Take what i'm about to say as a description of the process rather than any support for it :)

So, it's not quite that. Here, they are claiming it because a dog "alerted" on the package, so they then claim it's related to criminal activity. regardless of whether they find actual drugs in it.

This part: "Even though Indianapolis Metropolitan Police Department dogs alerted handlers to the smell of drugs in the box, no contraband could be found once it was opened."

The first part is why they were involved and allowed to seize it.

The second is mostly irrelevant, legally (whether it should be or not). You don't have to prove it contained drugs to prove it was proceeds of a crime or otherwise part of criminal activity. This part is actually right, whether it gets used in an insane fashion or not. This is civil and not criminal, so the standard is not "proof beyond a reasonable doubt".

They file a suit against the money itself. It ends up with a funny case title like "United States v. An Article Consisting of 50,000 Cardboard Boxes More or Less, Each Containing One Pair of Clacker Balls," or "United States v. Approximately 64,695 Pounds of Shark Fins"

(both real, but federal seizures. If a state seizes it, it's like State of Indiana v., and often less funny)

Even if the person is not charged with a crime, if they successfully argue the money itself is criminal proceeds or was involved in criminal activity, they can confiscate it.

So, it's not sending cash that enables them to seize it. It's whether the money is used in criminal activity. The thing that enables them to be involved is that the dog alerted to it.

Now, for as much bullshit as exists in dog alerts, in this case, fedex often goes through about 100k packages an hour in this site, and they have seized 100 of them in the past year.

That's a really really small percent of the packages.