Over the past few years, there’s been a dramatic increase in mail theft in the Unite States. While consumers would most likely attribute this to “porch pirates” (where a thief steals packages delivered to a home), this is simply not the case. What is occurring across the US is criminals robbing Post Office “blue mailboxes’ and even mail carriers for the purpose of stealing mail, particularly paper checks.
According to an article from USA Today:
“Between Oct. 1, 2021 and Sept. 30, 2022 (the Postal Service's 2022 fiscal year), 412 letter carriers were robbed while on duty. That has increased to 305 incidents from Oct. 1, 2022 to March 31, 2023 (the first half of the current fiscal year), the Postal Service said in May.”
Furthermore, the USPS has seen mail theft rise from 38,500 in fiscal year 2022 to more than 25,000 in the first half of fiscal year 2023.
What’s driving this massive increase in mail theft? The answer is simple: Check Fraud.
Mail Theft Leading to Check Fraud
The primary driver of the increase in mail theft is paper checks. The goal for criminals is to either steal paper checks from blue boxes/mail carriers, or to pilfer the “arrow keys” from mail carriers that unlock the blue mailboxes.
Once paper checks are stolen, these criminals have two options:
The first option is simple. The fraudster will establish a drop account at a financial institution; alter a stolen check through various means like white-washing (using solutions like nail polish to wash the payee name and amounts); deposit the check – typically through mRDC or ATM, where a human does not inspect the physical check, and; transfer the money out of the account electronically.
This method is an easy and fast method for fraudsters to make quick money with very low risk.
The second option is more complicated. There is an entire “check fraud ecosystem” on the internet – typically through encrypted channels and the dark web. According to research by BlueVoyant, there has been an 500% increase in “check fraud IM groups” from January 2022 to February 2023. Furthermore, there are more than 6000 stolen checks for sale per month through these channels.
The value of stolen checks have only increased over the past few years. According to David Maimon, an associate professor of criminal justice and criminology at Georgia State University and founder and director of the Evidence Based Cybersecurity Research Group, a personal check typically goes for $175, while business checks sell for $250.
The Evidence Based Cybersecurity Research Group finding from monitoring and tracking 60 online black market channels is astonishing:
“They began tracking stolen checks in August (2021), where they observed 1,639 checks up for sale on the black market channels. Monthly numbers have been rising dramatically since, peaking in January (2022) at 8,021.
Maimon estimates monthly losses from these thefts could range from $10 million to over $30 million, though he warns the fraud they’re tracking is just a snapshot of what is likely a much bigger crime wave.”
Additionally, there are “services” available for hire to perform certain tasks such as washing checks, purchasing drop accounts, and walkers/mules to deposit checks. There are also fraudsters offering lessons - both via the black market and YouTube - on how to perform check fraud.
Curbing the Mail Theft Trend: What FI’s Can Do
Financial institutions need to take an active role in curbing the mail theft trend. First, whenever a client is a victim of check fraud, the financial institution needs to report the crime to proper authorities and government entities. These authorities can actively work with the victim to find the perpetrator and bring them to justice.
On the back end, financial institutions are the last line of defense between the fraudster and their customer’s funds, and should be partnering with fintech vendors to deploy the latest technologies -- like artificial intelligence and machine learning -- that can effectively detect a fraudulent check.
These technologies include:
These technologies can be integrated into a financial institution’s fraud review platform to ensure that their customers funds are safe.
Remember: financial institutions, law enforcement, and consumers all play a role in the fight against mail theft and check fraud.