What Do Mailing Addresses Have to Do with Regulatory Compliance?

In many industries, the way companies communicate with customers and other entities is highly regulated. A vital factor in complying with the rules is a valid, verified mailing address. A physical address defines a unique position on the planet. That can affect not only how letters and parcels make it from one place to another but in calculations, terms and conditions, rates, offers, and more.

In the USA, every organization deals with regulations. For some industries, like finance or insurance, a good part of how they do business depends on a complicated collection of local, state, and national laws and regulations. Regulations control interest rate limits for lenders, for instance. Each state in the union has its own rules, known as usury laws. The same holds true for insurers. Each state regulates insurance companies differently, so a policy written for a customer in one state may include different disclosures than one issued in a neighboring state, even if the customers live only a mile apart.

 

Address Accuracy and Insurance

While we’re talking about insurance, consider how an insurer determines the prices to charge a customer for an automobile or homeowner policy. Factors related to a customer’s address, such as the speed limit on local roads and the frequency of accidents on roadways near the customer’s home will cause the company to vary the premiums from one location to another. Homeowners might pay more or less to cover their property, depending on their proximity to the nearest fire station. People in a part of the country prone to damaging hail storms might find their insurance rates are higher than homeowners living in more temperate climates. State insurance boards regulate how insurance companies conduct business according to the location of customer residences, so keeping the address data correct is important for compliance reasons.

 

Postal Addresses Influence Tax Computations

Taxes are another area where the exact location of a customer can make a difference in how much a customer must pay for goods or services. For sales taxes, the relevant address might be the buyer’s home, business address, or the shipping address. And this address could be different from the credit card address. Companies must be sure their address data is accurate or they won’t collect the correct amount of sales tax.

Service providers like telephone and cable TV companies or mobile phone companies add taxes to a customer’s bill according to where they receive the service. Have you looked at your phone bill lately to see all the “address specific” extra charges?  Here are a few extra fees from a typical customer invoice: Access Charge Per FCC Order, Access Recovery Charge, 911 Service Charge, City Franchise Fee, Federal Universal Service Fee, State Universal Access Fund, State Hearing Impaired Surcharge and Deregulated Administration Fee. Inaccurate address data results in billing mistakes. Over-charging customers for taxes because of faulty address information can cause customer retention problems or even trigger expensive class action lawsuits.

 

Elections Rely on Accurate Addresses

The last national election shed a light on the importance of correct voter data. A voter database that hasn’t been updated causes waste and extra work for election officials as they deal with undeliverable mail. The handling of ballots printed for voters who have moved out of the jurisdiction can cause concern about an election from citizens and candidates worried about the integrity of the voting process. Addresses also affect the content of the ballots. Ballots differ from one city or county to the next, even within the same state. Local bond measures, civic improvement projects, school board candidates, and other variables appear on ballots that arrive in voter mailboxes. The ballots are printed based on the voter registration data on file. Address accuracy plays a big part in the trust people have in elections.

 

Addresses and Privacy

Accidentally sending sensitive documents to the wrong address can cause regulatory problems too. In the United States, the Health Insurance Portability and Accountability Act (HIPAA), controls access to personal healthcare information. Healthcare providers or their business partners who violate patient privacy by mailing documents bearing protected information to unauthorized individuals are subject to fines and regulatory oversight.

Where a person lives makes a difference in how an organization may communicate with them and what they can do with customer data. A slew of privacy laws already exist, and more are on the way.

The concept of an individual’s “address” has become somewhat blurred over the past decade or so. An address may be related to postal letter delivery, package delivery, GPS coordinates, email destinations, or the IP address of a computer. How different countries and states view the relationships between digital and physical addresses varies. It is confusing, and failing to follow privacy regulations can have consequences, including some serious fines.

 

Commercial Electronic Messages to Canada

The Canadian Anti-Spam Law (CASL) applies to any commercial electronic message sent from a computer within Canada or accessed by a computer in Canada. CASL even requires organizations operating solely outside Canada to follow CASL rules if they communicate with Canadian prospects or customers. The consequences for companies sending unsolicited emails include fines of $1 million to $10 million per violation. Individuals, companies, directors, officers, and other agents are responsible for the conduct of their company related to commercial electronic messages.

Failing to update the physical addresses of customers, partners, or prospects can create CASL compliance problems for your organization. Postal addresses make a difference, even if you communicate only by email.

 

Commercial Electronic Messages to Europe – General Data Protection Regulation – GDPR

The European Union (EU) updated their data protection rules in 2018. Europe has many privacy laws across different countries. Companies collecting and handling personal data in the EU must manage data handling practices and use cases carefully. If you send commercial electronic messages to recipients in Europe, you must take their physical location into account. Consult the specific rules as they may vary by country even beyond the GDPR protocol.

 

Privacy Rules May Vary by State in the U.S.

The state of California has enacted a specific set of rules. They fall under the California Privacy Rights Act (CPRA) set of regulations. Other states are considering similar legislation. As states enact these new laws, accurate recipient postal addresses will be a key factor in determining who you can email, and under what conditions.
 

Why Updating Postal Addresses is Important

The physical “where” is very important in all these cases. National Change of Address (NCOA) and other change of address tools can reduce the chance of emailing to the wrong recipient, charging the wrong interest, or causing other compliance problems.

When a customer moves out of the country, they must file a Form 3575 Change of Address Order with the US Postal Service. The Post Office will not forward mail to a new international address unless the recipient has paid for that service. However, the move will be recorded in the Move Update database. Your data files will be updated when you process them through an NCOA service, allowing you to filter recipients or segment them so your communications and business practices follow the rules.

 

In Summary

The best strategy for remaining compliant with your electronic and printed communications, calculations, and business practices is to err on the side of caution. The regulations are not wholly restrictive, yet fines are a possibility. With a program of ongoing data cleansing and updating, the messages will get through and business practices will comply with regulations. Firstlogic offers a complete set of tools to clean up your address lists. As shown above, accurate postal addresses are important even if you do not communicate by postal mail. Visit our Firstlogic Software page for information about tools you can use to ensure your customer address data is correct and up to date.