Check fraud is a major challenge for the banking industry. Since 2018, check fraud has increased 2-3X, with attempts estimated at $45B and losses at $7B. Financial institutions and their fintech vendors have been left to their own devices to solve the issue. The US Government has been slow to react to the issue and only this past year have they begun to take notice and “step up” to the challenge.
The main reason for the US Government finally taking notice: The rise in mail theft.
The USPS reports that there have been 305 incidents of mailbox/mail carrier robberies from Oct. 1, 2022 to March 31, 2023. Additionally, the USPS has seen mail theft rise from 38,500 in the entire 2022 fiscal year to more than 25,000 in the just the first half of fiscal year 2023.
As with most issues, the US Government takes a more reactive approach. And, once there is a situation that cannot be ignored, they will continue to push the issue until they find a suitable resolution.
Timeline of Government Action
The first major step taken was at a House Committee on Oversight and Reform subcommittee hearing held in Philadelphia, PA on September 7, 2022. This hearing addressed the rise in mail theft, with Frank Albergo, National President of the Postal Police Officers Association, present:
“As other witnesses testified that mail-related crimes were rising, Albergo complained that Postmaster General Louis DeJoy and Gary Barksdale, chief postal inspector of the U.S. Postal Inspection Service, had stripped postal police of their powers and had gutted the uniformed force.
It was a policy of ‘defunding the police,’ Albergo said, adding he could not explain why the uniformed force called the Postal Police Officers had been decimated and restricted to protecting postal property.”
According to Mr. Albergo, postal police staffing has shrunk 65% since 2022, with around 300 postal police currently active. This has considerably hindered their ability to properly protect the blue mailboxes and mail carriers.
This hearing was followed up on October 14, 2022, as U.S. Senator Sherrod Brown, D-Ohio sent a letter to the US Postal Service Board of Governors asking them to quickly take action on mail theft and postal robberies.
On May 10, 2023, the National Association of Letter Carriers published a statement, demanding “real, immediate solutions to make sure employees are safe from the moment we enter the trucks in the morning to the time we leave the station at the end of the shift.”
Recently, we’ve seen several members of Congress take action:
- On January 24, 2023, Congressman Ken Calvert (CA-41) reintroduced the Ensuring the Safety of Our Mail Act, H.R. 446, which aims to protect Americans from the rise in mail theft by enhancing penalties for convicted mail thieves.
- On April 6, 2023, Congresswoman Nicole Malliotakis (NY-11) and Congresswoman Grace Meng (NY-06) introduced the USPS Subpoena Authority Act -- bipartisan legislation designed to enhance the U.S. Postal Service's (USPS) ability to crack down on postal crime.
- On May 5, 2023, Congressman Andrew R. Garbarino (R-NY-02) reintroduced the Postal Police Reform Act -- a bill to reverse a 2020 directive from the Chief Postal Inspector restricting Postal Police Officers to physical postal locations and preventing officers from fully executing their duty to ensure public safety within the nation’s mail system. Co-leading this legislation with Rep. Garbarino are Representatives Bill Pascrell (D-NJ-09), Ken Calvert (R-CA-41), and Eleanor Holmes Norton (D-DC-At Large).
Now, in an ironic twist, an October 29, 2023 article from Raw Story reports that Rep. Calvert's very own leadership political action committee — Eureka Political Action Committee — experienced an "unauthorized expense" worth $9,900 in late August, according to a filing with the Federal Election Commission.
“Calvert's committee told federal regulators that it believes someone stole a check while it was in transit in the U.S. mail, which the thief ‘recreated and cashed to an unauthorized entity.’
“The Eureka Political Action Committee filed a police report and a fraud claim with its bank, Wells Fargo, it told regulators.”
USPS Actions: Not Enough
One would believe that with all this new government pressure, the USPS would be motivated to make major changes to protect their mailboxes and mail carriers. However, critics of Postmaster General Louis DeJoy do not believe that enough is being done.
On February 9, 2023, Dejoy outlined the agency’s 10-year reform plan.
“DeJoy said USPS under the plan is focused on five key areas: improving operational precision, improving service reliability, reducing costs, increasing revenue, and ‘creating productive and enjoyable long-term career paths for our employees.’
“‘This new emphasis on not only doing things right, but doing the right things, the things that a modern service organization needs to do to survive in a competitive environment, is beginning to create energy, focus, and improvement across every function of our entity,’ he said.”
So far, the USPS has taken only one significant action on May 12, 2023, known as the “Joint Project Safe Delivery Initiative.” Included within the initiative replacement of 12,000 high-security mailboxes in high-risk areas, and updating 49,000 antiquated arrow locks with electronic locks. It’s not known which areas will receive these updated security mailboxes, but one would imagine that criminals will adjust to stealing codes to unlock the mailboxes vs. obtaining a physical key.
It remains to be seen what further actions will be taken by the US Government and the USPS to protect business and consumers from criminals stealing their mail – and in turn, paper checks. It’s recommended that financial institutions take action immediately to increase their check fraud detection capabilities rather than wait for the government and USPS to find and implement a solution.