9, 1995. Redesignated at 66 FR 55097, Nov. 1, 2001] 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 shall maintain control over the procurement, manufacture, and distribution of meter security seals. Manufacturers must reimburse the Postal Service promptly for the cost of the seals. All costs associated with meter security seals are apportioned twice annually to the meter manufacturers by the installed base of each manufacturer. [60 FR 30726, June 9, 1995. Redesignated at 66 FR 55097, Nov. 1, 2001] (a) An authorized manufacturer must maintain sufficient facilities for and records of the distribution, control, storage, maintenance, repair, replacement, and destruction or disposal of all meters and their components to enable accurate accounting thereof throughout the entire meter life cycle. Recordkeeping is required for all meters including newly produced meters, active leased meters, inactive meters, unleased meters, and lost or stolen meters. All such facilities and records are subject to inspection by Postal Service representatives. (b) If the manufacturer uses a third party to perform functions that may affect meter security, including, but not limited to meter repair, maintenance, and disposal, the manager of Postage Technology Management, Postal Service Headquarters, must review in advance all aspects of the relationship, as they relate to the custody and control of meters, and must specifically authorize in writing the arrangement between the parties. (1) Postal Service authorization of a third-party relationship for a given function does not extend to any other function. Extension of the third-party relationship to another function must be implemented and approved as if it were a new relationship. (2) No third-party relationship shall compromise the security of the meter, or of any of its components, including, but not limited to, the hardware, software, communications, and security components, or of any system with which it interfaces, including, but not limited to, the resetting system, reporting systems, and Postal Service support systems. The functions of the third party with respect to a meter, its components, and the systems with which it interfaces are subject to the same scrutiny as the equivalent functions of the manufacturer. (3) Any authorized third party must keep adequate facilities for and records of meters and their components in accordance with paragraph (a) of this section. All such facilities and records are subject to inspection by Postal Service representatives, insofar as they are used to distribute, control, store, maintain, repair, replace, destroy, or dispose of meters. (4) The manufacturer must ensure that any party acting in its behalf in any of the functions described in paragraph (a) of this section maintains adequate facilities, records, and procedures for the security of the meters. Deficiencies in the operations of a third party relating to the custody and control of postage meters, unless corrected in a timely manner, can place at risk a manufacturer's approval to manufacture and/or distribute postage meters. (5) The Postal Service reserves the right to review all aspects of any third-party relationship when it becomes aware that the relationship poses a threat to meter security under paragraph (b)(2) of this section, whether or not that relationship required authorization under paragraph (b) of this section. [68 FR 2698, Jan. 21, 2003] Each authorized postage meter 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 Postal Service requirements for suitable quality and content. (e) (1) Have all meters set, sealed (if applicable), and checked into service by the appropriate Postal Service representative before 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. (2) 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. (3) A meter should show a zero in the descending register before being checked into service. If a zero is not shown, the initial payment must include the residual amount the locked-out meter could not imprint. (f) Notify Computerized Remote Postage Meter Resetting System 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 taken 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 a response is not 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) Check a nonfaulty meter out of service in accordance with the procedures that the Postal Service has approved for that meter when the meter is to be removed from service for any reason. Ensure that a Postal Service employee certifies the register readings and clears the descending register when the meter is checked out of service, unless the Postal Service has approved other procedures for the specific meter model. Complete the checkout process in a timely manner and transmit the required data to the appropriate Postal Service information systems. Ensure that no employee of the meter manufacturer or any third-party changes, interferes with, or performs any element of the Postal Service employee's established checkout and withdrawal process for any meter, unless approval for the change in procedures is granted in writing by the Postal Service. (h) Handle faulty meters, including those that are inoperable, those that are misregistering or the registers are unreadable, those that inaccurately reflect their current status, those that show any evidence of tampering or abuse, and those for which there is information or other indication that the meter has some mechanical or electrical malfunction of any critical security component, such as any component the improper operation of which could adversely affect Postal Service revenues, or of any memory component, or that affects the accuracy of the registers or the accuracy of the value printed, as follows: (1) Ensure that all functions required to handle faulty meters are completed in a timely manner and in accordance with Postal Service regulations and procedures. (2) Begin the process to retrieve any faulty meter within 2 business days of being notified of a problem. (3) Complete PS Form 3601–C, Postage Meter Activity Report, in the presence of the licensee and obtain the licensee's signature on the form confirming that the information is accurate. (i) Include the register information on the form when the registers can be read. (ii) Print the system report, if available for the meter, and attach the report to PS Form 3601–C when the register values cannot be read. (iii)Have the licensee provide any original daily usage logs with PS Form 3601–C for refund calculation when the register values cannot be read. (4) Identify and tag the meter as faulty as soon as the manufacturer or the manufacturer's agent receives it from the customer. Keep the identification tag and the PS Form 3601–C, which was completed under paragraph (h)(3) of this section, with the faulty meter until processing is completed and the meter is returned to service or is scrapped. (5) Secure all faulty meters and maintain the integrity of the meter and of the information residing on the meter. Maintain control of the meter until processing is completed. (6) Ensure that under no circumstance are registers on a faulty meter cleared or any funds refunded or transferred until examination and processing are completed, the Postal Service has reviewed and analyzed the manufacturer's report and determined the appropriate postage adjustment, if any, and approved refund procedures are followed. (7) Maintain a record of the faulty meter and all changes in its custody, state, and condition (including availability of register information) from the time the meter is reported as faulty until processing is completed under paragraphs (h)(9), (12), or (14) of this section. Make the record available to the Postal Service for its review upon request. (8) Examine each meter withdrawn for faulty operation as soon it is received from the customer to determine if the registers can be read and if there is any evidence of tampering. (9) When the registers can be read or a summary report of the appropriate redundant electronic register memory readouts is available using Postal Service-approved methods, and there is no evidence of tampering or any problem covered by paragraph (h)(13) of this section: (i) Check out the meter and withdraw it from service under paragraph (g) of this section. (ii) Submit a report to the Postal Service by the 15th of each month listing all faulty meters with readable displays and no other problems received in the prior month, identifying the meter and including an explanation of the meter malfunction. (10) Maintain a dedicated, secure facility, approved by the Postal Service, for handling faulty meters that cannot be handled under paragraph (h)(9) of this section. (11) Ship faulty meters not handled under paragraph (h)(9) of this section directly to the secure facility described in paragraph (h)(10) of this section for processing. Ship these faulty meters via Registered Mail service, Express Mail service, or Priority Mail service with Delivery Confirmation service. (12) If there is no evidence of tampering, if the meter registers cannot be read, and if a summary report of the appropriate redundant electronic register memory readouts cannot be retrieved: (i) Develop other data to support the request for Postal Service approval of a postage adjustment amount, such as a manual calculation of the estimated value of the descending register based on estimated highest average daily usage, or applicable system-generated register documentation. Include the original daily usage logs maintained by the customer, if any, with the supporting data. (ii) Furnish a report explaining the malfunction to the Postal Service within 7 days of receiving the meter. Accompany the report with a recommendation of the postage adjustment amount that includes all data developed to support the recommendation. (iii) Maintain control of those meters that have unreadable registers and hold them in the manufacturer's dedicated, secure facility described in paragraph (h)(10) of this section until a representative of the Postal Service approves the postage adjustment amount or verifies the condition of the meter before proceeding with the meter repair or destruction. (13) In some instances, even though the registers can be read, there is information or other indication that the meter has some mechanical or electrical malfunction that affects the accuracy of the registers or the accuracy of the value printed. Handle such meters under paragraph (h)(12) of this section. (14) If there is evidence or suspicion of tampering: (i) Ensure that the meter is handled in a secure manner and maintained in its original state until the Postal Service or its agent can be present during the examination. (ii) After examination, if approved by the Postal Service or its agent, process the meter under paragraph (h)(12) of this section. (15) Issue the refund of any postage value said to remain in a faulty meter, after Postal Service approval of the amount of the refund, when the Postal Service requires it. Request reimbursement from the Postal Service for these refunds by periodically submitting a reimbursement request letter to the Postal Service. Accompany the letter with listings and support documentation for each refund and indicate the cause of failure for each incident. (i) Report promptly the loss or theft of any meter or the recovery of any lost or stolen meter. The manufacturer must provide notification by the Postal Service with completing a standardized lost and stolen meter incident report notifying 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 §501.26 before submitting this report to the Postal Service. (j) Provide the designated Postal Service Information Systems Service Center (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 reporting 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 Postal Service officials at any time during business hours. These records must 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 of the keys is essential, preferably in the form of signed receipt cards. The record must include the date, location, and details of any loss, theft, or recovery 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. (p) Provide monthly the designated ISSC with a compatible computer tape of lost or stolen meters. 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 use by unauthorized individuals. Manufacturers must ship all meters by Postal Service registered mail unless given written permission by the Postal Service to use another carrier. The manufacturer must demonstrate that the alternative delivery carrier employs security procedures equivalent to those for registered mail. (r) Affix to all meters a cautionary label providing the meter user with basic reminders on leasing and meter movement. (1) The cautionary label must be placed on all meters in a conspicuous and highly visible location. “PROPERTY OF [NAME OF MANUFACTURER]” as well as the manufacturer's toll-free number must be emphasized by capitalized bold type and preferably printed 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] (800) ###-#### Use of this meter is permissible only under U.S. Postal Service authorization. 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 1–800–372–8347 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) Exceptions to the formatting of required labeling are determined on a case-by-case basis. Any deviation from standardized meter labeling requirements must be approved in writing by the Postal Service. (s) A demonstration meter is typically used to acquaint a potential user with the features of a meter as part of the sales effort. The following procedures must be followed to implement controls over demonstration meters: (1) A demonstration meter may print only specimen indicia and must not be used to meter live mail. (2) A demonstration meter must be recorded as such on internal manufacturer inventory records and must be tracked by model number, serial number, and physical location. If the meter's status as a demonstration meter changes, the meter must be administered according to the procedures that apply to its new status. (3) A demonstration meter may be used only for demonstrations by a manufacturer's dealer or branch representative and must remain under the dealer's or representative's direct control. A demonstration meter may not be left in the possession of the potential customer under any circumstance. (t) A postage meter loaned to a customer for temporary use (a “loaner meter”) is typically used to acquaint a potential user with the features of a meter as part of the sales effort, or serves as a temporary placement while the customer awaits delivery of a new meter. The following procedures must be followed to implement controls over loaner meters: (1) A loaner meter prints valid indicia and may be used to apply postage to a mailpiece. Only electronic, remote-set meters may be used as loaner meters. The city/state designation in the loaner meter indicia must show the location where the user's mail will be deposited. (2) A customer may have possession of a loaner meter for a maximum of five consecutive business days. When the customer chooses to continue the use of a postage meter, the loaner meter must be retrieved and a new meter must be installed under the customer's license. (3) The manufacturer's dealer or branch representative (“representative”) must have a USPS-issued meter user license to place a loaner meter. A single license per USPS district can be used to issue loaner meters to customers in any of the different Post Office service areas within that district. (4) Loaner meters must be reported electronically to the USPS meter tracking system when activated. A Form 3601–C, Postage Meter Activity Report, must be initiated to activate a loaner meter under the representative's meter license. The licensee and meter location information on the form will show the representative rather than the temporary user. However, loaner meters may only be placed with customers who have been issued a USPS meter license. (5) Representatives must record and verify the accuracy of the ascending and descending register readings when a loaner meter is placed with the customer. Any discrepancies detected during the verification process must be reported immediately to the meter manufacturer, who will then notify Postage Technology Management. (6) The representative is responsible for resetting the loaner meter with postage and must arrange for reimbursement directly with the customer. (7) The representative maintains full responsibility for the loaner meter. As both a manufacturer's representative and a meter licensee, the representative is subject to the provision of Domestic Mail Manual part P030 and Code of Federal Regulations part 501. As a licensee, the representative assumes all licensee responsibilities under USPS meter regulations and must ensure that loaner meters are available for examination by the Postal Service on demand and are examined in accordance with Postal Service policy. Any losses incurred by the Postal Service as a result of fraudulent use of the loaner meter by the customer are the responsibility of the meter licensee, the customer, and the manufacturer. (8) When the customer returns the meter, the dealer or branch representative must record and verify the accuracy of the ascending and descending register readings and inspect the meter. Any discrepancies or indication of tampering or fraudulent use must be reported immediately to the meter manufacturer, who will then notify Postage Technology Management. In such circumstance, the meter must not be used and must be returned to the manufacturer's QAR department via Registered Mail. (9) Loaner meters must be reported electronically to the USPS meter tracking system when withdrawn from service. The dealer or branch representative must prepare Form 3601–C, Postage Meter Activity Report, for each loaner meter withdrawn. [60 FR 30726, June 9, 1995, as amended at 66 FR 20745, Apr. 25, 2001. Redesignated at 66 FR 55097, Nov. 1, 2001, and amended at 67 FR 69138, Nov. 15, 2002; 69 FR 55506, Sept. 15, 2004; 70 FR 705, Jan. 5, 2005] (a) Meter for purposes of this section means any postage meter manufactured by an authorized postage meter manufacturer under §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 §501.22, to follow standardized lost and stolen meter incident reporting in §501.26, or to conduct any of the inspections required by §501.25 in a timely fashion is 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 and/or loss occurred, as determined by the Postal Service. Sanctions shall 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 that the action shall take effect if a written defense is not presented within 30 calendar days of receipt of the notice. (d) The manufacturer may present to the Postal Service a written defense to the proposed action within 30 calendar days of receipt of the notice. 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 written 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 receiving the decision, addressed to the manager of Retail and Customer Service, Postal Service 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 or concern. [60 FR 30726, June 9, 1995. Redesignated at 66 FR 55097, Nov. 1, 2001] The manufacturer must keep its postage meters in proper operating condition for licensees by replacing them when necessary or desirable to prevent mechanical breakdown. [60 FR 30726, June 9, 1995. Redesignated at 66 FR 55097, Nov. 1, 2001] (a) The manufacturer must have all its meters in service with licensees inspected according to the following schedule. A high-volume mailer is defined as one who has annual metered postage in excess of $12,000. (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, Record of Meter Register Readings, or equivalent, and a copy of the most recent 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 then comparing the register readings 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 no screw 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 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 irregularity in the operation of the meter or sign of improper use, and take steps to replace or remove the meter. [60 FR 30726, June 9, 1995. Redesignated at 66 FR 55097, Nov. 1, 2001] Upon learning that one or more of its postage meters in service cannot be located, the manufacturer must undertake reasonable efforts to locate the meters by following a series of Postal Service-specified actions designed to locate the meters. If these efforts are unsuccessful and a meter is determined to be lost or stolen, the manufacturer must notify the Postal Service within 30 days by submitting 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 with return receipt to the licensee at the last known address with the notation “Forwarding and Address Correction 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 following actions: (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. (c) 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. (d) 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 purging lost and stolen meter reports that are provided on a periodic basis to the Postal Service ISSC for those meters that have been recovered. (e) Any authorized manufacturer that fails to comply with standardized lost and stolen reporting procedures and instructions is subject to an administrative sanction under §501.23, as determined by the Postal Service. [60 FR 30726, June 9, 1995. Redesignated at 66 FR 55097, Nov. 1, 2001] Any physical or electronic access to the internal components of a meter, as well as any access to software or security parameters, must be conducted within an approved factory or meter repair facility under the manufacturer's direct control and active supervision. The Postal Service must have checked a meter out of service before any component, software, or security parameter is accessed or modified in any way, or internal repairs are undertaken. This does not apply to Postal Service-approved user, field, or Postal Service access to a specific internal component or software. To prevent unauthorized use, the manufacturer or any third party acting on its behalf must keep secure any equipment or other component that can be used to open or access the internal, electronic, or secure components of a meter. [68 FR 2699, Jan. 21, 2003] (a) Description. The Computerized Remote Postage 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. Before proceeding with the setting transaction, the MRC must verify the data and ascertain from its own files whether the licensee has sufficient funds 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)(5) of this section, the MRC may complete the setting transaction. (b) Deposits with the Postal Service. (1) Deposits in the Postal Service Fund at Treasury are backed in full faith and credit by the U. S. Treasury. (2) A CMRS licensee is required to have funds available on deposit with the Postal Service before 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 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. (3) The MRC is required to incorporate the following language into its 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. (4) 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 daily all available balances to the Postal Service. (5) If the MRC chooses to offer advancement of funds to licensees, the MRC 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 circumstance. The Postal Service shall not be liable for any payment made by the MRC on behalf of a licensee that is 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 deficiency that is likely to result in the loss of funds to the Postal Service as provided in §501.12. (d) Equipment. The meters used in the computerized resetting system must conform to the specifications in §501.6. They must be tested under §501.7 and conform to the safeguards, distribution, and maintenance requirements of §§501.15 through 501.23 to protect the Postal Service against loss of revenue from fraud, manipulation, misoperation, or breakdown. (e) Financial operation. (1) Before 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 processes the CMRS deposits daily, consolidates the data, and performs a direct file transmission to each MRC. The daily deposit processing cutoff times and the automated file transmission times are coordinated independently with each of the MRCs. Manufacturers must ensure that their data center computers are programmed to reflect each licensee deposit and track all licensee activity. (3) The MRC must require each licensee that requests meter resetting 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 sufficient 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 is to transfer, by 10 a.m. local 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 transfers (wire transfers). (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 preencoded deposit ticket. The Postal Service provides CMRS customers with deposit tickets for inclusion with check payments. At the time a new account is opened, a licensee not possessing a preencoded 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 ACH 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, advises 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 provides collection services for returned checks on behalf of the Postal Service. The Postal Service lockbox bank notifies the MRC once this item is paid. The MRC then releases the account for activity. (f) Refunds. The Postal Service issues a refund to a licensee for any unused postage in a meter. Refunds of 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: (h) Inspection of records and facilities. The manufacturer must make its facilities that handle 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. [60 FR 30726, June 9, 1995. Redesignated at 66 FR 55097, Nov. 1, 2001] (a) As stated in §501.22(b) manufacturers must 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 data processing facility. (b) The Postal Service may use applicant information in the administration of postage meter and metered mail activities, and to communicate with customers who may no longer be visiting a traditional USPS retail outlet. The Postal Service will also use applicant information to communicate with USPS customers through any new retail channels, and for the following purposes: (1) Issuance (including re-licensing, renewal, transfer, revocation or denial, as applicable) of a meter license to a postal patron that uses a postage meter, and communications with respect to the status of such license. (2) Disclosure to a meter manufacturer of the identity of any meter required to be removed from service by that meter manufacturer, and any related licensee data, as the result of revocation of a meter license, questioned accurate registration of that meter, or de-certification by the Postal Service of any particular class or model of postage meter. (3) Use for the purpose of tracking the movement of meters between a meter manufacturer and its customers and communications to a meter manufacturer (but not to any third party other than the applicant/licensee) concerning such movement. The term “meter manufacturer” includes a meter manufacturer's dealers and agents. (4) To transmit general information to all meter customers concerning rate and rate category changes implemented or proposed for implementation by the United States Postal Service. (5) To advertise Postal Service services relating to the acceptance, processing and delivery of, or postage payment for, metered mail. (6) To allow the Postal Service to communicate with USPS customers on products, services and other information otherwise available to USPS customers through traditional retail outlets. (7) Any internal use by Postal Service personnel, including identification and monitoring activities relating to postage meters, provided that such use does not result in the disclosure of applicant information to any third party or will not enable any third party to use applicant information for its own purposes; except that the applicant information may be disclosed to other governmental agencies for law enforcement purposes as provided by law. (8) Identification of authorized meter manufacturers or announcements of de-authorization of an authorized meter manufacturer, or provision of currently available public information, where an authorized meter manufacturer is identified. (9) To promote and encourage the use of postage meters, including remotely set postage meters, as a form of postage payment, provided that the same information is provided to all meter customers, and no particular meter manufacturer will be recommended by the Postal Service. (10) To contact meter customers in cases of revenue fraud or revenue security except that any meter customer suspected of fraud shall not be identified to other meter customers. (11) Disclosure to a meter manufacturer of applicant information pertaining to that meter manufacturer's customers that the Postal Service views as necessary to enable the Postal Service to carry out its duties and purposes. (12) To transmit to a manufacturer all applicant and postage meter information pertaining to that manufacturer's customers and postage meters that may be necessary to permit such meter manufacturer to synchronize its computer meter database with information contained in the computer files of the Postal Service, including but not limited to computerized data that reside in Postal Service meter management databases. (13) Subject to the conditions stated herein, to communicate in oral or written form with any or all applicants any information that the Postal Service views as necessary to enable the Postal Service to carry out its duties and purposes under part 501. [63 FR 53812, Oct. 7, 1998. Redesignated at 66 FR 55097, Nov. 1, 2001]
Title 39: Postal Service
PART 501—AUTHORIZATION TO MANUFACTURE AND DISTRIBUTE POSTAGE METERS
Section Contents
§ 501.1 Postage evidencing system/infrastructure authorization.
§ 501.2 Manufacturer qualification.
§ 501.3 Changes in ownership or control, bankruptcy, or insolvency.
§ 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 and Communications.
§ 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 Secure destruction.
§ 501.19 Destruction of meter stamps.
§ 501.20 Inspection of new and rebuilt meters.
§ 501.21 Keys and setting equipment.
§ 501.22 Inventory control.
§ 501.23 Distribution controls.
§ 501.24 Administrative sanction.
§ 501.25 Meter replacement.
§ 501.26 Inspection of meters in use.
§ 501.27 Meters not located.
§ 501.28 Protection and control of internal and security components.
§ 501.29 Computerized remote postage meter resetting.
§ 501.30 Licensee information.
§ 501.1 Postage evidencing system/infrastructure authorization.
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§ 501.2 Manufacturer qualification.
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§ 501.3 Changes in ownership or control, bankruptcy, or insolvency.
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§ 501.4 Burden of proof standard.
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§ 501.5 Suspension and revocation of authorization.
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§ 501.6 Specifications.
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§ 501.7 Test plans.
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§ 501.8 Submission of each model.
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§ 501.9 Security testing.
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§ 501.10 Meter approval.
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§ 501.11 Conditions for approval.
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§ 501.12 Suspension and revocation of approval.
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§ 501.13 Reporting and Communications.
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§ 501.14 Administrative sanction on reporting.
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§ 501.15 Materials and workmanship.
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§ 501.16 Breakdown and endurance testing.
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§ 501.17 Protection of printing dies and keys.
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§ 501.18 Secure destruction.
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§ 501.19 Destruction of meter stamps.
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§ 501.20 Inspection of new and rebuilt meters.
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§ 501.21 Keys and setting equipment.
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§ 501.22 Inventory control.
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§ 501.23 Distribution controls.
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§ 501.24 Administrative sanction.
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§ 501.25 Meter replacement.
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§ 501.26 Inspection of meters in use.
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§ 501.27 Meters not located.
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§ 501.28 Protection and control of internal and security components.
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§ 501.29 Computerized remote postage meter resetting.
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---------------------------------------------------------------------------------------------------------------- Report description Content Frequency Medium----------------------------------------------------------------------------------------------------------------MRC CMRS Daily Activity Report...... Summary of Business Daily................. Paper (facsimile). Activity.Revenue Allocation Report........... ZIP Code of Licensing Postal Accounting Electronic. Post Office; Amount Period. of Resettings.Postage Refunds Report.............. Customer ID; ZIP Code; Daily (by request Paper. Amount of Refund. only).Funds Advanced Report............... Customer ID; ZIP Code; Daily (by request Paper. Amount of Funds only). Advanced.----------------------------------------------------------------------------------------------------------------
§ 501.30 Licensee information.
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