Vendors Developing Shared Databases of Mail Fraudsters

In the battle against mail fraud, several vendors are developing databases that would allow mailers to share questionable addresses and provide leads to postal inspectors.

The databases would be filled with names, aliases and/or addresses of suspected perpetrators supplied by individual mailers. When another mailer reported fraudulent activity, its findings would be run through the database to identify matches.

Data on common violators then would be passed on to the enforcement arm of the U.S. Postal Service, said Barry Silverman, a consultant with National Fraud Investigations (NFI), Nanuet, NY.

NFI recently received approval from the Federal Trade Commission to share its Consumer Fraud Investigation Database with mailers.

“We concentrate on the address structure. [Perpetrators] can use any name they want, but they need the product delivered,'' Silverman said. “There is usually a pattern to how addresses are linked together.''

The need for a database grew out of discussions among mailers in the joint USPS and direct marketing industry Confidence in the Mail Task Force.

The task force was formed two years ago to help reduce the estimated $1 billion to $3 billion in annual losses associated with nonreceipt claims, thefts and fraud.

It has discussed a shared database and encouraged mailers to furnish records of nonreceipts for investigation. Federal regulations and political concerns prevent the USPS from maintaining a database, so the task force has established guidelines to contract out databases to third-party vendors.

“It's something that needs to be done and will be done,'' said Chuck Wilson, task force leader and postal inspector in charge of the Detroit office. “It's a matter of working through various issues and concerns so that all companies feel that everything is done in a legal and defensible way.

“If mailers want to do this, it would have to be a database of suspected addresses, we're not even talking about names. The mailers have put together some requirements in setting up database, and some vendors have made offers,'' Wilson said.

Approved vendors are prohibited by the Fair Credit Reporting Act from providing any credit reporting, screening or collection services. The credit data these vendors collect could not be used to grant or deny a suspected perpetrator credit. Their use of credit data is limited to fraud investigation and consulting.

The onus is on vendors to sell their database services to mailers. Silverman said NFI has approached about 40 mailers in the task force but has not received much response. The more mailers he can sign up to participate, the more his findings will be noticed and acted upon, he said.

“Instead of one company going in [with a complaint], if we come in with 10 companies, then [the USPS] will go after them,'' Silverman said, adding that the creation of the task force has made the USPS more willing to cooperate with outside vendors.

NFI developed its database four years ago to help Publishers Clearing House, Port Washington, NY, combat systematic fraud by individuals and small groups that assumed multiple identities and were able to place those identities on mailing lists.

They would order products and services from direct mail pieces or catalogs and sell them off without paying for them.

“You can tolerate some minor ripoffs, but these people take it to such extremes,'' said Dan Doyle, treasurer for Publishers Clearing House. “Two ladies in a trailer had 150 identities.''

Doyle added that his company became susceptible to scams when it began offering resellable merchandise in addition to its magazine subscriptions.

“Direct marketing companies are disbelieving that these people can pick their pocket so completely. Some identities in our files are in the files of others. Sometimes there is reluctance on part of companies to admit that it's happening.''

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