What is a "bad address"?
It is an address the USPS considers unusable for presorted mail. That means it cannot be part of a discounted bulk mailing.
Virtually every mailing we receive has bad addresses. Even the address lists provided by professional list companies have up to 10% bad addresses (it's even built into their contracts).
A "bad address" does not always mean it is undeliverable. The terminology just indicates that the address cannot be included as part of a presorted, postage discounted, First or Standard Class mailing. Often the Zip Code will get a bad address to the proper area, and USPS personnel and letter carriers can find it's real destination.