USPS mail theft led to $688M in ‘suspicious activity’ tied to check fraud

The Postal Service’s surge in mail theft cases contributed to hundreds of millions of dollars in suspected check fraud cases last year, according to a recent Treasury Department analysis.

Treasury’s Financial Crimes Enforcement Network (FinCEN) received more than 15,400 reports of suspected mail theft-related check fraud under the Bank Secrecy Act (BSA) from more than 840 financial institutions between February and August 2023.

FinCEN, in a financial trend analysis of this data, said those mail theft-related check fraud cases amounted to more than $688 million in “suspicious activity.”

The report states that those reports include both completed and attempted transactions.

“Generally, mail theft-related check fraud is the combination of two crimes: mail theft and check fraud,” the report states.

FinCEN found the average amount of check fraud reported in a single case was nearly $45,000, and that the median amount of reported check fraud exceeded $14,000.

FinCEN’s latest report underscores many of the same concerns it raised in an alert on a “nationwide surge in mail theft-related check fraud” it posted in February 2023.

FinCEN’s analysis found financial institutions reported mail theft-related check fraud in all 50 states, Washington, D.C. and Puerto Rico.

New York, California and Florida saw the most reports of mail theft-related check fraud.

In 44% of cases, fraudsters altered and deposited stolen checks. In another 26% of cases, criminals used the stolen checks as templates to create counterfeit checks.

In 20% of cases, they fraudulently signed and deposited a stolen but unaltered check.

Small-to-medium size banks filed a majority of mail theft-related check fraud reports.

Many fraudsters avoided cashing the checks in person by using mobile deposit apps and ATMs, and opening bank accounts online.

In many cases, fraudsters used a host of “check washing” techniques to remove the original payee’s name and the original check amount.

These techniques range from using chemicals to remove the original ink, to using white-out to cover up those fields.

FinCEN reports that criminals in some cases also newly ordered blank checks from the mail, forged the original account holder’s signature, and then issued the checks to themselves or others.

In a case last year, federal prosecutors charged a USPS employee with stealing more than $1.6 million in checks from the mail.

Despite a declining use of checks in the U.S., FinCEN said criminals, since the start of the COVID-19 pandemic, have increasingly targeted the mail to commit check fraud.

The Postal Inspection Service received 299,020 mail theft complaints between March 2020 and February 2021, a 161% increase compared with the previous 12 months.

USPIS reported nearly 1,200 cases of mail theft in fiscal 2023, and made 1,559 arrests, according to its most recent report to Congress. Prosecutors saw 1,210 convictions from those mail theft cases.

USPIS notes its annual arrests and conviction statistics “may be related to cases initiative in prior reporting periods.”

Criminals in many cases are robbing letter carriers for their arrow keys, which are used to open blue mail collection boxes. Criminals then use these arrow keys to steal mail and packages.

USPIS also reported 628 robberies of postal employees in 2023 and 193 arrests in robbery cases — as well as 93 convictions.

Postal unions are calling on Congress to pass the  Protect Our Letter Carriers Act, a bill Reps. Brian Fitzpatrick (R-Pa.) and Greg Landsman (D-Ohio) introduced in March.

Among its changes, the bill would amend federal sentencing guidelines to treat the assault of a postal worker with the same severity as assaulting a police officer.

The bill would also require the Justice Department to designate an assistant U.S. attorney at all 93 U.S. Attorney’s offices across the country to supervise the investigation and prosecution of crimes committed against letter carriers.

Don Maston, president of the National Rural Letter Carriers Association, called on lawmakers to pass the bill to protect carriers on their routes.

“No letter carrier should ever go through the things that we are witnessing happening now. It’s almost weekly we are seeing these events on television,” Maston said in a rally in Reno, Nevada last month. “It’s been going on for far too long.”

FinCEN Director Andrea Gacki said in a statement that financial institutions reporting mail theft-related check fraud “are critical to curtailing this egregious fraud that is affecting communities across the United States.”

“FinCEN values its ongoing collaboration with the United States Postal Inspection Service (USPIS) to raise awareness of this criminal activity impacting innocent Americans across the country,” Gacki said.

Chief Postal Inspector Gary Barksdale said the latest report “demonstrates the severity of mail theft-related check fraud and why fraud is a high priority,” and that banks reporting these cases is key to tracking down fraudsters.

“Suspicious activity reports are a valuable tool utilized by Postal Inspectors for not only targeting criminal networks and their illegally derived assets, but they also aid in the identification of victims,” Barksdale said.

“Postal Inspectors are committed to helping financial crime victims using all available resources and aim to ultimately make these victims whole through restitution.”

The Government Accountability Office reported in May that the number of serious postal crimes — including burglaries, robberies, assaults, and homicides — increased almost every fiscal year between 2017 and 2023.

GAO noted a significant uptick in the number of cases where the robber demanded a USPS employee’s arrow key, which is used to open blue collection boxes.

Despite the surge in postal crime, GAO found the overall postal inspector workforce, and the location of those employees, remained “relatively unchanged” during this period — while USPIS has decreased staffing of its postal police workforce.

GAO auditors found USPIS hasn’t assessed the size and location of its postal police workforce, and whether it’s commensurate with its caseload, since 2011.

The report says it remains unclear how long USPIS “will rely on outdated information to determine how to align its postal police workforce with current security needs.”

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