My IRS payment went missing, leading me down the rabbit hole of check washing and mail fraud

Antonio Gomez, inspector in charge at the U.S. Postal Inspection Service, held up a homemade device used to steal mail from collection boxes. Thieves use methods as simple as putting string with something sticky at the end — duct tape, for example — inside a mailbox and snagging envelopes. The U.S. Postal Service announced in May that it is replacing tens of thousands of antiquated keys used by postal carriers and installing thousands of high-security collection boxes to stop a surge in robberies and mail thefts. Rebeca Piccardo/Sun Sentinel

During the past year, bank failures have been headline news. But largely unnoticed is an epidemic of personal check fraud.

I know because a PNC Bank check of mine for thousands of dollars payable to the Internal Revenue Service was stolen, washed with a common chemical (like nail polish remover), made payable to somebody else in the same amount and cashed. Thus, my new skill set: how a check gets washed and how to prevent it.

Even as fewer people use paper checks, check fraud has increased significantly in the past three years, becoming a favored method of bank fraud, according to the Financial Crimes Enforcement Network (FinCEN). Last year alone, financial institutions filed over 680,000 suspicious activity reports to FinCEN, nearly double the 350,000 reports filed in 2021, which was already up 23% from 2020.

Most victims remain unaware until their bank balances crater. It was only when the IRS contacted me to say that my payment hadn’t been received that I realized something was wrong. I investigated — and learned pursuing bank refunds as a check washing victim is a frustrating, complicated and drawn-out affair.

Initially, I wasn’t overly worried because a bank employee told me PNC had a “zero fraud liability” policy. What I quickly learned, however, was that fraud detection is mostly the customer’s responsibility. And so, in an unsigned form letter, my bank refused any responsibility for protecting my funds by hiding behind “pertinent sections of the Uniform Commercial Code,” as well as my “deposit account agreement” signed 13 years ago, which, unfortunately, I did not readily have in any of my files. My repeated requests for copies of these documents have thus far returned no results.

In the interim, I’ve learned what I can about incidents of check washing and “zero fraud liability” realities. The sad truth is that the recovery of stolen funds is too often a herculean task.

It’s only in theory that a bank is liable for accepting a check that has been forged, altered or improperly endorsed. The big banks, like PNC, are quick to make the argument, no doubt crafted by their high-powered attorneys, that “customer’s failures to exercise care may substantially contribute to an alteration or forgery.”

I suppose I was careless in the sense that I had not been regularly inspecting every cleared check. I had trusted PNC to do that. Image forensics for deposit fraud of altered checks are good and fast improving, especially now with artificial intelligence innovations. Yet few organizations appear to employ the tools.

In my opinion, PNC Bank contributes to that carelessness by providing to its customers inexpensive logo pens with a low-security ink that’s easily washed.

You might be asking how I know this to be true: I relied on the time-tested and authoritative source of a YouTube video to learn the practicalities of check-washing. After a quick trip to buy various household supplies for $30 or so, I had my own make-do laboratory. I quickly became a semi-competent novice washer of checks written with the low quality ink of a PNC giveaway pen.

The lesson? All of us should be using indelible, high security gel ink pens to write checks; the ink embeds itself in the paper fibers. But better quality ink alone won’t solve the problem. In addition to the small-time crooks, there are more sophisticated bad actors competing to offer their services in online chat rooms.

The banks, therefore, should regularly use watermarks, pantographs, solvent sensitive ink and high resolution printing or even the relatively inexpensive fluorescent cellulose fibers for their checks. Why they don’t is a question I have yet to find an answer for.

In the case of PNC, it’s likely not because of the expense. PNC Financial Services Group reported a nearly 20% rise in first-quarter profit in April.

Of course a better way to reduce check washing is to pay recurring bills online. And I now do that — I eventually made up the missed payment to the IRS by using the IRS payment portal — but I still have to write checks from time to time.

The American Bankers Association has been sounding an alarm about check washing, calling it “a big problem that’s getting worse.” Employees at my local PNC branch, as well as at other branches that I’ve visited, have told me of other check washing incidents — all involving mail theft of checks.

Envelopes with checks inside addressed to the Internal Revenue Service, like mine, are obviously an easy target for such theft. In addition to check washing, there are reports of criminals creating fake entities out of personal data obtained from a check, or even opening new lines of credit or businesses with the information.

According to the United States Postal System (USPS), there were 38,500 reports of incidents involving mail theft from blue collection boxes last year. The perpetrators often attach something sticky, like rodent glue traps or a small glue-covered bottle, to a weighted object and drop it into the box to reel in a catch.

Others are more brazen, directly robbing mail carriers. The USPS said 412 letter carriers were robbed on the job in 2022. Such incidents are driven by criminals who want to get what are known as “arrow keys,” which open multiple mailboxes in a large collection area for a bigger harvest. That’s supposedly how a suspect was found possessing 9,000 pieces of undelivered mail when arrested by authorities recently, highlighting the severity of the crime.

On the black market, an arrow key is sold for $5,000 to $10,000. The median income of the geographical area of collection boxes that can be opened affects the market price. It’s not surprising, then, that affluent Bethesda, Potomac and Chevy Chase have received unusual criminal activity, according to the Evidence-Based Cybersecurity Research Group at Georgia State University. Areas of Prince George’s and Montgomery counties have been targeted as well.

Some of those arrow keys can open blue collection boxes across an entire ZIP code, according to the U.S. Postal Inspection Service. Stolen unwashed checks can be purchased for as little as $100 on the black market. Business checks, for more.

In May, USPS announced plans for a safer mail initiative. It includes the installation of 12,000 high security blue collection boxes nationwide. There will be 50,000 electronic locks to replace the antiquated arrow locks. How soon the new initiative will be implemented is unclear.

There’s lots of wisdom in never mailing a check in a residential mailbox, or in one of the blue collection boxes.

Instead, inside the post office is better, but not foolproof. I mailed my check to the IRS from inside a local post office, but the check never reached the IRS. What happened to my check remains a mystery. The USPS Office of the Inspector General has told me that it’s a very small number of postal employees who have been found to “abuse the public trust.”

So, to recap: Online payments whenever possible, and high-security ink for paper checks when it’s not. Avoid blue collection boxes. And know for certain that nothing can replace the vigilance of eyes-on photo-images of cleared checks — front and back — as soon as possible after they are presented for payment.

T. Nelson Thompson ([e-mail]) lives in Mount Rainier, Maryland.