The Financial Crimes Enforcement Network (“FINCEN”) has released in 2024 Financial Trend Analysis (“FTA
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In English, the FTA looks at checks that were stolen in the mail and then were fraudulently signed and cashed, usually being altered. The FTA also looked at whether the stolen checks were cashed through an ATM or live before a teller.
According to the FTA, the average amount of instances of mail-related check fraud was $44,774 and the median amount was $14,215. Most of the checks were altered before they were cashed, although sometimes the thieves simply signed the checks and attempted to cash them. Often, the thieves would open a new bank account with a minimum amount but with the payee’s name. Then, the thieves would then cash the check.
More sophisticated thieves will take a stolen check and then reproduce it and cash the reproduced checks at a number of banks. These tactics usually involved gangs of thieves acting in concert, cashing as many checks as possible before their gig was discovered. In a few cases, these gangs would involve a complicit bank employee as an insider to help cover up their fraud.
Another tactic was to “wash” the check by changing certain information, such as the name of the payee and increasing the amount. Probably to nobody’s surprise, many of these checks were cashed via an ATM or through a smartphone app.
You are probably thinking by this point: “How do they get away with this?” The answer is that the rightful payee may presume that the mail is simply slow and that the check will arrive eventually. In the meantime, the thieves are able to set up new accounts with the payee’s names and cash the checks. It may be literally weeks or months — and maybe even tax season — before the victims figure out what happened. Sometimes the payee may not even be expecting the check.
How do the thieves get the checks in the first place? Stealing mail out of boxes is probably the most common source, although there have been instances of U.S. Post Office employees going bad. The obvious solution is to try to avoid sending checks by mail and instead use electronic transfers which is easier than ever.
Ultimately, it is the banks who will eat the loss for this sort of check fraud, but both the payor and payee may end up wasting a lot of time dealing with this. Just think about that the next time you send a check. None of us need that headache.