Check Washing Scam Steals Thousands From Rhode Island Couple

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[00:00:01] Bob: This week on The Perfect Scam.

[00:00:04] Terri Kless: We were looking at the checks, at the bank statement, and I noticed that there was a lot less money in the account than there should have been. We actually saw the check made out to this strange person, and then endorsed by the same person and thinking, wait a minute. This is crazy.

[00:00:20] Richy Kless: It's like someone breaking into your house and like how could this happen?

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[00:00:28] Bob: Welcome back to The Perfect Scam. I'm your host, Bob Sullivan.

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[00:00:33] Bob: Stealing mail is one of the oldest crimes, and so is stealing checks. But criminals have recently added a modern twist to these old-fashioned scams with some really dire consequences because in my view, consumer protections haven't really kept up with the times, which means you have to be extra vigilant to protect yourself. Today we'll show you how. But first, let's meet Richy and Terri Kless. Their check theft nightmare began in a most innocent way when they tried to send a happy anniversary card to their son and daughter-in-law. And you can already guess they are a charming couple.

[00:01:12] Terri Kless: I've been here my whole life. I was born in Rhode Island, and I'm still here.

[00:01:16] Richy Kless: And I came up from Brooklyn, New York, riding the subways and met Terri while I was in college and have stayed ever since. I used to tell people I used to ride the subways longer than it takes to drive through the state of Rhode Island.

[00:01:30] Bob: Yeah, I want to hear the rest of that story, though. So you grew up in Brooklyn and tell me how you guys met.

[00:01:35] Richy Kless: Got a track scholarship to Providence College and I came and went to PC. Got an undergraduate degree in social work, and then I went on for a master's degree immediately in theology, believe it or not, and...

[00:01:50] Bob: Wow.

[00:01:50] Richy Kless: Yeah, I was trying to use the social work skills with the Gospel message so to speak. And it was in grad school that I got to know this girl, Terri, and we started dating and we've been together ever since.

[00:02:06] Terri Kless: Yep. Ever since. It was the summer of my junior year, when we first started dating, and we dated through my senior year and then got engaged shortly after I graduated and that was it. We've been together for 48½ years.

[00:02:22] Bob: All your friends must have been very impressed you were dating a graduate student.

[00:02:25] Terri Kless: Yeah, I guess they were, yeah. We all hung out together, Richy's friends and my friends, and yeah. It was great.

[00:02:33] Richy Kless: They probably weren't too impressed with who she was dating. (chuckles)

[00:02:39] Terri Kless: I'm sure they were. He was a big football star at Providence College. They had club football back in the day, and all my friends knew who he was.

[00:02:49] Bob: So as this couple does every year at the same time, back in May of 2023, they send a card to their daughter-in-law and son wishing them a happy anniversary and include a small check inside so their kids can have a little fun. But the card and the check were somehow lost in the mail.

[00:03:10] Terri Kless: He wasn't aware that the check was coming, so he never notified us that it hadn't arrived, and we lost track of that.

[00:03:18] Bob: It's certainly easy to imagine that. Gift checks and gift cards get left in desk drawers all the time, but there is another reason they don't notice this uncashed check right away. The couple has two checking accounts; one for everyday bills, and one for occasional fun, and this gift check was...

[00:03:38] Richy Kless: Was from an account that we just labeled it "Travel Account." And it was something that we rarely used, so I paid attention more to the routine checks and Terri would use the other checking account for maybe gift giving or we did do some traveling, and we would put down payments down. And so we would write maybe four or five checks a year from that. So I really never really paid that much attention to it.

[00:04:07] Bob: But a year later, something happens that gets their attention when they look at their August bank statement.

[00:04:15] Terri Kless: We were looking at the checks, at the bank statement, and I noticed that there was a lot less money in the account than there should have been, and I was sitting at the kitchen table saying, wait a minute, this isn't right. This doesn't make any sense.

[00:04:30] Bob: There's a lot less money than there should have been; nearly $10,000 less.

[00:04:36] Bob: You get old-fashioned printed statement, right, and the big number at the bottom was wildly wrong.

[00:04:40] Terri Kless: Correct. Yeah, exactly.

[00:04:42] Bob: What does that feel like?

[00:04:43] Terri Kless: Scary. And shocking. And immediately thinking the banks made a mistake.

[00:04:49] Bob: So they go pull all their records out of the closet and Terri discovers check 216 was recently cashed for a gigantic amount; $9,742. They certainly never wrote a check for that amount. But there it is. There's a picture of the check anyway right in their bank statement.

[00:05:10] Terri Kless: And the check was made out to a person, fraudulently endorsed by the same person, somebody we had never heard of, and was cashed by our bank. And not understanding how it could possibly happen until we, we actually saw the check made out to this strange person, and then endorsed by the same person and thinking, wait a minute. This is crazy.

[00:05:35] Richy Kless: I use the term violated immensely. It's like someone breaking into your house and like how could this happen.

[00:05:42] Bob: They know they have to go to the bank with this problem, but they do a little research first. Where did check 216 come from? It doesn't take long before Terri realizes that check 216 was the anniversary check they'd sent to their son a year ago. Now they know he didn't cash it.

[00:06:01] Terri Kless: When we realized that it was a check that we wrote out to our son, we were even more puzzled. How did this happen? It was a greeting card that was mailed, I believe we mailed it at the post office because we had mailed it late just before their anniversary and usually if I was mailing something late, I would go right down, downtown to the po--, to the post office. So I, my thought was, this was a greeting card. This check was inside a greeting card. How did this happen? Total, just totally being puzzled that, that this could have occurred.

[00:06:34] Bob: And by the way, it's adorable that you send a check to your son for his anniversary; that's very sweet.

[00:06:39] Terri Kless: We, yeah, we do that... we do it with, we do it with the kids, yeah.

[00:06:43] Bob: But it wasn't a check for $10,000.

[00:06:45] Richy Kless: No.

[00:06:46] Terri Kless: No. It was just for $200. It wasn't for a lot, it wasn't for a, a, it wasn't a huge check.

[00:06:54] Bob: Yeah.

[00:06:55] Richy Kless: There was another thing that about the check number itself that was very puzzling to us. The check had a number 216 on it. Now Terri mentioned that we had moved from the town of Smithfield in Rhode Island to the town of Cranston. And when we did, we got all new check numbers. And they started again and check number 216 with our present address had already come through my ledger, and I checked that off. So that was a puzzlement too. I said, how could they cash two 216 check numbers?

[00:07:36] Bob: That is a question for the bank. So Terri and Richy get their box of records together and head down to their local branch.

[00:07:44] Terri Kless: We went to see a woman; she had an office. We had dealt with her before. We knew her. She explained a little bit about check washing which we didn't know was a thing.

[00:07:55] Bob: Check washing. Criminals steal checks, often from the mail, and use chemicals to wash off the original amount and payee. Then they enter their own name and cash the check for lots of cash. You'll hear a lot more about how it works in a moment, but this sure looks like check washing, the bank tells them.

[00:08:15] Richy Kless: They closed the checking account checking account on us, told us to report this to the police locally, and also to the United States Postal Service; they have like a sheriff or a marshal vigilance squad that, that looks at check fraud. We did that all on a Friday, so it was a busy Friday for us and the bank kind of assured us they'd work with us to get the money back and that was it. But we were quite upset.

[00:08:44] Bob: The bank manager assures them she has put in a claim for them.

[00:08:49] Bob: Okay, so you left the bank Richy, how did you feel when you left the bank? Were you at least calmer about everything?

[00:08:55] Richy Kless: Yes, we were. And that those were the exact words she did use. She said, 'cause I asked them, I said, "Will we ever get this back?" And she said, "Oh you'll get it back, but it's going to take time." That was kind of reassuring and from there we went directly to the police station, local police station in the city of Cranston, 'cause that's where we live. After that, we went to the post office and the post office locally told us to call, they had a number for us to call. And we filed a claim with the post office that very day too. And they, they too gave us like a, a case number and like the bank had given us a case number for them, so we had to keep track of all these things.

[00:09:44] Bob: What did the police tell you?

[00:09:45] Richy Kless: The police said, they too said, oh you'll get your money back, you know and then they, again, more nonchalantly. But they were more aware of this type of situation as check washing, and Terri and I were still like, who does this and how does it happen?

[00:10:05] Bob: How does this happen? How can a bank cash a check for almost $10,000 like this? At least they've been reassured they'll get their money back. Unfortunately, that feeling doesn't last long. Only four days later, a letter arrives from the bank and it says their claim is denied.

[00:10:26] Terri Kless: I mean, we were angry, we were frustrated, uh, we were confused. We felt, I can speak for myself, I felt that you know the bank that we've been dealing with for over 20 years was really turning their back on us. I mean it was very; it was a very, you know, a very difficult time. It was unbelievable, just totally unbelievable that this could happen and that we were being treated this way.

[00:10:51] Bob: The bank says flatly, Terri and Richy took too long to notify them of the washed check. The check was cashed in May, but they didn't notice it and report it until August. Account holders must report such a loss within 30 days, they're told, so they're out of luck. They must suffer the loss.

[00:11:12] Bob: How does that feel?

[00:11:13] Richy Kless: I was shocked and betrayed, but that's my biggest emotion that, that I felt, and again, we immediately brought the letter and the letter wasn't even on colorful, it was like a copy of a copy; I hate to say that, but it was. No signature. And when we brought it into the office, even, even the local branch folks are like, this isn't even in color, like who, what, are they running out of paper up there, you know the higher ups. And they weren't impressed with the fact that there was no signature on it, nobody to call. It was just blunt: We're not going to reimburse you.

[00:11:50] Bob: But they aren't about to just accept the rejection letter.

[00:11:54] Richy Kless: Several people had come into the office because by that time, several other people had heard about what happened to us. These people are employees of the bank, and they're like, “I never heard of that 30 day. I thought it was like 90 days. Isn't it 90 days?” This was the discussion that was going on in front of us.

[00:12:12] Terri Kless: The folks at the bank gave us some information about how to escalate our appeal, and so we set about writing another letter to question the denial.

[00:12:26] Bob: And then also, what’s this 30 days thing? Nobody mentioned that at the first conversation. What’s with 30 days?

[00:12:31] Terri Kless: Apparently when you open your account, they sent you something and they told us time and time again that you only receive this particular document once, and when it’s you initially open your account, and it’s called the personal deposit account agreement, and it outlines everything about having an account at the particular bank. And in that agreement, it does state that you have 30 days to report fraud. But I'll tell you, when you're a customer for 20 years, and you only get this document once, I don't know of anybody who would remember everything that comes to them when they first open an account. You look at it once and file it away. You don't remember all the details. But somehow, we were supposed to remember that we only had 30 days to report fraud.

[00:13:18] Bob: And you were also supposed to notice it within 30 days and as you’ve described, you had a lot going on in your life.

[00:13:24] Bob: A lot going on in their life.

[00:13:27] Terri Kless: A friend of ours had passed away actually in my husband's arms. My husband had two surgeries; he was in the middle of physical therapy. There were a lot of things that went on that we could point to saying we didn't notice it within 30 days because we had a lot of life, a lot of crazy things happen to us that summer.

[00:13:45] Bob: Yeah. Yeah.

[00:13:46] Terri Kless: We had to deal with these things. We were trying to be upfront and just provide as much information as we could as to why we didn’t notice it immediately.

[00:13:56] Richy Kless: The local people knew my circumstances. My right arm had surgery, and my right knee was replaced all because of what a good buddy of mine, literally, collapsed in my, he was a big man, and it was an emotional time for us.

[00:14:11] Bob: So they file an appeal. And they wait. And wait.

[00:14:17] Terri Kless: And then between September 1st and December, we would just stop into the bank weekly to say, what's going on, I know you were going to escalate it. You know, has there been any resolution? Did, and no real updates were ever provided, but we were being told to hang in there and wait for further reviews, that it would be reviewed and so I think we, we just, we, they told us it would take time, so we thought okay, it will take time.

[00:14:46] Bob: This whole time the couple is out nearly $10,000, but they’re still confident the money will eventually be refunded. But...

[00:14:56] Richy Kless: Over time, Bob, things started to change. There was a demeanor of, oh you'll get your money back, but it's going to take time and they would say we kicked it up to higher ups and they're working on it, and this... And then after a while, and I'm talking a few months, they would just shrug their shoulders and they would not say anything.

[00:15:18] Terri Kless: and then we started to hear, like Richy said, a little bit of a different tune from them, and around Christmastime, we received a second denial letter. I think that was December 21st, a second denial letter after we had tried to escalate it.

[00:15:33] Bob: Ah, Merry Christmas, yeah.

[00:15:36] Bob: A second denial letter. Now there is real cause for alarm. They’re out $10,000 it would seem, so they start filing appeals anywhere else they can imagine.

[00:15:48] Terri Kless: And that’s when we contact the Consumer Financial Protection Bureau and the Office of the Controller of the Currency, and we sent letters to a number of different agencies outlining our situation. And every time we sent a letter to one of these agencies, they would send something back to our original bank, and then we would hear from the customer service office at the bank, and they would lead us to believe that they were going to be able to help us, but then within two days we'd get another denial. It was back and forth, getting your hopes up because these folks made it sound like, oh, we understand your situation; we're going to try to advocate for you. And they actually used those words, the customer service office of our bank, which will remain nameless. And shortly thereafter we'd get a, another denial. We also sent a complaint to the Rhode Island State Department of Business Regulations, Division of Banking. Let’s see, we did a few other things, and then we started to hear from the customer service office at our bank, and they started to tell us, they gave us new case numbers, they’d tell us that there’d be one, at one point they told us there’d be a meeting that would take place to review out situation.

[00:17:02] Richy Kless: I do have to say, I give all kudos to Terri because she was like the dog with the bone who tracked everything and took meticulous notes of whoever we spoke with, and the date and time and it was really remarkable.

[00:17:18] Bob: Meanwhile, working with law enforcement, they make a little bit of progress until they don’t.

[00:17:24] Terri Kless: They were able to determine that the check was, the person who fraudulently had written the check out to themselves, they knew what bank that person belonged to, and they actually had bank data and a video of the, the person who deposited the check at that bank. And they had snapshots and photos of the suspect, and of course, they couldn't release any of that to me, but the bank that the person deposited the check at was in Providence. So they needed to send all this information to the Providence Police Department because that's...

[00:18:04] Richy Kless: Different city.

[00:18:05] Bob: Yeah.

[00:18:06] Terri Kless: That the crime, where the crime was actually committed. And then after, that was it. We could never reach the detective in Providence, we never heard back from anybody. We tried a number of times.

[00:18:17] Bob: But they do learn that mail theft and check washing are really prevalent, especially in Rhode Island.

[00:18:25] Richy Kless: There was a breakout crime in the main post office in the city of Providence where four or five employees of the United States Post Office were captured and uh charged with pilfering and stealing credit cards, gift cards, and checks out of the mail. And that was a, another telltale like OMG to us that this is widespread. And this postal theft, that made big news here in the state of Rhode Island. I mean that was all over the newspaper, so we thought that we might get a call about that, I think, as I said, four or five guys were convicted, but they never revealed anything. And when what we could gather from the news stories, this was a much larger ring and they weren't about to confess or turn on the other people who were involved. So all that was background music to us, and we're like, okay.

[00:19:32] Bob: Yeah. Of course.

[00:19:35] Bob: So dead-end with the bank, dead-end with law enforcement other than the knowledge that they aren’t alone, and the denials, they keep coming.

[00:19:45] Terri Kless: We got three denials in writing, and then a fourth denial was verbal, and that was after we finally wrote to the CEO and sent a copy of the timeline to the CEO of everything that we had done over the course of just about a year. And the fourth denial was verbal. We received a call from customer service telling us that it would be denied again, and I said to the woman, “Aren’t we going to receive a letter?” And she said, “You’ve already received three letters. This will just be a verbal.” This was after sending a letter to the CEO. I thought to myself, oh, that’s interesting.

[00:20:23] Bob: I mean you must have considered giving up at this point, right?

[00:20:26] Terri Kless: Absolutely.

[00:20:28] Bob: It’s been six months of letters, forms, police reports, and it’s exhausting.

[00:20:35] Richy Kless: This was an extremely stressful moment for Terri and I. Every time we'd get these build-ups of getting your hopes up and the friendliest voices with the, I'm going to advocate for you, we're on your side, this is where we have it, and then a day or two later we just get a punch in the gut again. And you talk about the frustrations and you asked Terri, do you almost feel like giving up? I have to say, I did. I had it. I was like I spent way too much time on this in the long time I have left to live on this planet, I don't think this money is going to improve my life or this, that, and the other thing, and I'm trying to put things in perspective of there's worse things that have happened. I'm thinking about my friend dying in my arms, and I'm like, hey, I'm still walking the earth and but it was extremely stressful for Terri and I. And at times she said, "I'm going to write another letter, or I'm going to..." and I’d throw my hands up like do what you want, do what you want. And so it put stress on our own marriage, and at one time when in a more peaceful time, we, we said, if we weren't retired, how could you, how could anybody spend the time doing this? It, it, as Terri said, it was like a full-time job from phone calls.

[00:21:58] Bob: It feels like a full-time job just trying to get their money back, a job they really want to quit.

[00:22:06] Terri Kless: And at that point, I remember saying to my husband, we’re going to just take one more step here because, and if we don't get anywhere, then I'll hang it up. I won't even pursue it. And that's when we reached out to Channel 12 and provided them with our information and they were very helpful.

[00:22:26] Bob: Reporter Sarah Granelli from WPRI, she was more than helpful.

[00:22:33] Terri Kless: The, the consumer advocate at Channel 12, she um, called us and said, um, “I think you're going to be hearing from the bank soon. Um, please let me know if you hear anything from them.” And because some--, somebody from the customer service office called and just simply said that the money was going to be deposited back into our account. And I, I said, what? I said, “Oh yes, you should check and see the money will be deposited back into your account. We've, we've reviewed your situation and you'll see the money back in your account.” And I was dumbstruck. I just couldn't even, I said, "You're kidding!" I was totally shocked, and of course we went online and the money was put back in our account. And um, when the piece was aired, I believe it said something like, um, that she had reached out to the bank and they had made an indication that they were actively working with the customer to resolve the situation. And, and Richy and I were like, what? Because we hadn't received anything but denials up to that point. So it was...

[00:23:38] Bob: Did you get a letter eventually?

[00:23:40] Richy Kless: No.

[00:23:41] Terri Kless: No, nothing. Just a phone call, and then we went online and we saw that the money had been put back in.

[00:23:47] Bob: So after all the denials, boom, the money’s back - no apology, no nothing?

[00:23:52] Richy Kless: Nope. No.

[00:23:53] Terri Kless: Absolutely. Nothing.

[00:23:55] Bob: Wow.

[00:23:55] Terri Kless: Nothing, and I have to tell you when Channel 12 asked us to sit for an interview, and that was one of her questions, how did you feel about that? And I said, “I have mixed feelings. I was happy to get the money back, but I was actually quite angry that it had taken us a full year of researching and finding out about federal agencies to contact and contacting the agencies and doing all the legwork and working really hard to resolve this situation, and all the news people had to do was make one phone call and the money was put back into our account." And I think that says a lot about the bank.

[00:24:36] Bob: Yeah.

[00:24:37] Terri Kless: I, and that’s all very disappointing in the way that whole thing worked out.

[00:24:40] Bob: And even the resolution was dis--, still left you with a bad taste in your mouth, right?

[00:24:44] Richy Kless: It did. It did.

[00:24:46] Terri Kless: Yes.

[00:24:48] Bob: This took a year of your life, this experience, right?

[00:24:51] Richy Kless: Oh yeah.

[00:24:53] Bob: And just like that, the ordeal is over. But the Klesses want to keep talking about this story because they want people to know about this wave of mail theft and check washing. But also, they want consumers to understand that bank contracts give the account holders, as little as 30 days to report theft from a checking account via a bogus check.

[00:25:16] Bob: I’m sure at one point in your life have had a fraudulent charge on your credit card. When that happens, you make a phone call and it goes away.

[00:25:22] Richy Kless: Immediately.

[00:25:23] Terri Kless: Thank you, Bob, for mentioning that because I have that written down too, and if anything happened to a debit card, you would get that money back. But not with a check, and I don't think people know that, and I think that's one of the concerns that I’d like to voice to customers that they need to know; if there's some fraudulent thing that happens with a check, make sure you know what the policies are at your particular bank, because it's not like something happening to your Visa card or your debit card. It's totally different. Now I don't know why that is, I don't know why that is, but it is. And if you don't report that fraud in a timely manner, whatever your bank's time frame is, you might have to really do what we had to do, and really pursue it finally.

[00:26:08] Bob: Yeah. I, that’s what, frankly that's why we're doing this episode because I'm quite convinced that most people have no idea that this is the case, and it's really important they learn.

[00:26:16] Richy Kless: Yeah.

[00:26:16] Terri Kless: Yeah.

[00:26:18] Bob: Even if a lot of young people never write checks anymore, but it can happen to them too.

[00:26:22] Terri Kless: Right.

[00:26:23] Bob: Somebody can write a check and you don’t notice within 30 days, you’re completely out of luck, and that’s, yeah, the rules are, the rules governing checks are very different. And you probably have now noticed this since then. Mail theft check washing in general is surging right now. Probably because of this. Yeah.

[00:26:39] Terri Kless: Right.

[00:26:40] Richy Kless: It's insane.

[00:26:41] Terri Kless: Yeah, but Bob, by the same token if this is surging, why, why can't banks make checks more fraud-proof? If, if everyone knows this is now surging, why, why isn't there a better way to make these checks fraud-proof? And why isn't there more messaging about fraud, like check washing. We were at a Super Bowl party the other night and we were talking to friends about check washing; they had no idea. They have never heard of it, and these are folks that are, they read the paper, they’re, they’re knowledgeable, they were professionals. Hey, I don't think that it's out there. People are just not aware and when we talk to people about it, they're absolutely amazed.

[00:27:26] Bob: What do the Klesses want people to remember from their story?

[00:27:30] Richy Kless: I guess it’s trust others but tempt no one, and know the regulations of your own bank when you're dealing with check writing, as we found from the Office of the Controller of Currency and through other federal agencies, banks have down from a year to 30 days to have this reported. And it varies from bank to bank. They each can set their policy from that 30 day to a year. So that, that would be my cautionary, and pay deep vigilant to your check ledger. If you write a check that's going in the mail and you don't see it cashed in a timely manner, and I know people do that. You know you get a check, you put it on your bureau, it’s like, when I go to the bank, boom. So just don't be afraid to follow up on a check and get that done.

[00:28:26] Bob: And Terri, how about you? What do you want people to remember from your story?

[00:28:29] Terri Kless: Basically the same thing, but, but maybe try to limit the number of checks that you use. Try not to use that many checks because the more you use, the, the greater the chances that you could have a mishap like we had. But yeah, it's important to know what your policy, your bank's policies are. And it's important to know that it, it's not like a Visa card or a Visa number being stolen. It's quite different. And I just think people need to be aware of that.

[00:29:00] Bob: Through this experience, Richy has learned a little bit more about protecting your mail and your check.

[00:29:07] Richy Kless: I would just tell your listeners, if you’re mailing something with a check, don’t put it in a local box on a street corner. Make sure that you bring it to the post office and put it in the box there. I don’t think there's too many other thieves that are out there, but because the police were saying that they have devised little hooks or gummy or whatever throwing a fish line into a local mailbox, and they bring the mail up through that way, and they sort through it. And that's they're, they're stealing checks or and/or uh, cash cards, gift cards, or Visa cards. And they’ve come up with these ingenious ways of just lifting mail out of a local mailbox. So again, it's something that we, as consumers, and that's one of the reasons we wanted to do this podcast with you, is to educate other people to say, you just, you need to be those vigilant.

[00:30:07] Bob: You need to be vigilant when it comes to check washing. So, to talk just a little bit more about what vigilance means, we have Eric Shen here. He’s the Inspector in charge of the criminal investigations group within the United States Postal Inspection Service.

[00:30:25] Bob: Today, we’re going to talk about what feels to me like a very old-fashioned crime, mail theft, right? It seems like one of the oldest crimes, it’s probably been around as long as the postal service has been around, right?

[00:30:36] Eric Shen: Uh, absolutely, yes. Even though it is a, like you mentioned, a old scam or a crime, we've seen it evolve throughout the years and we are seeing it now, bad actors using better technology to, to conduct mail theft, and then when they conduct mail theft is to steal, of course, your personal information, checks, credit cards.

[00:30:59] Bob: Mail theft has seen a large increase in the past several years, in part because there’s been such a surge in check washing.

[00:31:07] Bob: Okay, so let’s define a couple of terms before we get into how it’s done. What is check washing?

[00:31:12] Eric Shen: So check washing, it just sounds like what it is. If I mail a check through the mail and it gets stolen through the mail, or however the suspect obtains a check, what they do is they use just pretty much household chemicals to essentially wash the check, the ink of the check off of that check, and then they can then use that check to whether they write the check for more funds, or to themselves, or to someone who's involved or unwillingly involved as well. But then they use that new check, that washed check to cash or withdraw more cash from the person's account. We also have seen, once that they’ve washed the check, it's a blank check now, so they will duplicate the check. So they will then, whether it's making more photocopies of it, or some of the new technology now we've seen, even artificial intelligence, AI, being utilized to make more checks out of that one check. So now they're, they have a multitude of counterfeit checks that they can again leverage and withdraw funds from that account.

[00:32:22] Bob: Okay, I don’t mean to oversimplify it, but I’m hearing that there are basically two jobs; one is to steal mail, the other one is to cash checks, and these are probably not the same person.

[00:32:31] Eric Shen: Right, it could be the same person, but in these larger networks that we have seen investigated, there are, they are two different jobs, and it just depends on how big the network is, and what type of checks they're negotiating. Obviously like the bigger checks, the business checks, those are the ones that they know there's going to be a lot of money to be made, and so more high profile, and...

[00:32:53] Bob: Yeah, sure. Okay, so let’s go over job one, stealing the mail. Before we got on this call, I did a google to update my search on this topic, and the internet is full of these pretty frightening stories of mail carriers being attacked. So there is a dangerous element to this mail theft story, right?

[00:33:11] Eric Shen: Absolutely. Our carriers are out there and they are being targeted for the mail or the arrow key that opens the receptacles for the mail. I would say though in the last two or three years, we have seen a decline in carrier robberies, uh, ever since the Inspection Service started Project Safe Delivery three years ago where we really are targeting higher areas where there are robberies, where there are higher areas of check fraud and really investigating those cases. And when you take down these networks, you're not just taking down the person stealing the mail, you're not just taking down the person orchestrating it, but you're taking, also taking down the people that are robbing, potentially hurting the carriers. There is a violent component to it, but we have definitely seen a decline in carrier robberies, just because some of the actions that the Inspection Service has done, not just investigations, but in prevention messaging as well. One of the big initiatives is utilizing data-driven information to investigate these cases, working with our federal partners such as the US Attorney’s Office in prosecuting these cases. And utilizing our resources a little more efficiently, and then going into certain parts of the country where we were experiencing a lot of robberies, with a surge of resources and it has really helped the decline of robberies. Mail theft, I would say, is still prevalent, but it always has been. Uh, but we continue to utilize the Project Safe Delivery’s initiatives to continue to battle mail theft, financial crimes related to mail theft such as check washing, bank fraud, identity theft, and then continue to utilize some of the resources and technology that we've acquired to investigate carrier robberies when they do occur.

[00:35:05] Bob: In many of these violent attacks against mail carriers, criminals are after what’s known as an arrow key.

[00:35:12] Eric Shen: So an arrow key is basically the key that a carrier uses to open receptacles when you're delivering mail at residential collection boxes or apartment panel boxes. And that's part of Project Safe Delivery. I mentioned leveraging technology. We've upgraded our keys to be a lot more secure, meaning just because you steal a key from a carrier, that key doesn't necessarily work as well as it used to. We have a lot of security features that we put into the key and into the collection box and the panel boxes now that have been able to really push some of the mail theft away from certain areas. And working with the Postal Service, we really are leveraging a lot more technology and replacing a lot of the old equipment that's been out there whether it's vehicles, locks, collection boxes; they have a lot more security features now that we utilize to prevent a lot of the mail theft before it occurs.

[00:36:12] Bob: So there might a, a development or an apartment that has a couple of hundred units and a couple of hundred mailboxes, but a mail carrier needs one key to get in all of them and deposit the mail, right, and so that if a criminal gets access to one of those keys, that's a treasure trove for them, right?

[00:36:29] Eric Shen: Absolutely it is. Yeah, and that's why we're addressing it by utilizing newer technology in the lock itself that's sitting at the apartment panels, and also the key that they carry.

[00:36:41] Bob: One of the ways criminals use technology to facilitate mail theft and check washing is they use communication tools to recruit other criminals and rapidly expand their networks.

[00:36:52] Eric Shen: I would say the sophistication of it is really being able to now communicate through social media, especially uh, certain channels that are not regulated like a telegram is, where we're seeing a lot of check fraud and communications there and recruitment. So because of that, they're able to build their groups and recruit through social media showing how easy it is and how much money you can make. And then being able to sell kind of their method.

[00:37:25] Bob: In some cases people are lured into crime networks thinking they are applying for a normal job.

[00:37:31] Eric Shen: You know people that need money as far as not knowing, thinking that they’re, it’s work from home scheme, but they think it’s legal, they don’t think anything of it, so they reach out and then they get recruited to these groups, these networks, and then once these networks start growing, they literally reach across the country. We’ve taken down quite a few groups that have, whether it’s a check that was compromised in the East Coast being cashed on the West Coast. That just shows the reach of the networks now. It’s very prevalent and it's not just, hey, you can make money quick. Some of it is very blatant on, especially on Instagram, on how they're recruiting younger adults that need money, and also flashing the lifestyle that they're living, bricks of cash, driving fancy cars, you know, when you get enticed to that and knowing that you can make money, then they tell you, hey, reach out to me on my Telegram channel. Here's my Telegram handle, and that's where really then you reach out to them there and you learn more, and they really recruit you to whether it's robbing a carrier for a arrow key to obtain mail or here's a arrow key, go steal some mail, or I'm going to sell you some checks, and this is how you then make money with that.

[00:38:54] Bob: Okay, so let’s talk about the other side of it, the check presentment, right? So somebody uses check washing chemicals to take stolen mail, write a check that was $80 to the electrical bill and now they have an $800 check for something else that they want to cash. What kinds of people show up at the bank trying to cash these fraudulent checks?

[00:39:14] Eric Shen: It’s a, all kinds of people that want to make money. So there's not really a, a specific target or anyone like that. And also, with technology, you don't necessarily need to go into the banks anymore. If you have a app, you can potentially utilize that to deposit checks now. So there are a number of different ways that they can exploit that check. They can go to check cashing stores as well. You know, so we've seen different, all kinds of people; there's no specific age range or anything to that nature. If they're conducting mail theft or check fraud, they're just trying to make money, so it, it has ranged from all demographics.

[00:39:55] Bob: So one of the things we learned a couple of years ago that there was a set of people who were doing this who were not part of the crime. They didn’t realize what they were doing, and in fact, specifically, older people were being recruited partly because they would be trustworthy when they showed up at the bank and they'd be somehow or another persuaded that this was a, a legal thing they were doing. Is that still going on?

[00:40:16] Eric Shen: We still see that. I mentioned it earlier a little bit about like work at home scams. That's, that's what we kind of seeing a lot of that where I will get a check mailed to me and then it, the instructions for me is to go and deposit it into my account and then move the money over. So it's like a form of laundering money, and they are unsuspecting. They don't realize it's not really legal to do that.

[00:40:43] Bob: When Eric’s team brings down a network, they often find much more than bags of stolen mail.

[00:40:49] Eric Shen: Oh, and a lot of times too, we find them linked to other criminal activities, so we’ll find a large number of drugs, we’ll find weapons as well. So you do see a lot of that connection to the violent crime portion now doing what I know traditionally we call it white collar crime, but it really is just financial crimes, because they see how lucrative it is. It’s definitely more enticing for them to do that. So we’re really, when we conduct the search warrant, when we search a house, we really are finding a multitude of things; it’s not just mail theft related.

[00:41:24] Bob: Okay, so what do financial institutions do to try to prevent this from happening?

[00:41:29] Eric Shen: So we actually do a lot of partnerships with different financial institutions, but we also partner with American Bankers Association, the ABA, and similar associations, financial institutions in prevention and education and training. One of the things that they train and that we have helped financial institutions in training is, you know your customers that come in on a regular basis. You know that they don't normally cash $800 checks, or they don't normally withdraw large sums of money. There are patterns to it. If you see those patterns, report it, report it to law enforcement, and try to stop it. Try and have that conversation with the customer that's trying to cash that check that’s un-, unsuspecting customer to make sure that whatever they're doing is legit, and if it’s not, really try and help and explain it, and guide them to the right law enforcement agency, to the right people as far as prevention, so they can stop it before it gets worse or stop it before it even starts.

[00:42:34] Bob: So we want tellers just having conversations with people at the bank saying, hey, this is unusual. Can we talk about why you’re cashing this check? Is that what we want?

[00:42:42] Eric Shen: Yeah, absolutely. And the other part too is even a lot of banking now is done online too. The banks see patterns. They understand uh what is unusual transactions or activity on a bank and they will notify the actual customer. I know I always get, I don't know, Bob, if you do or not; if I go and spend or make a large purchase on furniture or a new TV, I usually get a text message from my bank asking me, hey, did you just go to Best Buy and buy a $2000 TV? If so, ignore this text. If not, please call. So I think more and more the banks and the financial institutions are putting in a lot more prevention mechanisms to catch a lot of those anomalies that normally wouldn't occur on the bank account that you have.

[00:43:36] Bob: Okay, so how can we avoid getting our mail stolen in the first place?

[00:43:40] Eric Shen: So one of the things that I do myself, ‘cause I still write checks and I still mail checks. If I’m going to mail something, I don’t use my mailbox at my house. I usually drop it off at a post office. The collection boxes, whether it's inside the post office or the ones on the outside, I always look at the time for the last collection, because I want to make sure it doesn't sit in there. The longer you have something exposed, the more opportunity there is. So I always try to deposit the mail when it's like an hour before the last collection at the latest so it doesn't sit there for a long time. Some of the other things that I do, just writing the check; using gel ink, black gel ink is usually the best ink where it's hard to get to wash, so that's another method I utilize. And just being much more proactive. So if I'm, I am going to send my brother a check, I'm going to let him know, hey, I'm going to send you a check so he can keep an eye out on it and ensure that it was, that he's the one who was going to get it, not that it was stolen.

[00:44:52] Bob: What about leaving mail at your door for the carrier to pick up, outgoing mail. Is that a good idea or is that a bad idea now?

[00:44:57] Eric Shen: I try not to do that. I always try to give it to my mail carrier. So if I'm driving around and I see a mail carrier and I have to mail something, I'll stop and give it to a carrier. I try not to, again, leave things exposed. Even if you go on vacation, there's vacation holds you can put on your mail, or you have, you have trusted neighbors; you can ask them. I've asked my neighbors a number of times to pick up packages for me or hold my mail for me, but even the Postal Service will hold your mail for you when you go on vacation for free. So it's a great service to have. I use it all the time as well. And informed delivery is another free service the Postal Service provides. Basically you sign up, free, and every morning you'll get an email showing you what should be coming to your house that day as far as the mail.

[00:45:47] Bob: I’m a big fan of informed delivery. I think it’s pretty amazing actually.

[00:45:50] Eric Shen: Yeah, it’s awesome. I love it. I used it uh, since the very beginning of it. I actually had the uh, the privilege and the opportunity to beta test it, and fell in love with it since then.

[00:46:02] Bob: Of course, none of these methods are foolproof, and that’s why it is absolutely critical to stay on top of your checking account so you discover something is wrong as soon as possible.

[00:46:13] Eric Shen: Yeah, that’s something I always tell the general public when I talk prevention on mail theft or any kind of financial crimes. You have to be really proactive. I know myself, no matter how busy I am, I try whether it's in the morning or before I go to bed, I always check my bank accounts and my credit card statements, and I always look at any activity that might not have been flagged by the banks to make sure I actually did spend that money or whoever else, whether whoever else in my family has spent that money. My wife always makes fun of me because she says she can never surprise me with a gift, 'cause I am so diligent in checking my statements, and I will question her like, “Hey, why did you go to Nordstroms and buy this?” And she's like, “You just ruined your birthday gift.” I’m like, oh. But I'd rather do that than become a victim. So I would say being proactive is really key in prevention. You have to monitor everything as best you can. I feel for a lot of the victims that are in the cases I work because I get it; there are, there are times when you, other personal things fall into your daily routine that can throw things off, but that's what scammers and that's what these suspects are hoping that you don't catch it, that you, that something else is going on that's distracting from it.

[00:47:37] Bob: Okay, I think this is a point we really want to stress in the episode. People at this point are very familiar with how easy it is to deal with fraud on your credit card. You just call up and they give you a new card and they wipe off the charges, and it’s barely a hassle at this point. But when a check is cashed against your checking account, it can be a lot more difficult and what we’ve learned the hard way is that consumer protections are not as strong as they are with say credit cards. Can you talk us through that?

[00:48:04] Eric Shen: Yeah, it is tougher just because it is drawing straight from your checking account, your bank account. So it makes it harder for the banks, I think, to recover those funds, but like I mentioned earlier, the earlier you can detect something that has occurred on your bank account, the faster you can notify the banks, the quicker you're able to recoup your funds. So that's something that I always highly recommend and you know file a police report with your local police, file a complaint if it's mail theft related that you think it's mail theft related. Go to USPIS.gov, and file a complaint with us as well. Go to FTC.gov; that's another great resource site. Obviously, AARP has a great website that has a lot of resources that we partner with a lot when it comes to different prevention methods when you have been compromised and you are a victim of, or your bank account has been compromised. Something that I always try to tell people is, open and get it, you know, the banks will help you with a new bank account, get new checks, and just start over a little bit that way, and try to recoup as much as you can with the losses, but I, the main point is, is just being very proactive and the sooner you catch it, the sooner you're able to stop it as far as the payment, or if it's already been cashed, like a day or two ago, the banks usually are able to help you recoup that money.

[00:49:39] Bob: Richy and Terri were shocked that they couldn’t get the money back, and they were told, no multiple times by their bank because they didn’t report it within 30 days, which struck them as a very small span of time. Do you hear from people who don’t get money back from the bank?

[00:49:52] Eric Shen: Unfortunately, I have. We've had a lot of cases where the victims don't realize they're victims until they’re too late and that has occurred where they're unable to get their money back.

[00:50:05] Bob: Rules can vary by state, even by bank, but the crucial point is you might only have 30 days to tell the bank your money has been stolen, or you might not get any of it back. For The Perfect Scam, I’m Bob Sullivan.

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[00:50:32] Bob: If you have been targeted by a scam or fraud, you're not alone. Call the AARP Fraud Watch Network Helpline at 877-908-3360. Their trained fraud specialists can provide you with free support and guidance on what to do next. Our email address at The Perfect Scam is: theperfectscampodcast@aarp.org, and we want to hear from you. If you've been the victim of a scam or you know someone who has, and you'd like us to tell their story, write to us. That address again is: theperfectscampodcast@aarp.org. Thank you to our team of scambusters; Associate Producer, Annalea Embree; Researcher, Becky Dodson; Executive Producer, Julie Getz; and our Audio Engineer and Sound Designer, Julio Gonzalez. Be sure to find us on Apple Podcasts, Spotify, or wherever you listen to podcasts. For AARP's The Perfect Scam, I'm Bob Sullivan.

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