Mail Fraud

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The term mail fraud refers to any scheme carried out in a fraudulent manner, with the intent of depriving another person of his or her property, or “honest services,” via the U.S. Postal Service, or any other interstate mail carrier. Since 1872, the crime of mail fraud has been classified as a federal offense in the United States, and carries serious penalties. To explore this concept, consider the following mail fraud definition.

Definition of Mail Fraud

Noun

  1. A scheme or fraudulent activity carried out with the use of United States mail.
  2. A deceit, trickery, or scam perpetrated through the postal or private mail carrier service.

Origin (fraud)

1300-1350        Middle English fraude

What is Mail Fraud

Mail fraud schemes are more common than one might imagine, as they include such activities as employment fraud, financial fraud, telemarketing fraud, fraud against the elderly, and sweepstakes fraud. According to the U.S. Postal Inspection Service, each of these types of fraud is perpetrated in a variety of ways, such as:

Employment Fraud

Employment fraud includes a number of scams offering fake jobs and work-at-home opportunities. These include such fraudulent activities as:

  • Distributorship and Franchise Fraud
  • Phony Job Opportunities
  • Multi-Level Marketing Jobs (Pyramid Schemes)
  • Six-Cent and Other Short-Paid Postage
  • Postal Job Scams: Don’t Fall For a Con Game
  • Work-at-Home Schemes
  • Mystery Shopper Scam

Financial Fraud

Financial fraud includes any scheme to defraud people of their money or other assets. These may include:

  • “900” Telephone Number Fraud
  • Loan Schemes charging an advance fee
  • Charity Donation Fraud
  • Credit Card Fraud
  • Schemes that Charge Money for Services the Government Provides for Free
  • Health Insurance Fraud
  • Ponzi Schemes and other Investment Fraud
  • Solicitations Disguised as Invoices
  • Land Fraud

Fraud Against Older Americans

Elderly Americans are targeted by a wide variety of scammers. Many individuals make up fraud schemes specifically to target older people, preying on their lack of knowledge of how modern technology and legitimate companies work. Fraud against older Americans is perpetrated through the mail, as well as by phone and online. The Postal Inspection Service offers free tips for seniors on protecting themselves from this type of fraud.

Example:

Marge receives an official-looking letter advising her she is entitled to a refund from Social Security, and that someone would be following up with her by phone. When Marge receives a phone call from someone stating they are calling from Social Security, and they have determined she is entitled to a refund that is to be paid as $500 per month for the next six months, she starts to ask questions. The caller only repeats the information and asks for Marge’s bank account information so he can ensure her first $500 payment is deposited right away.

Fortunately, Marge was skeptical and told the caller she would call Social Security the following day to provide whatever information was needed, and the caller hung up. Although the bank account information was solicited by phone, the fraud was initiated by mail, and can therefore be prosecuted under mail fraud laws.

Other Types of Mail Fraud

The U.S. Postal Service is aware of, and offers advice for avoiding, a great number of mail fraud schemes. Scammers are creative, however, and invent new ways to defraud people out of their money, personal information, and other assets on a regular basis. Common mail fraud schemes include:

  • Home Improvement and Home Repair Scams
  • Phony Inheritance Scam
  • Receipt of Unsolicited Merchandise
  • Missing Persons Fee for Location Fraud
  • Prison Pen Pal Money Order Scam
  • Fraudulent Health and Medical Products
  • Fee for Removal of Name from National Contact Lists Fraud

Elements of Mail Fraud

When the U.S. Postal Service, or any interstate mail carrier, is used to further a criminal act, it is considered to be mail fraud. In order for an individual to be convicted of mail fraud, certain specific elements must be proven. These include:

  1. The perpetrator must have acted with the intent to scheme or defraud a person or entity.
  2. The scheme must have involved material misstatements or purposeful omissions.
  3. The scheme or fraud resulted in, or would likely have resulted in the loss of property, honest services, or money.
  4. The perpetrator must have used the mail in some manner to further the scheme to defraud.

U.S. Postal Service Inspectors

The U.S. Postal Service employs inspectors who are trained to investigate fraud and mail schemes. The U.S. Postal Service Inspectors investigate any crime in which the postal service or mail was used at any point in the scam, even if that crime originated on the internet, by phone, or some other means.

If mail fraud is discovered, the postal inspectors seek prosecution of offenders. Unfortunately, postal inspectors do not have the authority to ensure victims receive a refund or other resolution to their issue. In many cases, however, victims may seek reparations through a civil lawsuit against the perpetrators. Typically, mail fraud schemes are discovered when one or more people report a scheme to the postal service.

Reporting Mail Fraud

In order to detect and prosecute people that engage in mail fraud, the United States Postal Service depends on individuals to report problems. If an individual suspects mail fraud, he can contact the U.S. Post Office in their jurisdiction, or talk to his mail carrier to learn the appropriate steps to take. Complaints of mail fraud, mail theft, and identity theft using the mail service, as well as the receipt of unsolicited sexually oriented materials, may be reported online by visiting the U.S. Postal Service Inspection website, or by calling 1-800-275-8777.

Mail Fraud Penalties

While mail fraud penalties vary depending on the exact nature of the fraud committed, the penalties are very serious. Fines and restitution are only the beginning when it comes to punishing perpetrators of mail fraud. Other mail fraud penalties may include:

  • Fines – A single count of mail fraud may result in a fine as high as $250,000. If the fraud involves a financial institution, or federal disaster relief, the fines may be as high as $1 million per occurrence.
  • Restitution – Perpetrators are commonly ordered to repay the victims for their losses as a result of the fraudulent acts. Restitution is ordered in addition to any other penalties.
  • Probation – A perpetrator of mail fraud may be ordered to serve one to five years on probation, in addition to fines and restitution. During probation, the perpetrator’s activities are closely monitored.
  • Imprisonment – Perpetrators of federal mail fraud are often sentenced to spend up to 30 years in prison for each offense. The stiffest penalties apply to mail fraud that involves financial institutions, federal disaster relief programs, or other special victims.

For example:

Tyler forges letterhead using the logo of FEMA, a federal disaster relief organization, then mails thousands of letters seeking donations to fund such activities as providing clean drinking water to hurricane victims. Tyler rakes in over $500,000 in donations before the postal inspectors catch up with him. Tyler is convicted of more than 50 counts of mail fraud involving a federal disaster relief organization, and is ordered to pay a hefty fine, and to make restitution to those victims who could be identified. In addition, Tyler is sentenced to 30 years in prison for each count of mail fraud.

Mail Fraud Cases

Work-From-Home Scam

Timothy Donovan and Sharon Henningsen, both in their sixties, engaged in a scheme in which fake solicitation letters were mailed to people offering them a work-from-home opportunity stuffing and mailing envelopes. The letters asked the people to pay for materials up front, at a cost ranging from $59 to $149, with the promise of earning up to $5,000 or more per week.

Donovan and Henningsen were the only ones who profited, having deposited more than $3 million into three different bank accounts between 2005 and 2007. Investigators estimate that the victims, in addition to the money paid for “supplies,” spent over $800,000 in postage responding to the fraudulent letters. After taking into consideration the defendants’ age and health conditions, the judge sentenced each to spend 11 years and 3 months in prison, far less than the 20 years recommended by the prosecution.

Sweepstakes Fraud

Publishers Clearing House, a legitimate sweepstakes contest provider, issues a warning to all consumers that a scam originating in Jamaica is using the Publishers Clearing House (“PCH”) name. This scheme involves sending fake letters to individuals, promising a large payout if the consumer makes a wire transfer to the company to claim their prize. This Jamaican scam may originate by phone, mail, or email. The scammers then build a rapport with victims, tempting them with their prize “already won.” Payments made by wire transfer or other means never result in prize payout, however, only requests for more money.

According to U.S. law, all sweepstakes are free of charge, and there can be no payment or purchase required to enter or claim a prize. This fraud scheme is so large that it is being investigated by the U.S. Postal Inspection Service, the Federal Trade Commission, the Office of Homeland Security, the FBI, and the U.S. Attorney’s office, as well as local law enforcement agencies.

Related Legal Terms and Issues

  • Civil Lawsuit – A lawsuit brought about in court when one person claims to have suffered a loss due to the actions of another person.
  • Criminal Act – An act committed by an individual that is in violation of the law, or that poses a threat to the public.
  • Defendant – A party against whom a lawsuit has been filed in civil court, or who has been accused of, or charged with, a crime or offense.
  • Intent – A resolve to perform an act for a specific purpose; a resolution to use a particular means to a specific end.
  • Jurisdiction – The legal authority to hear legal cases and make judgments; the geographical region of authority to enforce justice.
  • Omission – The act of excluding or leaving something out; a failure to do something, especially something for which there is a moral or legal obligation to do.