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The NRF 2016 Organized Retail Crime Survey Currently Under Way

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Did you know that Organized Retail Crime costs the retail industry approximately $30 billion each year? Are you a retail loss prevention decision maker? If so, and you want to be part of the solution, the 2016 Organized Retail Crime survey is currently under way.

The NRF 2016 ORC Study explores numerous aspects of these industry-wide issues by asking participants to answer 23 questions, including ORC activity levels, company resources allocated, fencing, merchandise credits and gift cards, and cargo theft, among other areas. You will also be asked three questions to help us segment the results to include the number of stores that your company operates and the retail segment that your company would identify with most closely.

We ask that you please take part in this year’s exclusive 2016 Organized Retail Crime survey. Take the next 15 minutes and start the 2016 ORC survey by clicking here, and be entered into a random drawing to win an iPad Mini!

Please don’t wait! The deadline to participate is EOD Friday, August 19. If you have any questions about this survey (and/or if you need a copy of the survey PDF re-sent to you), please contact via email Bob Moraca, NRF VP Loss Prevention, at moracar@nrf.com.

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People on the Move: August 2016

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Professional advancement and building a successful loss prevention career can mean many things to many different people. For some individuals it may mean reaching a top leadership position at a particular company, perhaps serving as a director or vice president of loss prevention/asset protection. For others, it may involve gaining experience in multiple professional fields in order to establish a unique and versatile role that capitalizes on all of our various skill sets. Some aspire to be the very best at a particular skill or discipline, building a base of knowledge and expertise that sets us apart from the rest. There are those that strive to leave a professional legacy, leaving a lasting mark on the present and future of the loss prevention industry. And there are still others that simply want the recognition that comes with reaching a particular level of performance and the security that it provides.

Want an awesome LP career? Download this FREE Special Report, How to Find the Best Loss Prevention Jobs and Build a Successful Loss Prevention Career.

There are many different ways to evaluate our career vision and professional aspirations. But what is most important is that we find the path that fits us best. We need to fashion and follow a professional development plan that leads us forward and builds our future. Especially when involved in a profession that is evolving as quickly as retail loss prevention, career growth is essential to professional survival. Whatever our professional goals and aspirations might be; whatever skills and experiences have helped forge our personal loss prevention career path, we have to find and seize the opportunities to learn, grow, and progress.

All of us throughout the loss prevention community are proud of the accomplishments of those that have worked hard and earned a new place along the loss prevention career path. Please join us in congratulating the following individuals on their recent career moves and promotions.

August 2016

 

Matt Farley was promoted to Regional Loss Prevention Manager at CVS Health

Joseph Ledesma is now a District Loss Prevention Manager at Dick’s Sporting Goods

Jessica Censoplano is now a District Loss Prevention Manager at Lucky California

Tiffany Wimbish is now a Regional Loss Prevention Manager at Brooks Brothers

Alex Patterson was promoted to Market Asset Protection Manager at Walmart

Tony Raab was named Senior Asset Protection Manager at Spencer Gifts

Edwin Saul was promoted to Director, Asset Protection & Risk Management at CKE Restaurants

Scott Johnson is now a Regional Loss Prevention Manager PBM – Southwest at CVS Health (Information provided by Loss Prevention Recruiters)

Scott Yancy III is now a Regional Loss Prevention Manager at Mattress Firm (Information provided by Loss Prevention Recruiters)

J.C. Felix, CFI is now a Regional Loss Prevention Manager at Mattress Firm (Information provided by Loss Prevention Recruiters)

Dennis Lonergan, CFI is now a Regional Loss Prevention Manager at Mattress Firm (Information provided by Loss Prevention Recruiters)

Glen Canarte is now Operations & Loss Prevention Manager at Kiehl’s/L’Oreal Luxe Division (Information provided by Loss Prevention Recruiters)

Brigham Roberts, MA, LPC is now Manager, Loss Prevention & Safety at Michaels (Information provided by Loss Prevention Recruiters)

Sharon Cruz is now Manager, Asset Protection-DC & Supply Chain at 99 Cents Only Stores (Information provided by Loss Prevention Recruiters)

Jed Weinstein is now Regional Security Manager, U.S. Security at McDonald’s Corporation (Information provided by Loss Prevention Recruiters)

William Penn, CFI was promoted to Supply Chain Investigations Manager-Northeast at Gap Inc. (Information provided by Loss Prevention Recruiters)

Scott Pickrel has a new position; Loss Prevention and Safety Manager – Lowe’s Companies, Inc.

Chris Hyde, LPC is now a District Loss Prevention Manager at Dick’s Sporting Goods

Florentino Posada is now a Regional Investigator at Stage Stores (Information provided by Loss Prevention Recruiters)

Sam Raper has been promoted to Southeast Regional Account Manager at Catalyst, Inc.

Greg Edelson is now West Coast Regional Account Manager at Catalyst, Inc.

Max Salata is now the Director of Asset Protection for Goodwill Industries of South Central Wisconsin

Matthew Pistel, NCCP is now an Area Loss Prevention Manager at Ulta Beauty

Eric Woodward was promoted to District Manager of Asset Protection at Abercrombie & Fitch

Nathan Anderson LPC has been named Director of Field Asset Protection at 99 Cents Only Stores  Click here to learn more

Paul McQuillan has been promoted to Sr. Manager, Loss Prevention at Loblaw Companies

Octavio Andres Garcia Torres is now a District Loss Prevention Manager at Abercrombie and Fitch

Angela Bisland was promoted to Divisional Director of Loss Prevention at CarMax

Carl Veld is now a District Loss Prevention Manager at JC Penney

Molly Gottlieb, CFI is now a Regional Asset Protection Manager at lululemon athletic

Rick Mitchell has been named Director of Loss Prevention at Charming Charlie  Click here to learn more

Steve Sell has been named Vice President, Global Sales and Marketing at CONTROLTEK USA  Click here to learn more

Chris Strongman has been named Director of Loss Prevention at Aritzia  Click here to learn more

Jamie Bailey, CFI has been named Director of Loss Prevention for St. Louis based Scrubs & More, LLC  Click here to learn more

 

To review the July “People on the Move” click here.

Many of the Loss Prevention / Asset Protection career moves and promotions are reported to us by our career advisor partners. We are grateful for their collective efforts and diligence in delivering this information. If you would like to provide information pertaining to a recent promotion or career move that is not listed below, we welcome your submissions by clicking here.

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Crime Prevention Conversations at the LPRC Houston Robbery Prevention Summit

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On Wednesday, July 27, over 70 retail professionals along with Houston law enforcement personnel stepped away from their jobs to take part in a groundbreaking event: the Loss Prevention Research Council’s (LPRC) Houston Robbery Prevention Summit.

The meeting started with Dr. Read Hayes of the LPRC introducing goals and objectives for the gathering. Speakers from Walmart and Sam’s Club presented findings on robbery trends in the Houston market, along with organized retail crime analyses. CAP Index followed with a presentation on findings of Houston robbery trends in different retail sectors coupled with crime mappings over the past three years.

Soon after, Walmart’s representative, Russell Hinds, led a discussion on robbery offenders and the various mitigation efforts deployed by different retailers. Law enforcement then provided recommendations based on those efforts.

Lastly, the retailers, along with FBI, ATF, and HSI special agents, brainstormed with local law enforcement on how to better bridge present-day gaps enveloped within the communication system in order to effectively combat crimes in Houston.

The summit was a great success as it not only brought together a great number of retail professionals and law enforcement personnel but gave everyone an opportunity to collaborate on how the community as a whole can move forward in the future robbery prevention endeavors. The summit will lead to retailer-law enforcement professionals working together over the next year in the Houston area to reduce violent retail crime.

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5 Upcoming Loss Prevention Conferences and Events

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This post brought to you by LPJobs

As a busy loss prevention professional, you don’t have much time to keep tabs on industry event details. Let us help you find your next networking opportunity, retail technology expo, or training course. Take a look at the LP conferences, events and activities happening between now and September 8, 2016.

Looking further down the line? Check out the Calendar of Events to see more. You can also submit your own loss prevention conference or retail event to johns (at) lpportal (dot) com to be listed.

Almost 5,000 loss prevention jobs have been posted in the last 90 days on LPJobs. What's your job search strategy?

August 8–10: Axis Retail Leadership Forum

  • When?
    • August 8: 6:00 pm – 9:00 pm
    • August 9: 7:30 am – 6:00 pm
    • August 10: 7:30 am – 5:00 pm
  • Where? Denver, CO

Retail experts will gather for two days in the Mile High City of Denver, CO, for two days of education and open discussion on advances in IP technologies, trends in security, and the future of retail surveillance. The Retail Leaders Advisory Board is guiding the agenda to ensure the focus is on your needs, overcoming your challenges and preparing for the future. Event is exclusive to retailers only.

August 15–17: NSSF Firearms Retailer Security Conference

  • Where? Atlanta, GA

NSSF’s new Firearms Retailer Security Conference will provide a review of security protocols from the perimeter of your store to your internal controls. When was the last time you tested your alarms, reviewed your security procedures with your team, spoke to local law enforcement about crime trends or reviewed your disaster recovery plan? This conference will teach you what you can do to protect your staff, your store, your community and your reputation as a firearms dealer. We’ll review the latest loss prevention technology, crime trends, and tactics to combat theft, while also covering your store’s internal inventory controls, information security, employee safeguards and disaster preparedness. In addition, we’ll have top security vendors on hand to demonstrate their products and services.

August 24: 2016 GRAORCA Retail Crime Conference

  • When? August 24, 8:00 am – 5:00 pm
  • Where? Atlanta, GA

The Georgia Retail Association Loss Prevention Council (GRALPC) and the Georgia Retail Association Organized Retail Crime Alliance (GRAORCA) have a mission of providing law enforcement and loss prevention professionals with opportunities to come together for professional networking, training and information sharing. The 2016 conference includes a Vendor Trade Show with industry vendors and community outreach organizations. The Vendor Trade Show is designed to provide exposure to technologies and community programs that can help retail and law enforcement organizations positively impact crime.

August 25: Chicago Cyber Security Summit

  • When? August 25, 9:00 am – 6:00 pm
  • Where? Chicago, IL

The Cyber Security Summit, an exclusive C-Suite conference series, connects senior level executives responsible for protecting their companies’ critical infrastructures with innovative solution providers and renowned information security experts. This educational and informational forum will focus on educating attendees on how to best protect highly vulnerable business applications and critical infrastructure. Attendees will have the opportunity to meet the nation’s leading solution providers and discover the latest products and services for enterprise cyber defense.

September 7–8: International Supply Chain Protection Organization 2016 Conference

  • When?
    • September 7: 8:30 am – 5:30 pm
    • September 8: 7:30 am – Noon
  • Where? Richardson, TX

Fossil Group, Inc. will once again host the ISCPO Conference at their Corporate Headquarters in Richardson, Texas. The two-day Global Expansion of Business conference will be addressing topics related to supply chain security, industry theft trends and investigations. The conference will again provide a venue to network with global industry peers, transportation/logistics professionals, law enforcement, and select vendor partners. ISCPO is proud to announce this year’s keynote speaker Thomas Class, Special Agent in Charge – FBI in Dallas, Texas.

BONUS: September 27–29: Loss Prevention Magazine Annual Meeting

  • When?
    • September 27: 3:00 pm – 6:00 pm
    • September 28: 8:00 am – 9:00 pm
    • September 29: 8:00 am – Noon
  • Where? Fort Myers, FL

Over 100 of the industry’s top retail and solution provider executives will meet at the Sanibel Harbour Marriott Resort September 27 – 29 in Fort Myers, Florida, to celebrate the 15th anniversary of LP Magazine as well as discuss issues around the evolution and future of retail loss prevention. In addition to meetings of the magazine’s editorial and vendor advisory boards, the Retail Industry Leaders Association’s (RILA) Asset Protection Leaders Council (APLC) and the Loss Prevention Foundation’s Board of Directors will also hold separate meetings. This event is open to members of the boards and council listed, plus magazine retail sponsors and other interested retail pyramid heads.

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Retail Theft Statistics: Staying Focused on What’s Really Most Important

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There are many different ways that retail theft statistics can be applied in order to show how the many different ways that shoplifting, employee theft, and other forms of retail loss can impact a retail enterprise. But how are retail theft statistics really used, and what numbers are truly most important?

The answer to that question isn’t as easy to answer as many in the general public may seem to think it is—and truthfully, for many of those beginning a career in loss prevention, the answer isn’t as simple as many might believe as well. This is in fact a much more complicated question that can be answered in many different ways depending on the type of retailer, the approach that the organization takes to loss prevention, and even the way that these statistics are applied on a situational basis.

This isn’t to imply that retail theft statistics aren’t critically important to the way that a particular retailer might manage their loss prevention program, staff their departments, or train their people—because they are. These numbers are very important, and the many different resources that provide us with this information offer a valuable and important service to the entire retail community. What’s most important is the way that we interpret the available information in our own particular setting, and then apply what we’ve learned to best serve the interests of the company that we work for. Let’s take a closer look at a few examples to better illustrate our point.

Shoplifting and External Theft

Retail theft statistics that focus on shoplifter apprehensions can provide us with a very deceiving metric in many situations. While a high number of shoplifter apprehensions might offer a particular perception of the crime occurring in a particular store or market, it may also simply provide a reflection of the ability of the department to identify and detain shoplifters. It might be a result of the approach that the department takes regarding external theft matters—whether they prefer to take a more proactive approach to deterring shoplifters rather than a more reactive approach such as making shoplifter apprehensions.

Such statistics might be a result of a specific focus. For example an organized retail crime (ORC) task force that has been assembled to combat the impact that these highly sophisticated groups can have on our stores might influence our statistical results. These dedicated and often dangerous thieves can wreak havoc on a retail company to the point that entire stores are frequently found to be stocked with stolen goods. Individuals with substance abuse problems and violent criminal pasts are often involved, providing significant damage to the company, significant drama within the community, and significant attention towards those involved in the crimes.

In other situations, a low number of shoplifter apprehensions might provide us with a deceptive picture of the problem for other reasons. Low shoplifter apprehensions aren’t necessarily the result of low crime rates. Many specialty retailers, for instance, won’t have a dedicated loss prevention team in the stores; and won’t allow their store associates to make shoplifter apprehensions for a variety of reasons to include a lack of appropriate training and most importantly safety concerns. These employees are typically trained to deter theft and provide exceptional customer service to avoid many theft-related episodes rather than to confront shoplifters. Naturally, this doesn’t imply that shoplifting doesn’t occur or that the store doesn’t have a significant problem.

Yet some of the most confounding retail theft statistics occur when certain cities and particular jurisdictions begin to refuse to respond to retail stores to arrest shoplifters. Feeling these situations involve “minor” crimes that simply demand too many resources for the department to manage this multi-billion dollar problem, they simply notify the retailers that they will no longer respond. Some of these jurisdictions will later release crime statistics claiming that shoplifter incidents have dropped in their communities—failing to associate the drop in shoplifting arrests with a failure to make such arrests in the first place.

Employee Theft

Even employee theft statistics can fail to provide a true picture of a potential problem. For example, I recall a situation involving a director of loss prevention boasting how 39 employees were terminated for theft from a single store over the course of one year. He applauded the efforts of the loss prevention representative covering the market and rewarded him for his dedication and hard work in removing these individuals from the company. That director then challenged the rest of his team, criticizing them for not being able to match these results in any of the other markets.

How should we look at these numbers? Should the employee be rewarded? Should the rest of the team have been criticized? Once again, we have to consider the circumstances, the type of retail store, and other factors necessary to appropriately interpret the retail theft statistics.

In this particular situation, this retail store had a total of twelve employees on staff—not at any given time on a given day, but the total team for that specific store. This store was in a tough neighborhood with many challenges. However, if the store actually turned over the entire staff on four occasions (having to replace the team three times) for theft in a single year, I would argue that the loss prevention representative should be reprimanded rather than rewarded.

Obviously, nothing or very little was done to ensure that the problem didn’t occur again. Management and employee training, increased and improved store audits, enhanced security controls, improved hiring practices, more store visits (for reasons other than to interview dishonest employees), an improved business partnership with the store and district sales managers, and any number of simple and necessary steps should have taken place to make sure that the ongoing problem didn’t continue on a consistent basis.

In fact, the most important statistics were overlooked altogether.

Retail Shrink

When measuring retail theft statistics, the most important metric that we must look at is the impact that these incidents have on retail shrink numbers. The role of retail loss prevention is to enhance the profitability of the company—just like every other role in retail. There are many different ways that this role is fulfilled in today’s retail environment, and that role is changing on almost a daily basis. There are also other responsibilities that we are typically asked to complete as we serve the needs of the organization. But it remains a primary role of the loss prevention/asset protection department to reduce retail shrink.

In the employee theft situation described, the loss prevention representative that was rewarded had the highest shrink numbers in the department. Clearly there are many different factors that can impact these numbers. Without question, the individual was an exceptional interviewer and investigator. But there’s much more to being a successful loss prevention professional than simply “catching bad guys.”

The Value of Information

Retail theft statistics provide us with a wealth of information that helps to improve the performance of a retail organization. There are a number of annual surveys that help us gather and apply these statistics in the retail environment and assist our loss prevention teams, and these tremendous services provide an invaluable asset to the entire loss prevention community. But as these numbers are provided, it’s critical that we also pay close attention to how the numbers are interpreted by the experts.

The subject matter experts that offer these survey results also help interpret the results of the surveys so that the information can be better applied in the retail environment, and that message is just as important for us to hear. Further, retail loss prevention leadership puts extensive effort into evaluating these statistics and constructively applying the information to a particular retail setting.

The value of information comes by understanding the purpose. Without appropriate interpretation and action, these are just numbers. As a retail company, this helps us better understand how theft truly impacts company profits—which are then passed on to the consumer. As a retail employee, it helps us better serve the both company and our customers.

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Organized Retail Crime: Are We to Blame?

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You may be exhausted from hearing all the bad news regarding organized retail crime (ORC). Sure, we hear about large arrests made on organized retail crime rings, but we all know that as soon as one ring is dismantled, the power vacuum sucks in the next in line to open up shop in its place. Are we truly making the level of progress that we have all hoped?

A 2011 article in the Star Tribune stated, “While retailers spend $12 billion a year to battle organized retail crime, thieves pilfer $30 billion annually, a huge blow to businesses and, ultimately, their customers.” If these data are correct, then it’s official—we are losing the war against organized retail crime.

This is perplexing given that our profession has never had more resources available to it than it does today. We have vendor partners who have diligently sought to acquire, develop, and improve upon technologies to help us do our jobs more efficiently. We continue to invest in state-of-the-art equipment and technology, specialized personnel for undercover operations, training seminars, books, meetings, and committees. We are even seeing legislation enacted all across the country that addresses organized retail crime, thanks to the lobbying efforts of LP professionals.

Armed with these resources, we have collectively taken up arms, mounted our horses, and staged an all-out assault on criminals who use Internet sites, flea markets, cleaning houses, warehouses, and even illegitimate brick-and-mortar storefronts to move the stolen goods. All of this with one objective in mind—stopping professional thieves from removing mass quantities of merchandise from our stores. With all of these deployed resources, how can we still be losing this war on organized retail crime?

It is possible that while we are all focused on preventing our merchandise from leaving through the front doors of our respective castles of commerce, we never once considered what was coming in through our back doors. Could it be that we have been hitting the bulls-eye of the wrong target?

Economics of Organized Retail Crime

E-Bay-Chart-CorrectedBefore we answer this question, let’s first consider the “economics of organized retail crime.” We all understand that boosters are part of a complex business enterprise. But even though these are illegitimate businesses, they still operate under the same indiscriminate economic principle of supply and demand. No retailer or wholesaler can stock their shelves with merchandise no one wants and expect to be successful. Similarly, no retailer or wholesaler can sell merchandise they don’t have. Said differently, the supply of a product and the demand for that same product must have a synchronized relationship in order for an enterprise to profitably function.

So how does supply and demand play a role in our fight against organized retail crime? If we as loss prevention professionals were asked where stolen merchandise was being sold, the majority of us might tend to say Internet sites, flea markets, and a whole host of other locations. And why not? Every ORC ring that has ever been conquered has been identified as using one or more of these venues. However what if we, as retailers, are unknowingly purchasing the very merchandise that was stolen from our shelves just a few weeks earlier? What if we are actually causing the “demand” needed for the supply-and-demand principle to work?

Consider for a moment what is occurring right under our noses. Boosters steal our merchandise and sell it to a fence. The fence cleans and organizes the cache into two categories—pristine and damaged. The damaged, or marked, merchandise goes to the all-too-familiar flea markets and Internet sites, but the pristine items are sent up the chain where they eventually land in a repack operation. Once there, our stolen merchandise is packed in boxes labeled with the same quality names of the manufacturers with whom we do business.

The stolen merchandise, now packed neatly into branded boxes, is sent to wholesalers. Some wholesalers may be aware the merchandise is suspect and others may not, but either way they have plausible deniability. These wholesalers accept this merchandise into their inventory waiting for a buyer to place an order. If that buyer happens to be a broker representing your company, then your company just created the demand for more merchandise to be stolen. The chart above will help demonstrate this point.

Anti-ORC Buying Program

The only way to stop organized retail crime is to stop the demand. As loss prevention professionals, we have a duty to build an anti-ORC buying program for our organizations. Here are suggestions for approaching this challenge:

Step 1—Meet with your executives and explain how buying stolen product creates demand for more stolen product.

Step 2—Get a commitment that your company will not purchase stolen product, which may entail revamping incentive structure for buyers.

Step 3—Communicate expectations to suppliers by establishing procedures for violations and sending vendors detailed letters.

Step 4—Create a “right to audit” clause in all supplier contracts that allows unannounced visits to supply warehouses.

Step 5—Audit for compliance by inspecting lot numbers after you receive product.

If retailers only purchased merchandise from legitimate suppliers, then wholesalers will be forced to stop buying stolen product. If the illegitimate sources lose the customers to whom they’ve been selling stolen product, then the stolen merchandise will no longer have value.

We will always be fighting the sale of stolen merchandise at flea markets and the like, but if we all ban together and build an effective anti-ORC buying program for our respective organizations, the losses will drastically decrease to such a level that we can finally use our progress and resources on more profitable challenges.

For more on the subject, check out “How NOT to Investigate Organized Retail Crime.”

This article was first published in 2012 and updated August 11, 2016.

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Cyber Crime’s ORC Connection

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Retailers struggle with cyber crime and organized retail crime (ORC) on a regular basis. But how do these illegal behaviors relate to one another. Tom Meehan, CFI, addresses this question in the most recent Future of LP column in the July-August 2016 issue of LP Magazine.

Meehan suggests that while cyber crime and ORC differ in how they affect retailers, they likely originate as a result of similar principles. Specifically, the “broken window” theory may serve as a common explanation for how crime starts both in the real world and in the online environment. From the column:

“For those not familiar with the theory, it proposes that a small amount of disorder in a given community (think a wall of graffiti) can eventually become the norm and can permeate throughout the area. The graffiti was never washed off, so now it becomes a part of that society. Eventually the graffiti artists will spread their work to other walls since they saw there was no action taken to remove the first wall of graffiti.

This theory is very similar to the career path of a shoplifter turned booster turned fraudster. The shoplifter isn’t getting caught taking small amounts of items, so they try their luck at larger items. Once they get into the lifestyle of stealing and reselling larger quantities of goods, they need to do it more and more to keep up the lifestyle.”

Check out “Bridging the Gap between Cyber Crime and ORC” to read the full column and discover how Meehan differentiates between the impact of ORC and the impact of cyber crime on the retail industry. You can also visit the Table of Contents for the July-August 2016 issue or register for a free subscription to the magazine.

The post Cyber Crime’s ORC Connection appeared first on LPM.

Changing Roles and Challenges Inside Home Depot Loss Prevention

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Stacie Bearden is the Director of Asset Protection, Field for The Home Depot. In this role she is responsible for the theft and fraud agenda for Home Depot Loss Prevention, including organized retail crime program and all asset protection capital and technology programs. In her fifteen years with the company, she has held management roles in operations, distribution, delivery, and transportation. Prior to Home Depot, Bearden retired as a lieutenant colonel in the US Marine Corps, worked in logistics with Schneider National, and taught management in the University of Georgia system. She is currently a member of the RILA AP steering committee, the LPRC Future of LP working group, and the LP Foundation.

EDITOR: As senior executives you have two jobs—your specific responsibilities and supporting the agenda of your boss. What are the challenges of those two roles?

BEARDEN: We typically avoid those challenges through alignment. Our department strategy was established as a leadership team, and our annual goals are jointly developed to support that. If an effort doesn’t support one of our three focuses (safety, accuracy, or profitability) or isn’t supported by our core values, it isn’t something we spend a lot of time on. In a business as dynamic as ours if things come up, we talk through the situation. Communicating often and openly helps avoid any conflict.

EDITOR: How and why did you get a job in loss prevention?

BEARDEN: I had been with Home Depot over fifteen years and served in a number of very different roles—supply chain, district manager, and operations. I was asked to move to AP and take over a role that had seen a lot of turnover and was full of opportunity. It was an intriguing challenge, so I jumped on it.

EDITOR: What programs, educational opportunities, or other experiences would you have liked to have had as you came up in the industry?

BEARDEN: I have only been with Home Depot loss prevention for two years. Because of that I haven’t grown up in the industry. While that’s also been an advantage—I don’t have pre-conceived ideas of how things have to work—it has made it like drinking from a fire hose. I didn’t learn about the Loss Prevention Foundation or LPC/LPQ until this past year. It would have helped to know about that much sooner. Both RILA and NRF conferences have been invaluable as have the resources RILA provides and contacts they allow you to make. I would have engaged with both faster and sooner. All that said, I have found that there are so many things that do apply from the broader business and operations. Because of my experience in those areas, we’ve been able to address process, projects, capital and expense, and people challenges in a much different way.

EDITOR: What qualities set an LP professional apart as they climb the career ladder?

BEARDEN: Broader business experience is extremely valuable within the organization. While there is a significant piece of what we impact that is theft and fraud related, there are other completely controllable operational factors. Business acumen is not only beneficial but also necessary as one seeks to change processes and vie for funding.

EDITOR: If you could change one thing about the LP profession, what would that be?

BEARDEN: I would have it be viewed differently within organizations. The recently publicized rounds of reorganizations and reductions continue to indicate that LP is a field that is much like insurance. It’s invaluable when needed and viewed as nothing but an expense when it is not.

EDITOR: Are there misconceptions about loss prevention that we can or need to overcome?

BEARDEN: The one above is a big one. Another is that LP is just about shrink, safety, and catching shoplifters. For example, the Home Depot loss prevention team is heavily involved in disaster response, ensuring our people, property, and product are safe, and we’re also closely involved with first responders and others in the community in times of crisis such as hurricanes. At the end of the day in LP, we protect brand and gross margin in ways few other departments do. That’s a big mental shift for some.

Want an awesome LP career? Download this FREE Special Report, How to Find the Best Loss Prevention Jobs and Build a Successful Loss Prevention Career.

EDITOR: What do you see as the most impactful retail crime trends emerging today?

BEARDEN: As omni-channel dominates the merchandising and fulfillment minds of today’s retailers, criminals are adjusting. It’s a world where prosecution is complicated. There are no cameras, and the victims can look a lot like the criminal. It’s top of mind for all of us. Another is the socioeconomic impact of drug abuse that we’re seeing in communities. It makes for an increasingly dangerous environment for our store teams. The ease of obtaining technology is allowing the criminal to be extremely nimble. They’re running as fast as they can to stay ahead. Just as the Internet is providing them a new environment for theft, it is also an endless resource. The last one is the impact of already over-crowded jails and over-tasked police departments. They’re challenged to meet the violent crime demand, much less the often viewed as “victimless” crime of retail. This increases the recidivism rate and results in our teams catching the same offenders multiple times. It’s a challenge for both law enforcement and the retailer.

EDITOR: What are the most impactful changes in the retail industry that are impacting LP?

BEARDEN: The ability to check out in the aisle, order from the comfort of our homes, and pay without carrying a wallet will challenge all of us as we seek to provide more flexibility to our customers. It’s a business imperative we have to support.

EDITOR: What work or life experiences best molded you for your current job?

BEARDEN: My time in the stores and operations were both invaluable from a business acumen perspective. In supporting my field team, the experiences from my time in the Marines have also served me well. Messaging on our mission and values help our front line leaders make the right decision in the heat of the moment. It also doesn’t hurt to have experience managing through a crisis or being able to make quick decisions and coordinate efforts across groups. With almost 2,000 stores, there is always something going on.

The post Changing Roles and Challenges Inside Home Depot Loss Prevention appeared first on LPM.


ORC Theft Trends and Impact

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Loss prevention has traditionally focused on shortage reduction through an emphasis on internal theft, external shoplifting, and operational controls. Resources to prevent these losses have been spent on developing programs and controls to stop loss from within the company.

More recently, retailers have identified the growing threat of organized retail crime (ORC) theft. Loss prevention departments are beginning to shift resources in order to investigate and resolve these more complex cases that are causing a large percentage of their overall external theft shortage. Loss prevention professionals currently responsible for handling cases of organized retail crime have realized the difficulty in investigating groups of criminals who operate by boosting merchandise from multiple retailers.

ORC theft investigators rely on incidents that occur at their specific retailer in order to gather necessary evidence to present to law enforcement for resolution. Investigators may believe that a group has stopped their boosting activity and a case may become cold without progressing because they have not been seen in that particular retailer. In reality, these criminals are boosting merchandise at many retailers, which make them difficult to track and apprehend. A more effective way to attack this increasing theft trend is to bring together retailers and law enforcement resources in order to share theft trends and case details.

Today’s reality is that these organized criminals boost merchandise from any retailer who sells product that can be easily resold to a fencing operation. While flea markets, pawn shops, and makeshift stores have provided common places for the traditional booster of the past, Internet sales, or e-fencing, now allows an anonymous worldwide sales outlet.

E-fencing is now a national outlet for the increasingly sophisticated organized retail crime rings. Because of the easy ability to resell boosted merchandise, boosters work with lists that include everything from electronics to baby formula and low-end apparel to high-end designer clothing. It is common to find a wide array of merchandise in their vehicles or in homes for resell.

Organized criminals commit crimes at all retailers, and for that reason, companies can–and should–work together in order to connect the dots for case identification and resolution. Combining evidence and investigative resources will produce more rapid case closure, increased criminal charges, restitution, and extended sentencing, all of which are needed in order to reduce shortage and take criminals out of circulation.

Shortage Impact

Organized retail crime costs the retail industry nearly $30 billion per year. According to a 2015 survey by the National Retail Federation (NRF), almost 97 percent of retailers report being victims of ORC theft activity within the last year.

ORC activity has been reported across all sectors of retail nationwide. In many closed cases, boosters were found to have been hitting multiple retailers for different types of product lines depending on what was hot for resale to traditional fence locations and e-fence locations.

Organized retail crime is making a significant negative impact on shortage results. Retailers realizing the magnitude of the problem impacting their bottom line are responding by creating departments within the LP pyramid in order to specifically identify and eliminate these theft rings.

Economic and Community Impact

ORC theft losses contribute more negative impact than just company profits. Retailers pass losses to consumers in the form of higher prices. Companies must make their product pricing decisions based on many factors. One such factor is projected overall loss the company will incur over the year and what appropriate price will recover those lost profits. An increase in cost to the consumer is the most likely answer to recover those losses.

In addition to increased prices, ORC theft rings make desirable products unavailable to honest consumers. When these crime rings boost large quantities of merchandise from a store, the honest consumer is left with no option to purchase the product, thus impacting their shopping experience and negatively impacting sales for the retailer. In many cases, the impacted retailer has no idea that the merchandise was stolen and replenishment does not arrive until a cycle inventory is completed later that year. Thus, every time a customer returns to attempt to purchase a particular product, the store will not have it in stock; the inventory system believes that it is still in the store when in fact it is being sold through a fence location instead.

Another negative impact of organized retail crime is that state governments lose out on needed sales tax revenues. When fewer products are sold through retailers who legitimately report and pay taxes, less money is contributed to fund government activity to improve our communities. When ORT rings use refund fraud as their mode of operation, this decrease in taxes is doubled. When merchandise is returned to a store fraudulently, not only do local, state, and government programs lose out from the taxes that would have been collected on the original sale, but they also lose a second time because that return pulls sales revenue from the store.

Criminal Benefits

Currently the benefits for criminals to commit organized retail crime far outweigh the negatives. The financial benefits for being involved in ORT at this time are too great for criminals to ignore. Individual boosters report profits of over $100,000 a year in providing fence operators with merchandise for resell.

When boosters are caught in a store for shoplifting, they generally only have small amounts of product on them and will likely be charged with a misdemeanor shoplift for that one incident of theft. What is often overlooked by law enforcement and even some LP investigators is that, in many cases, the shoplift incident where the arrest occurred may have been the fifth or sixth location that the booster committed a theft that day. The rest of the merchandise may be sitting in their vehicle in the parking lot.

If the correct questions are not asked by LP professionals or law enforcement officers, or if a vehicle is not searched, then the scope of the activity will not be uncovered. In the case where a booster is only charged for theft from one location, the penalties are minor and little or no jail time will be served.

If an investigation does lead to the arrest of an ORC theft ring and those individuals are charged for the full amount of loss they were responsible for at that one particular retailer, the group will see slightly more jail time, but still insignificant punishment.

However, if a joint investigation by multiple retailers leads to the arrest of an ORT ring in which a much larger dollar loss is proven and multiple counts of theft are charged affecting multiple retailers, then punishment can increase significantly. This will lead to the temporary elimination of the theft ring. Taking these groups out of circulation keeps needed merchandise in the store for sale to legitimate customers. However, once the individuals are released, they may return to target different retailers or products that were not part of the original investigation and prosecution.

Connecting Retailers and Law Enforcement

Law enforcement has a wide variety of task forces or special departments that investigate property theft cases depending on location and governing body. In many cases, law enforcement resources are used by retailers only after a case has been put together and the majority of the needed evidence to prosecute has been obtained. As a result, retailers can provide assistance to one another by becoming involved in cross-retail investigations sharing. This will allow for cases to be put together more quickly when multiple retailers are involved in a case.

Often, the pieces of evidence needed to complete an ORC theft investigation can be found across different retail case files, waiting for someone to connect the dots. In addition, having joint retail documentation and evidence adds credibility to cases for prosecution. It allows for a strong case presentation to a law enforcement agency that will be able to assist in the final stages of the case being closed.

A company’s policies on information sharing must always be considered in relation to case details. However, general case information such as the mode of operation, subject descriptions, and pictures should be considered by retailers when attempting to identify and locate theft rings that are causing large amounts of loss.

Good resources are available for cross-retail investigations sharing. Many counties and states across the country have organizations that meet monthly or quarterly where law enforcement and retailers get together to discuss thefts and criminal trends. These “crime stoppers” or “property theft” associations are beneficial places to educate law enforcement and share case details in order to solicit support for cases by both law enforcement and other retailers in attendance.

In addition to the above suggestions, the easiest way to work together is by simply talking to other LP professionals. Sharing information via email that can be passed along to investigators in the field is a great way to work together. This is a quick and easy way to get information out to those responsible for investigating this type of activity within their company. It also increases the probability that your subject will be seen by other investigators and evidence can be obtained in order to bring your case to resolution.

This article was excerpted from “Connecting Retailers to Combat Organized Retail Theft.”

The post ORC Theft Trends and Impact appeared first on LPM.

People on the Move: August 2016

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Professional advancement and building a successful loss prevention career can mean many things to many different people. For some individuals it may mean reaching a top leadership position at a particular company, perhaps serving as a director or vice president of loss prevention/asset protection. For others, it may involve gaining experience in multiple professional fields in order to establish a unique and versatile role that capitalizes on all of our various skill sets. Some aspire to be the very best at a particular skill or discipline, building a base of knowledge and expertise that sets us apart from the rest. There are those that strive to leave a professional legacy, leaving a lasting mark on the present and future of the loss prevention industry. And there are still others that simply want the recognition that comes with reaching a particular level of performance and the security that it provides.

Want an awesome LP career? Download this FREE Special Report, How to Find the Best Loss Prevention Jobs and Build a Successful Loss Prevention Career.

There are many different ways to evaluate our career vision and professional aspirations. But what is most important is that we find the path that fits us best. We need to fashion and follow a professional development plan that leads us forward and builds our future. Especially when involved in a profession that is evolving as quickly as retail loss prevention, career growth is essential to professional survival. Whatever our professional goals and aspirations might be; whatever skills and experiences have helped forge our personal loss prevention career path, we have to find and seize the opportunities to learn, grow, and progress.

All of us throughout the loss prevention community are proud of the accomplishments of those that have worked hard and earned a new place along the loss prevention career path. Please join us in congratulating the following individuals on their recent career moves and promotions.

August 2016

 

Ryan Haysley, LPC is now a District Loss Prevention Manager at TJX Companies

Joel Cirbo is now a Multi-Regional Loss Prevention Manager at Boot Barn

Steven Turner CFI is now a District Loss Prevention Manager at Dick’s Sporting Goods

Zak Brownlee, CFI, LPC was promoted to Market Loss Prevention Manager at Bealls Outlet

David Mulliner was promoted to Assistant Vice President, Loss Prevention and Safety at IEH Auto Parts LLC

Andrew Grummett was promoted to Regional Investigations Manager at TJX Canada/Winners Merchants International

Lance Lee was promoted to Regional Investigator at Bealls, Inc.

Michael Mainville, CFI is now a Zone Asset Protection Specialist with 7-Eleven

Ellie Bravo is now an Area Loss Prevention Manager at 99 Ranch Market

Jodi Palermo is now a Senior Investigator at Victoria’s Secret

Carson Altice, LPC was promoted to Sr. Manager of Field Operations Global Loss Prevention at Staples

Andrew Zahorsky, LPQ was promoted to District Loss Prevention Manager at Pacific Sunwear

Beth (Milwee) King, CFI was promoted to Market Loss Prevention Manager at Bealls

Andreas Seidel was promoted to Senior Regional Loss Prevention Manager CEU S/E at Amazon

Chad Scott was promoted to Area Asset Protection Manager at JC Penney

CJ Denton, CFI promoted to Senior Director of Loss Prevention at Hermès of Paris  Click here to learn more

Don Wuchter, CFI is now the Director of Loss Prevention – Midwest Division – The Americas Group at Sherwin Williams

David Glass was promoted to Senior Regional Manager of Asset Protection at Winn-Dixie

Canaan Peacock was promoted to Loss Prevention Market Manager at Bealls, Inc.

Rudy Mazak has been promoted to Vice President/GM of Stores: Sears Hometown Stores, Appliance and Hardware, and Home Appliance Showrooms  Click here to learn more

Mark Crowley has been promoted to Head of Profit Protection at John Lewis Department Stores  Click here to learn more

Deidra Grier has been appointed Director of Marketing at Nedap  Click here to learn more

Keith Johnson is now a District Loss Prevention Manager at Citi Trends

Janos Arcia is now a District Loss Prevention Manager at BCBG Maxazria

Timothy Rout, LPC has been promoted to Area Loss Prevention and Operations Support Manager at Lowe’s Companies, Inc.

Lani Lautoa was promoted to Corporate Loss Prevention & Fraud Manager for bebe Stores, inc.

Ahlam Elhammiri was promoted to Regional Organized Retail Crime Supervisor at TJX Canada/Winners Merchants International L.P.

Matt Farley was promoted to Regional Loss Prevention Manager at CVS Health

Joseph Ledesma is now a District Loss Prevention Manager at Dick’s Sporting Goods

Jessica Censoplano is now a District Loss Prevention Manager at Lucky California

Tiffany Wimbish is now a Regional Loss Prevention Manager at Brooks Brothers

Alex Patterson was promoted to Market Asset Protection Manager at Walmart

Tony Raab was named Senior Asset Protection Manager at Spencer Gifts

Edwin Saul was promoted to Director, Asset Protection & Risk Management at CKE Restaurants

Scott Johnson is now a Regional Loss Prevention Manager PBM – Southwest at CVS Health (Information provided by Loss Prevention Recruiters)

Scott Yancy III is now a Regional Loss Prevention Manager at Mattress Firm (Information provided by Loss Prevention Recruiters)

J.C. Felix, CFI is now a Regional Loss Prevention Manager at Mattress Firm (Information provided by Loss Prevention Recruiters)

Dennis Lonergan, CFI is now a Regional Loss Prevention Manager at Mattress Firm (Information provided by Loss Prevention Recruiters)

Glen Canarte is now Operations & Loss Prevention Manager at Kiehl’s/L’Oreal Luxe Division (Information provided by Loss Prevention Recruiters)

Brigham Roberts, MA, LPC is now Manager, Loss Prevention & Safety at Michaels (Information provided by Loss Prevention Recruiters)

Sharon Cruz is now Manager, Asset Protection-DC & Supply Chain at 99 Cents Only Stores (Information provided by Loss Prevention Recruiters)

Jed Weinstein is now Regional Security Manager, U.S. Security at McDonald’s Corporation (Information provided by Loss Prevention Recruiters)

William Penn, CFI was promoted to Supply Chain Investigations Manager-Northeast at Gap Inc. (Information provided by Loss Prevention Recruiters)

Scott Pickrel has a new position; Loss Prevention and Safety Manager – Lowe’s Companies, Inc.

Chris Hyde, LPC is now a District Loss Prevention Manager at Dick’s Sporting Goods

Florentino Posada is now a Regional Investigator at Stage Stores (Information provided by Loss Prevention Recruiters)

Sam Raper has been promoted to Southeast Regional Account Manager at Catalyst, Inc.

Greg Edelson is now West Coast Regional Account Manager at Catalyst, Inc.

Max Salata is now the Director of Asset Protection for Goodwill Industries of South Central Wisconsin

Matthew Pistel, NCCP is now an Area Loss Prevention Manager at Ulta Beauty

Eric Woodward was promoted to District Manager of Asset Protection at Abercrombie & Fitch

Nathan Anderson LPC has been named Director of Field Asset Protection at 99 Cents Only Stores  Click here to learn more

Paul McQuillan has been promoted to Sr. Manager, Loss Prevention at Loblaw Companies

Octavio Andres Garcia Torres is now a District Loss Prevention Manager at Abercrombie and Fitch

Angela Bisland was promoted to Divisional Director of Loss Prevention at CarMax

Carl Veld is now a District Loss Prevention Manager at JC Penney

Molly Gottlieb, CFI is now a Regional Asset Protection Manager at lululemon athletic

Rick Mitchell has been named Director of Loss Prevention at Charming Charlie  Click here to learn more

Steve Sell has been named Vice President, Global Sales and Marketing at CONTROLTEK USA  Click here to learn more

Chris Strongman has been named Director of Loss Prevention at Aritzia  Click here to learn more

Jamie Bailey, CFI has been named Director of Loss Prevention for St. Louis based Scrubs & More, LLC  Click here to learn more

 

To review the July “People on the Move” click here.

Many of the Loss Prevention / Asset Protection career moves and promotions are reported to us by our career advisor partners. We are grateful for their collective efforts and diligence in delivering this information. If you would like to provide information pertaining to a recent promotion or career move that is not listed below, we welcome your submissions by clicking here.

The post People on the Move: August 2016 appeared first on LPM.

Organized Retail Crime Training Strategies for Your Team

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Petty thieves can be a problem, but they can usually be managed with a capable loss prevention team. However, when the criminals get more sophisticated, a special organized retail crime training program may be required before your team can meet the challenge.

In 2007, Limited Brands put forth a comprehensive training concept that encompassed the five “ORC Pillars of Strength.” A thorough mastery of each pillar ensures that a team of loss prevention professionals is capable of identifying and apprehending professional criminals. The pillars are as follows:

Civil Liabilities. ORC associates must know how to properly observe a theft, and understand the five-step principle.

Legal. The whole team must be well versed in the entire criminal justice process, from arrest to arraignment and everything in between. The ability to work with law enforcement officers (and speak their language) is crucial. Don’t forget to exercise your right as a victim when criminals hit your store.

Investigative. Team members must review principles of investigation, including how to conduct surveillance in a mall vs. surveillance online. It may be helpful to work with consultants who have past experience with federal agencies (FBI, CIA, etc.). Safety should always be the first lesson.

Technology. Does your team have the right equipment to execute the ORC strategy? Your organization needs to invest in the appropriate technology that will help accomplish your goals. Covert digital cameras, GPS devices, and surveillance vehicles may prove useful.

Execution. Working together flawlessly will get the job done. Position the team so that everyone knows the order of operations and who is reporting to whom in any given situation.

Organized Retail Crime Training

An ORC investigative strategy might begin in-store, with your associates, who can be trained and coached to provide an amazing customer experience. “Prevention through service” is the first step in deterring thieves.

At the same time, the loss prevention staff must ramp up surveillance and intelligence-gathering activities, since professional theft teams are still able to circumvent the “prevention through service” strategy when they work together. Strategic placement in the areas with the greatest amount of organized retail crime is paramount. Managers should review crime data and allocate resources to the areas that show the most activity.

The ultimate goal of the increased surveillance is to catch organized retail crime groups in the act, identify their vehicles, and report their activity to law enforcement partners. When criminals leave the shopping area in their identified vehicle, they will then be placed under arrest. Slapping someone with this type of criminal charge is more meaningful and will likely result in a tougher sentence than stopping them in store for shoplifting.

This article was adapted from “Organized Retail Crime: Executing the ORC Strategy“, by John Talamo. 

The post Organized Retail Crime Training Strategies for Your Team appeared first on LPM.

Breaking News in the Industry: August 29, 2016

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33 in USPS face charges of mail theft, embezzling, credit card fraud

Dozens of U.S. Postal Service employees throughout the Southland were charged this past week with an array of federal crimes, including stealing mail, embezzling from the agency and failing to deliver mail, prosecutors announced Friday. The defendants are charged across 28 cases, about half of which allege mail theft and/or possession of stolen mail by USPS employees and contractors. Other cases charge postal employees with conspiracy, embezzlement, bank fraud and false statements.

Among the cases is one in which the former local area president of the Mail Handlers Union was charged with conspiracy and possession of stolen mail. Jarol Garcia allegedly stole mobile phones from parcels going through the center and traded the phones after offering them for exchange on a website, according to an indictment, which also alleges that Garcia was found in possession of at least 166 mobile phones stolen from the mail.

Another case charges a mail carrier with conspiracy to commit credit card fraud and theft of mail. The indictment alleges that Norman A. Muschamp was part of a conspiracy to use information belonging to identity theft victims to order pre-paid PayPal debit cards that were sent to primarily nonexistent addresses on his mail route. Muschamp allegedly took part in the scheme by obtaining the PayPal debit cards from the mail and delivering them to co-conspirators in exchange for cash. Investigators who are continuing to investigate the overall scheme believe it caused hundreds of thousands of dollars in losses.
Additionally, a postal carrier was charged with delaying the mail by effectively hoarding the mail she was entrusted to deliver on her route. Sherry Naomi Watanabe was found to have hoarded more than 48,000 pieces of mail at her home which was supposed to have been delivered to customers on her route, according to her plea agreement.

“The overwhelming majority of Postal Service employees are honest and dedicated public servants who are worthy of our trust,” said Brian Washington USPS Office of Inspector General special agent in charge. “However, when employees engage in criminal activity, our agency will aggressively investigate these matters to protect the overall integrity of the Postal Service.” [Source: My News Los Angeles]

 

Alleged shoplifter in critical condition after falling into quarry

An alleged shoplifter suffered “extensive” internal injuries and broken bones Friday after apparently falling into the area of Tilcon Riverdale Quarry while fleeing from authorities. Officers were dispatched on Friday evening to a Walmart after a shoplifter fled the store. Officers at the scene reported that the suspect was seen running to the back parking lot of the store and jumping a fence, behind which was a severe drop-off of between 20 to 100 feet, depending on the area. Behind the drop-off is the rocky edge of the large Tilcon Riverdale Quarry.

Patrolmen checked the quarry and climbed down into a wooded area below the fence and walked several hundred feet to investigate. During the search, they found the suspect, John Sanchez unconscious and lying on his back at the base of a high retaining wall below the fence.

Noting the location and severity of his injuries, police contacted paramedics for assistance. With the use of Riverdale Fire Department’s ladder truck and other emergency equipment brought to the scene, Sanchez was extracted from the area and taken to a landing zone, from where he was loaded onto a State Police Northstar helicopter and flown to St. Joseph’s Hospital.

During the investigation, Sanchez was alleged to have attempted to take a cart full of merchandise valued at $462.58 from the store, and running from the scene when confronted by Walmart employees. Sanchez was charged with fourth-degree shoplifting. He will be processed and given a court date when he is released from hospital care. [Source: USA Today’s Daily Record]

 

Under fire: Chipotle, Papa John, McDonald’s over ‘pervasive’ wage theft and discrimination

Federal regulators and states are finding fast food companies like Chipotle, McDonald’s and Papa John culpable of wage theft, worker intimidation and discrimination. A practice they say is “pervasive” in the industry. Workers are fighting back, however, and finding support in the court and regulatory bodies.

In a case stemming from the use of social media to criticize of the burrito chain, Chipotle, the National Labor Relations Board (NLRB) found in favor of the employee and argued the company’s workplace policies were illegal. Tweets by Chipotle employee James Kennedy criticized the company for paying workers $8.50 an hour while giving away free food, implying that this was an exploitative arrangement. He later took the tweet down when a supervisor informed him that the company’s social media policy prohibited employees from making “disparaging, false” statements about it online. Several weeks later, he was fired for organizing a petition protesting workers not getting their required breaks. The NLRB reviewed the case and agreed that Kennedy had been treated unfairly, with his firing connected to the petition as well as his earlier statements about wages on social media. The NLRB ordered Chipotle to offer to rehire Kennedy and pay him for lost wages.

In August Chipotle agreed to pay $550,000 in compensation and damages for discrimination against an employee for being pregnant. When worker Doris Garcia Hernandez informed her manager she was pregnant, she claims the manager began restricting her water and bathroom breaks. Hernandez alleges that her boss required her to “announce” to other staff members when she needed to use the restroom and he would then “approve her bathroom breaks so that he could cover her work position for her.” The manager also refused her requests to leave work and attend her prenatal doctor’s appointment. Hernandez chose to leave anyway and was publicly fired in front of other employees and customers the following day. The court found Chipotle had violated the Pregnancy Discrimination Act which forbids any discrimination based on pregnancy.

Earlier in August, a California labor lawsuit had workers at five McDonald’s restaurants alleging the franchise owner violated wages and hours laws, failed to pay overtime and failed to pay minimum wage. The franchisee has already settled its portion of the lawsuit for approximately $700,000 but McDonald’s has argued that it is not responsible for how franchisees operate their business or manage working conditions. However, the US District Court for Northern California allowed the motion to continue as a class action lawsuit finding employees reasonably believed McDonald’s was their employer. There are potential 400-500 employees that will be part of the class-action.

Other fast food operators have been found guilty of wage theft. After a year-long fight, New York’s attorney general has settled with Papa John pizza franchises when they agreed to pay $500,000 in back wages and damages to more than 200 employees. Over the past two years, the Attorney General’s office investigated and found violations at eight separate Papa John’s franchises, which operated a total of 30 restaurants. The violations were all wage theft violations. In a 2015 settlement over wage violations at 11 franchise locations, the judgement totaled almost $3 million. In a separate case, the owner of nine franchises in the Bronx was sentenced to pay $230,000 in restitution to workers, and the owner was sentenced to serve 60 days in jail. [Source: RT Question More]

 

Woman drives through store after refused gift card purchases

Employees a Safeway store were busy sweeping up broken glass, repairing and restocking damaged shelves and mopping up tire tracks after a woman allegedly drove her Chevrolet Tahoe through the store.

Noella Fay had been at the store and tried to buy $2,200 worth of gift cards, according to Springfield police. Safeway sells gift cards that can be used at a variety of retailers, including Starbucks, Nordstrom and iTunes. But when Fay’s check bounced, she was refused the sale, which prompted her to become angry and leave the store, police said.

Fay allegedly returned later and parked her sport utility vehicle in front of the store’s west doors, blocking the entrance. She was yelling about wanting her gift cards, police said. A Safeway employee told Fay she needed to move her vehicle before they could discuss the gift card issue any further. It was then Fay drove her sport utility vehicle through the west side of the store.

Fay drove the Tahoe down an aisle almost to the back of the store, police said. She then allegedly reversed the SUV back to the front of the aisle, turned the car toward the deli and drove between the aisle ends and the checkstands. She then drove the vehicle out the east doors and into the parking lot.
Fay was arrested at her home in Glenwood on six counts of reckless endangering, hit and run, reckless driving and first-degree criminal mischief. [Source: Register Guard]

 

73-year-old Man ran retail crime operation out of social club

Rhode Island State Police have arrested a man they say oversaw an organized retail crime operation out of his home and a Federal Hill social club. After a month-long investigation, 73-year-old Richard Tiberi was charged with receiving stolen goods, soliciting another to commit a crime and conspiracy.

The charges allege that the defendant oversaw an illegal retail crime operation being conducted out of his residence as well as the Decatur Social Club. The investigation included surveillance of Richard Tiberi conducted over the past month where he met with co-conspirators for the purpose of purchasing stolen items. The investigation resulted in the issuance of search warrants for Tiberi’s vehicle, residence and person.

When the search warrants were executed police seized a quantity of stolen items with a retail value of $5,553.25 along with a computer, two telephones, a vehicle and ledgers. Richard Tiberi was taken into custody and transported to State Police Headquarters. The search warrant on Tiberi’s vehicle resulted in the seizure of additional stolen items.

Tiberi’s criminal history includes fifteen (15) arrests dating back to 1962 with criminal charges including Bookmaking, Conspiracy, Keeping of Gambling Places or Devices, Possession of Lottery Slips, Usury and Conspiracy to Commit Usury. [Source: Rhode Island State Police]

 

LP Worldwide: Mother-of-six made millions shoplifting over 45 years

A former shoplifter who claims she made almost £2million during her 44-year ‘career’ as a thief says she has given up looking for a job that would pay enough to match the lifestyle to which she has become accustomed. Kim Farry, 55, from Fulham, London, dubbed the ‘millionaire shoplifter’ said she made a ‘business’ out of her ill-begotten gains – which has seen her jailed seven times. Her life of crime allowed her to enjoy designer clothes, plastic surgery and exotic holidays. Now she has changed her ways she says she has no choice but to claim £1,300 a month in benefits, including housing allowance as she can’t find suitable work.

I don’t want to work in a shop, it’s boring. There is more to me than standing at a till. It’s not enough money for me,’ she said. ‘I only want to earn big money, I am not earning stupid money because of what I used to earn. You need a £1,000 a week to be comfortable.’

The mother of six said it has been hard to give up shoplifting, which she refers to as ‘work’ and ‘going shopping’. ‘When I wake up in the morning I think I am going to work. Up until the shops shut I can’t relax,’ she said. ‘My brain is wired to go out shopping every day and I can’t. I miss making all the money and having all the stuff, it was a business as well.’

After she married in her 20s and started a family of her own, Ms Farry even trained up her three eldest children to help her once they turned 12. She says she was stealing items worth as much as £7,000 a month, taking home nearly £50,000 a year after paying her accomplices. But although Ms Farry said she turned to crime to support her family, it also caused the breakdown of her marriage and when she was sentenced to one of her jail terms her three eldest children were sent to live with her father. [Source: The Daily Mail]

 

Gunman who says he was hiding from cartel falls through ceiling of smoothie shop

A 37-year-old man barged into a Fort Worth smoothie shop Saturday night and hid in the ceiling after telling the store manager that a cartel was after him. Police arrested John Case more than two hours later when he fell through the ceiling, said Patrick Day, a manager of the Smoothie King.

Day and a co-worker were wrapping up their shifts Saturday night when a truck came to a screeching halt outside the store about five minutes before closing time. A man burst in and locked the door, telling the shop staff to call police because a cartel was chasing him. Case, who looked mentally unstable, tried unsuccessfully to get into the ceiling from the bathroom and then went to the back office and asked for a ladder. The store manager gave him access to one. “I was just trying to keep him happy,” Day said. “I didn’t want him to get more violent.”

Case became more agitated when police arrived. “He pulled out a gun on me and my co-worker and basically was just scared that someone was going to take his life,” the store manager said.

After Case climbed into the ceiling, Day and his colleague fled the store and met two police officers. Several police units arrived at the store, including a SWAT team and a K9 team, according to the store manager. The owner of the Smoothie King said police discussed sending the man for a mental evaluation. [Source: Dallas Morning News]

The post Breaking News in the Industry: August 29, 2016 appeared first on LPM.

Organized Retail Crime Associations Network with Law Enforcement at Fusion Center

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The 2016 National Retail Federation (NRF) PROTECT Conference, which convened in Philadelphia in June, marked the seventh time that eBay’s Global Asset Protection (GAP) team has sponsored retail outreach at the Fusion Center. Located in the expo hall, the Fusion Center designates a space where retailers and law enforcement agencies can “fuse” valuable partnerships. Participants at this year’s Fusion Center discussed tactics and shared critical data with the intent of collaborating against retail crime.

Macy’s partnered with eBay’s GAP team in sponsoring and operating the Fusion Center at the 2016 NRF PROTECT event. Dave DiSilva, senior manager of global asset protection for eBay, shared a list of participants in his recent Partnering with Retailers column (found the July-August issue of LP Magazine).

Participating organized retail crime associations included:
• Carolinas Organized Retail Crime Alliance
• Coalition of Law Enforcement and Retail
• Cook County State’s Attorney’s Regional Organized Crime Task Force
• Florida Organized Retail Crime Association
• Georgia Retail Association Organized Retail Crime Alliance
• Indiana Retail Organized Crime Coalition
• Los Angeles Area Organized Retail Crime Association
• Metro Area Organized Retail Crime Alliance

Participating law enforcement agencies included:
• Arlington (VA) County Police Department
• Barrington (IL) Police Department
• Board of Governors of the Federal Reserve System, US Currency Education Program
• Boise (ID) Police Department
• Delaware Valley Intelligence Center
• Fairfax County Police Department (Tysons, VA Urban Team)
• Federal Bureau of Investigation
• Florida Law Enforcement Property Recovery Unit

Check out “Law Enforcement, Retailers Meet at Fusion Center” to read the full column and see the entire list of participating organized retail crime associations and law enforcement agencies. You can also visit the Table of Contents for the July-August 2016 issue or register for a free subscription to the magazine.

The post Organized Retail Crime Associations Network with Law Enforcement at Fusion Center appeared first on LPM.

Breaking News in the Industry: August 31, 2016

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Risk of Bitcoin Hacks and Losses Is Very Real

When hackers penetrated a secure authentication system at a bitcoin exchange called Bitfinex earlier this month, they stole about $70 million worth of the virtual currency. The cyber theft—the second largest by an exchange since hackers took roughly $350 million in bitcoins at Tokyo’s MtGox exchange in early 2014—is hardly a rare occurrence in the emerging world of crypto-currencies.

New data shows a third of bitcoin trading platforms have been hacked, and nearly half have closed in the half dozen years since they burst on the scene. This rising risk for bitcoin holders is compounded by the fact there is no depositor’s insurance to absorb the loss, even though many exchanges act like virtual banks.

“I am skeptical there’s going to be any technological silver bullet that’s going to solve security breach problems. No technology, crypto-currency, or financial mechanism can be made safe from hacks,” said Tyler Moore, assistant professor of cybersecurity at the University of Tulsa’s Tandy School of Computer Science, who will soon publish the new research on the vulnerability of bitcoin exchanges.

His study, funded by the U.S. Department of Homeland Security, shows that since bitcoin’s creation in 2009 to March 2015, 33% of all bitcoin exchanges operational during that period were hacked. The figure represents one of the first estimates of the extent of security breaches in the bitcoin world. [Source: Fortune]

 

Green Bay’s most common crime drops by 40 percent in 60 days

A Green Bay Police crackdown on shoplifting — the city’s most widespread and common crime — is paying off. Reports of retail theft have gone down substantially: about forty percent, according to the Chief of Police Andrew Smith.

Sixty days ago, police began holding meetings for area stores to communicate shoplifting trends to one another. Retention specialist teams in big stores investigate who is shoplifting what items, as well as when — and how to stop a thief. It’s helpful to all stores, but especially ones without retention resources. “We talk about the design of the store, or the fact that they have somebody at the front greeting, somebody maybe checking packages as people are leaving,” Smith said.

Police also stepped up the consequences for someone caught stealing. “In the old days we would hand them a slip of paper and say here’s your ticket, you need to go to court on this day down the road,” said the chief. “Now, we’re taking them, giving them that ticket, but first we’re bringing them down to the police station, we’re photographing them, we’re finger printing them, we’re making sure we know exactly who this person is and that there’s some repercussions even on the first offense.”

Store owners reported that the number of thefts was nearly cut in half. “It’s very early, only a couple months into their investigation now and it seems like it’s been successful,” said Leah Weycker, the director of Military Avenue Business District. [Source: ABC News]

 

Russian MP’s son hacks ‘millions’ of stolen credit cards

Roman Seleznev is known as the son of Russian parliament member Valery Seleznev. He is also known as ‘Track2′ in hacking circles and has now been convicted of 38 counts of fraud and theft by a US federal jury who conducted an eight-day trial in Seattle.

The charges against Seleznev junior relate to his thefts of millions of credit card numbers, which he has subsequently sold online across a network of connected fraudsters and con artists. Seleznev was taken into custody in July 2014 and his laptop contained more than 1.7 million stolen credit card numbers.

Seleznev was convicted after the court considered 10 counts of wire fraud, eight counts of intentional damage to a protected computer, nine counts of obtaining information from a protected computer, nine counts of possession of 15 or more unauthorised access devices and two counts of aggravated identity theft.

According to a United States Department of Justice statement, Seleznev hacked into retail Point-of-Sale (PoS) systems and installed malicious software (malware) to steal credit card numbers from various businesses from a server he operated in Russia.

Seleznev operated by ‘bundling’ the credit card information he gleaned into groups called ‘bases’. These information packages were then sold as downloadable data on various ‘carding’ websites to buyers who would then use the credit card numbers for fraudulent purchases, according to the trial evidence. Seleznev will be sentenced December 2nd 2016 and his lawyer has said that his client faces a mandatory minimum of four years of jail time. [Source: SC Magazine]

 

Stolen goods found for sale in market raid

Police have busted a store for selling stolen merchandise after an investigation that lasted three months, Nashville Metro police said in a news release. When police raided N and P Discount Tobacco and Beer Market, they said they seized cigarettes, energy drinks, laundry detergent, batteries and various clothing items. Detectives also seized a stolen pistol from the market.

Pawn and Fraud Unit detectives began investigating the market in North Nashville in May. Police said the market’s owner, Nabih Zaher, purchased merchandise on seven occasions from a police operative who clearly represented the items as being stolen. Zaher paid the operative about a third of what the merchandise was actually worth, according to Metro. Kroger Organized Retail Crime personnel also assisted in the investigation, and charges against Zaher are still pending. [Source: The Tennessean]

 

Shoplifting Leads to Multi-State Fraud Investigation

A case of shoplifting at the Home Depot in Hillsborough, New Jersey led to the arrest of a man on fraud charges. Hillsborough Police say officers were originally called to the home improvement store on a shoplifting call. Authorities were then notified of potential fraud.

Police say Luis Hernandez-Castillo was at the store trying to purchase digital thermostats with a stolen credit card number. Hernandez-Castillo told officers he was buying lumber for his house in New Jersey, according to officials. But police say that digital thermostats from Home Depot locations in North Carolina, Georgia, Louisiana and South Carolina were all located in his vehicle. Police say Hernandez-Castillo have been arrested for obtaining property by false pretense from the multiple stores. He is currently being held in the Orange County Jail under a $100,000 bond, according to authorities. An investigation is continuing. [Source: Chapelboro News]

 

LP Worldwide: Man held for theft of 120 gold coins

The Chandannagar (India) police have arrested the man duping three persons here of gold coins worth Rs 32 lakh ($52,576 US). Ganeshan posed as a purchase manager with an IT firm, to place an order for 120 gold coins with a well-known jeweller. The glib talker convinced the sellers about his offer. The jeweller sent a man with the coins to Ganeshan’s office in an IT park, after which Ganeshan disappeared with the coins.

Police said Ganeshan had checked into a city hotel and hired a cab from tour operator Parmeshwar Khaire. He told the cab driver that he wanted to buy gold coins to distribute to his employees as bonus and the driver told Khaire about it. Khaire met Ganeshan and told him that a relative of his works with a famous jeweller and connected the relative to Ganeshan. The jeweller agreed to send him the gold coins on the promise that Ganeshan would pay him in cash. The owner told Ganeshan to send a purchase order and quotation.

When Khaire and an employee of the jeweller met Ganeshan at his office, he told them to wait in the meeting room and requested the employee to hand over the coins to him as he wanted to show them to his director. He then left the room at which time he also escaped with the coins.

Ganeshan had committed a series of such offences. When apprehended he confessed to the Kerala police about this crime and was taken into custody. 93 coins worth Rs 27.2 lakh ($44,690 US) were recovered. [Source: Times of India]

 

LP Worldwide: The Full Cost of Cargo Thefts

Criminal gangs are well-acquainted with the movement of different goods around Europe, and they often set out with a specific objective in mind; high-value, easily re-sold products like pharmaceuticals, alcohol, electronics, clothing and baby formula are particularly desirable. Frequently, they just follow the target and wait for the best opportunity to snatch the cargo. That’s often when the driver pulls off the highway for a break. They typically steal the truck, transfer the merchandise as quickly as possible into another vehicle, and drive off, usually to another country. And if the driver is detained during the process, he will often be let go unharmed; at least in Europe, these types of thefts rarely involve violence.

And today, it’s easier than ever to sell stolen merchandise. Many just offer it on online platforms and avoid generating undue attention by selling in small quantities and with only modest discounts. Or they may have arrangements with unscrupulous wholesalers who will buy products without proper documentation. Plus, the availability of online marketplaces makes the stakes more attractive. With e-fencing, thieves can expect to sell the merchandise for about 70-80 percent of retail value; that’s a lot better than the 25-35 percent they might have gotten in pre-Internet days. So an “average” cargo theft could net around EUR 70 thousand to upwards of EUR 150 thousand or more for a higher value load. While that’s not a huge payday, it’s enough to tempt many criminal gangs; it’s not so much, however, to cause most law enforcement agencies to put a lot of resources into trying to recover the goods.

According to FreightWatch International, the value of cargo stolen in transit in Europe totaled EUR 11.6 billion. Notably, this was 41 percent greater than in 2007, even though freight volumes were down 20 percent as a result of the economic downturn and Europe’s sluggish recovery. But then, property theft tends to be inversely correlated with the broader economy; thefts go up when the economy goes down, and vice-versa. The estimated average value of a cargo theft in Europe are EUR 91 thousand. And these figures only cover reported thefts. It’s well-known that some companies choose not to report a loss to avoid damaging their reputation / brand.

Moreover, these costs only account for the direct retail value of the goods. Other studies have found that the non-reimbursable indirect costs stemming from a cargo theft are anywhere from four – six times greater than the direct cost. Unfortunately, modern highwaymen will continue to prowl European motorways in pursuit of high-value cargos. And when weighing different approaches, companies should recognize that the indirect costs of a cargo theft, including possible damages to a company’s reputation / brand, are many multiples of the direct costs. [Source: XL Catlin]

The post Breaking News in the Industry: August 31, 2016 appeared first on LPM.

Please Join Us at the Premier Conference of the Carolinas Organized Retail Crime Alliance

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The Carolinas Organized Retail Crime Alliance (CORCA) will hold its first Annual Conference of September 8, 2016 in Charlotte, with a Welcome Reception hosted the evening before. Please join us at the Renaissance Charlotte Suites Hotel to participate in this exciting event.

This event will bring law enforcement together with retailers specializing in asset protection, loss prevention, and emergency and risk management fields, along with prosecutors, district attorneys, and policy makers. The event will provide an opportunity to network, learn about the trends surrounding retail crime in the Carolinas, and connect with vendors on innovative products in the field today. A wide range of topics will be covered throughout the day at both the general and breakout sessions. Presentations will be focused on some of the most pressing retail crime issues such as organized retail crime, cyber-security, return fraud, e-commerce, emergency preparedness, asset protection technology, and the private and public sector partnerships in the Carolinas.

The incomparable exchange of knowledge will benefit retailers, law enforcement, and other partners across the Carolinas. Our area is a hub for organized retail crime with major highways running along the eastern corridor and right through North and South Carolina. It is imperative that we work together to strengthen and expand this alliance, because together we can better identify organized retail theft networks and combat retail crime.

The Carolinas Organized Retail Crime Alliance was created in response to an increased level of retail crime in North and South Carolina and a higher level of sophistication surrounding complex schemes and organized efforts to obtain good through illegal methods.

CORCA allows retailers and law enforcement to further the mission of providing consumer education and awareness around the issues associated with retail crime, provide educational resources to industry loss prevention professionals and law enforcement, and work toward a goal of providing scholarships within the field.

For more information click here or go to www.corca.org

The post Please Join Us at the Premier Conference of the Carolinas Organized Retail Crime Alliance appeared first on LPM.


Boosters Versus Fences: Which Is the Direct Link to Retail Shrink?

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What is the issue facing retailers regarding boosters and fences? There seems to be confusion over which one is the primary cause of retail shrink. Is this issue one of those questions that we can break down into bite-sized pieces, make mathematical comparisons, study historical data, and reach an operationally sound conclusion? Humph! The booster-fence causal analysis is similar to the age-old question, “Which came first, the chicken or the egg?”

Everyone may not agree on which came first in the chicken versus egg analysis, but perhaps we can determine which is the most important. However, that depends on whether you want an omelet or fried chicken. In reference to booster or fence, the question is not so much, “Which came first?” but “Is one or the other a more direct cause of retail shrink?” Would the elimination of one actually cause the demise of the other? Until now, the issue has been too complex to invite consensus.

Examining Pertinent Questions

How does one define the role of booster or fence? Which did come first? Did one create the other, or simply create an environment in which the other could thrive? Is the relationship born of necessity? Do they depend upon each other for existence, or is the relationship a simple matter of symbiotic utility where both find the relationship beneficial?

Let’s attempt to answer these questions.

What is a booster? A person who makes a living by stealing retail merchandise for resale.

What is a fence? A person who makes a living buying and selling stolen merchandise.

There you have it: shrinkage from external theft in retail stores absolutely occurs at the booster level with or without a fence. Doesn’t that answer the next question? Not really.

A fence can’t sell a store’s merchandise if it’s not stolen to begin with, but fences sell a variety of other contraband from many sources.

This further establishes the fact that the booster is the first step in the stolen retail merchandise “pipeline.” However, we can’t place any value on which came first, because each one operates in some aspects without influence from the other and is capable of operating with total autonomy.

Does this mean retailers should ignore everything but the booster? Of course not. We can’t ignore the increase in losses due to the relationship between the booster and the fence.

Did one cause the other to exist, or create an environment in which to thrive? The booster expands the fence’s product line, while the fence expands the market for the booster’s stolen merchandise. They complement each other’s business by providing each other the opportunity for increased volume.

Is the relationship one of necessity or symbiotic utility? They exist independently from each other. Their relationship is that of utility, mutually beneficial for both parties, although not necessary.

The role of the participants becomes clearer during detailed analysis. We must conclude that boosters are the direct link to retail shrink.

Examples to Consider

Too often, boosters are thought of as the smallest link in the chain of organized retail theft. The dollar amount of a single booster apprehension pales in comparison to the amount of recovery from a well-established fencing operation. But how does each one impact your bottom line? Let’s look at some actual examples of past cases.

A Significant Fence Bust. Over 200 boosters were identified selling stolen over-the-counter pharmaceuticals to an opportunistic street-level fence. The criminal organization was on the threshold of making the move to a mid-level operation. We partnered with agencies of sufficient clout to bring the fullest extent of the law against the fence. As is the case with most high-level prosecutions, the time required to complete a thorough investigation required roughly 18 months. You don’t just run down and hang a pole camera outside the criminal’s business location. It takes cooperation and networking.

During the course of the investigation, documentation was accumulated establishing the fact that the fence transported on average $140,000 per week to an illegitimate repack warehouse in the Northeast. In retrospect, we allowed $10,080,000 to be stolen. The bust was a colossal event, and the recovery of $1,700,000 set a record at the time. But what was the net loss? Not counting expenses and payroll, the figure came to $8,380,000.

What did the community lose during the same period? Well, if the tax rate was 9 percent, and if we applied that percentile to sales of $10,080,000 at retail, the community coffers would realize a loss of revenue valued at $907,200.

A Typical Booster Ring. In another example, this particular booster group stole an average of $5,000 per day throughout the duration of the investigation. If the group only worked five days a week, they caused $25,000 in retail shrink. If we extrapolate that out over 52 weeks, the resulting retail shrink in the targeted market would translate to a cumulative yearly loss at retail of $1,300,000. This booster’s profit margin averaged 20 percent on the dollar, creating a yearly gross income for their business of $260,000. The group moved the stolen merchandise themselves. Maybe they hadn’t heard of outsourcing.

The group had been on a state agency’s targeted criminal list for 27 years. Ouch! Do you think the agency focused all their efforts toward working pawn shops and fences?

Maybe if they had understood that the booster is the direct link to retail shrink, they would have known a link to the fence was not necessary. Maybe they would have expanded their investigation. This misunderstanding has led to the success of many booster rings.

A Second Booster Case. Recently, an organized retail crime investigator told us about a booster group he busted. A cooperating witness provided information identifying a group that was hitting his stores and other retailers in his area. The group was stealing over-the-counter medicines and Gillette razors, and was responsible for a daily retail shrink of approximately $8,000. The group was reported to work at their craft six days per week.

The investigator assembled a team, contacted the police in the area specified by the witness, and began surveillance on the group. His team observed the boosters hit four stores, and then called the police. The group was arrested, at which time authorities discovered that the “booster in charge” was on parole with an outstanding warrant for parole violation. Prior to this arrest, the other members of the group had no criminal records.

This investigator’s initiative and organizational skills made a $48,000 per week impact on retail shrink at stores in his area. We were flabbergasted when we learned that a supervisor made the statement, “He’s spending valuable time on boosters when he should be working the fences.”

If the supervisor’s goal is to make a positive impact on the bottom line, maybe someone should point out the fact that boosters are the direct link to shrink.

One Retailer’s Attitude. While attending an LP meeting in the upper Midwest to discuss organized retail crime (ORC) and legislation, a retailer in attendance said, “Boosters are a dime a dozen, and we concentrate our efforts on fences. Cut off the head and the body dies.”

The statement came across as overly dramatic and was a complete opposite of commodity flow. Boosters feed the stolen product into the body of the speaker’s mystical beast, not the other way around.

A successful fence will enhance a booster’s business. If the fence is well connected to an illicit repack warehouse, the booster’s share of the stolen goods market can grow exponentially, increasing the wealth of the fence in the process. Further, if the repack warehouse is well connected to an illegitimate diverter, the potential for increased profits will have a ripple effect all the way back to the booster.

The Booster’s Business Plan

Some boosters are known to have their own version of a business plan. They set a daily goal in the form of a dollar amount of theft and work hard to reach the mark. This amount ends up on their criminal P&L as tax-free profit.

There are as many different levels of boosters as there are different levels of fences. For example, a drug addict may only boost in order to supply a daily habit, but the more entrepreneurial criminals may put the profits straight into their pocket or systematically amass the wealth for expansion of the criminal organization.

Of course, most of the professional boosters use more than one fence to transform the fruits of their labor into operating cash. It’s a good market strategy, and we all know any good risk management program should include a plan to mitigate losses. The booster’s plan just happens to be based on the possibility that one or more fences might get busted. No one wants their cash flow interrupted, illicit or not.

It’s important to remember that the entrepreneurial booster doesn’t require a fence. The fence only improves the booster’s business by helping to expand the booster’s market. The addict may use the fence when the opportunity is available, but they also have the option of trading directly with the drug dealer.

Alternatives to using a fence include working fraudulent refunds for cash or moving stolen product through flea markets. Some boosters sell their stolen products over the Internet as well.

Finding the right fence is merely a plus. Put in perspective, it’s like a vendor getting accepted by a major chain—business soars.

The Fence Connection

We’ve already established the fact that the fence can exist without the booster. Boosting from stores is only one way to generate stolen property. Remember the business relationship between booster and fence is one of utility. The booster’s association with the fence benefits the booster, and the fence’s association with the booster benefits the fence. Their association will only continue as long as it benefits both parties.

Which one should we focus efforts to deter, the booster or the fence? That question makes it sound like we still don’t get it. After all, we now know that the booster causes the loss at store level that causes retail shrink. If the booster did not steal merchandise from our stores, the fence would make no impact on our bottom line. On the other hand, the negative impact from shrink due to external theft is made more severe if a significant fence is thrown into the mix.

The booster’s activity is much more than a crime against a company. It’s a crime against the people who make their living in retail. It can negatively impact pay and bonuses, for everyone from the stock clerk to the CEO. We’ve also seen how boosters hurt the community through the example of lost tax revenue.

Should we feel compelled to work both angles of the problem? We’d better. While it’s a fact that the booster is the direct link to retail shrink, failure to recognize the significant role the fence plays is a mistake we can’t afford to make.

The fence is, in no small way, an indirect link to shrink. If we do not target and work the significant fences, we lose even more. Remember, the fence acts as an accelerant. The increasing demand for the booster’s stolen product pumps the contraband through the pipeline. Left unchecked, the relationship of booster and fence could literally drive even more companies out of business.

The booster-fence relationship is responsible for the movement of billions of dollars in stolen property throughout the United States and internationally. With focus on global markets, continued growth of the problem is inevitable. Spin-off issues include devaluing the integrity of certain products, especially those which are date sensitive or meant to be ingested. Not all fences deal exclusively in stolen retail merchandise, but the ones that do certainly deserve our attention.

Effective Retail Responses

Improve Procedural Controls and In-house Security Measures (Quick Solution/Temporary Results).

• Increase associate awareness and create programs that incorporate their involvement. For example, making false security calls when leaving an area to take a break or lunch.
• Make “bottom of basket” (BOB) and “look inside always” (LISA) regular topics of store meetings and awareness posters.
• Consider installing some form of greeter program.

Tightening security through a heightened loss prevention presence is an excellent way to start, but the menace is still in the market. Sooner or later, they will adapt and change their methods in order to circumvent your security measures. This fix is hit or miss and is a continual process.

Target Individual Boosters for Apprehension (Quick Solution/Lasting Impact).

At the least, the booster network will classify your company as a hostile environment and change their choice of stores for a satisfying boosting experience. A good in-store loss prevention program can add another dimension to your loss prevention presence by providing an opposing skill set to challenge the booster’s capabilities.

The in-store LP professional, when partnered with law enforcement, can monitor intelligence on the organized booster. When supplemented by a capable corporate ORC unit, your company is ready to take the process to the next level. Working together, a company’s loss prevention assets, along with investigators from other retailers and your law enforcement partners, can make a positive impact on market profitability.

With the right support from operations, a sustained emphasis on this type of aggressive response can land the career booster in the penitentiary and out of the market entirely, thereby breaking the direct link to retail shrink.

We can’t afford to ignore the example of the booster ring that was responsible for a market loss of $1,300,000 without the benefit of a significant fence; or the other example where $48,000 per week no longer leaves the market. The investigator who took the initiative to react to information from a cooperating witness and addressed the issue head-on contributed the potential increase in yearly profit for the stores in that market of $2,496,000. How can we ignore that?

Educating Law Enforcement, the Industry, and Legislators (Long-Term Goal/Progressive Results).

There are several things we must consider as long-term goals that will ultimately have a tremendous positive result for the entire retail industry, as well as the communities we serve.

Educating Law Enforcement—For the past several years, retailers have worked within the law enforcement community to educate those detectives involved with property crimes. Seminars on organized retail crime have been held from California to New York to Chicago and Miami. These efforts allow the participants to share goals and information and to lay the groundwork for developing partnerships and networking.

We invest substantial amounts of time educating the officers involved with property crimes, but what about the front-line officer who comes in contact with the booster on a daily basis? How many times have we heard a uniform patrol officer talk about stopping a vehicle that had all kinds of duplicate retail property in the back seat, but they had no idea it was from booster thefts?

Educating the Industry—Retailers can be a hard sale. The profit margins are sometimes narrow and their focus is on sales, as it should be. Operations executives have the tendency to leave issues of retail shrink and ORC to the loss prevention department. With 98 percent of the company’s human resources working in sales or sales-supporting departments, it’s easy to understand how 50 percent of the company’s loss only gets two percent of the company’s effort. We can have the best sales figures in the industry, but if the percent of profit isn’t there, investor confidence deteriorates and the end is inevitable.

The problem lies in the fact that the industry’s shrink from ORC represents a conservative figure of 15 billion dollars annually. This money comes right off the top of company profit columns on the corporate P&L. Large sales figures can mask the problem for a while, but once you look past the percentage points and focus on the dollars, you can see the need to refocus attention on the total business. One of our weakest endeavors as an industry may be our failure to educate our own folks regarding organized retail crime and its impact on retail shrink.

Educating Legislators—Our involvement in the development of the first retail loss prevention legislative team in history has been an eye-opening experience. There was a glaring need to document the difference in a simple “shoplifter” who stole a candy bar and the career criminal “booster” whose primary source of income was stealing retail property for resale. The team’s purpose was to write bills that target:

• The sale of stolen property at flea markets,
• Those who use devices to defeat EAS systems, and
• Those who use instruments in creating UPC and bogus receipts.

The team continued targeting several other types of retail crime until finally writing the major bills that create organized retail crime statutes.

Legislative change continues to be of utmost importance. If we are to be successful against ORC, it’s imperative that we have crime-specific laws. Most recently, we have moved to incorporate these ORC statutes in the existing racketeering laws of states that currently have these laws.

Legislative changes like the third-strike law have made a huge impact on criminal punishment for boosters. Better understanding of the severity of ORC lowers resistance to prosecution and fosters a mindset that can readily accept the need to increase penalties at the individual booster level as well as the fence.

Legislative change is just one of the tools needed to address these issues. We have recognized the importance of area coalition websites and distribution lists. Working together through coalitions that link retailers and law enforcement can improve the distribution of information pertinent to real-time ORC issues. One such organization is the Coalition of Law Enforcement and Retail (CLEAR), which has a board of directors evenly representing both law enforcement and retail. Formed in 2008, the association is currently headed up by Curt Crum, CID Special Services Manager of Forensics and Victim Services and Organized Retail Crime with the Boise City Police Department.

The Ultimate Goal

By using all the tools at our disposal, we can continue to impact the various levels of organized retail crime. We can make the occupation more difficult and less rewarding. Sooner or later, with the help of enhanced legislation, the career criminals will land in prison as habitual offenders.

Loss prevention’s goal must include taking the lead in educating all their partners on the issues of organized retail crime. We must break both links to shrink—the booster as the direct link to retail shrink and the fence as the indirect link to retail shrink.

This article was originally published in 2010 and was updated September 5, 2016.

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Products In Motion: Keeping Pace with the Global Retail Supply Chain

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The retail supply chain network is a critical component of the retail machine. While many in retail may view the heart of retail as the interactions and events that happen within the store, this support system has always fueled the way. Through a complex web of processes and activity, a well-managed supply chain is absolutely essential to a successful retail operation.

Merchandise doesn’t magically appear on the shelves of our stores and into the hands of our customers. When we consider that every single piece of retail merchandise must in some way pass through the retail supply chain network, it’s easy to see the need to implement appropriate controls and protect our interests as product moves throughout the network and, ultimately, makes its way to our customers.

For many seasoned loss prevention professionals, the importance of sound retail supply chain policies and practices is nothing new. However, expanding our knowledge and understanding of this essential aspect of the retail enterprise is something that we all can benefit from, and puts us on common ground as the industry moves forward.

Supply chain security: No LP pro can afford to overlook it anymore. Start learning with our FREE Special Report, Trailer and Warehouse Theft: Cargo Theft Security, Investigations, and Prevention Tips from the Experts
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The role of loss prevention across the retail supply chain has grown considerably in recent years and continues to expand today. The advancements in technology, the evolution of e-commerce and omni-channel retailing, and the mounting sophistication of retail crime will continue to revolutionize our role throughout the supply-chain network.

As this role grows more complex, our approach to the entire process must evolve as well. As a critical element of our overall programs, this function is much more sophisticated than making sure that receiving doors are locked, cargo is secured, and logs are signed. That image and mentality must change to reflect the true nature of the management process within the retail supply chain.

Managing a Process

Supply chain management encompasses the planning and management of the many activities involved in sourcing, procurement, conversion, and logistics management for the business. It involves planning and processing orders; handling, transporting and storing the products purchased, processed and/or distributed; and managing the inventory of goods in an efficient and coordinated manner. The primary objective is to fulfill business demands through the most efficient use of resources. By maintaining control over inventories and distribution, the retail supply chain seeks to match and manage supply with demand to reduce costs, improve sales, and enhance company profitability.

Efficient and effective retail supply chain networks are necessary to successfully compete in the global retail market. It rests on the loss prevention professional to take the necessary steps to gain a better understanding of the overall supply chain process and how the process impacts the business so that we can effectively support shrink reduction and profit-enhancement efforts.

In terms of understanding, even the term “retail supply chain” can be viewed as a misnomer. This is not merely a seamless link of interconnected, proportional pieces that takes us from a point of origin and leads to a single ending destination. It is a sophisticated, interdependent network of positions, processes, facilities, functions, responsibilities, tasks, transport, and technology that all culminates with delivering products and services to our customers.

From a loss prevention management perspective, our attentions must then focus on disruptive risk. As described by one industry leader, “Assuming the enterprise has taken the necessary precautions to ensure product quality, integrity, and safety, the primary risk to any organization posed by the supply network is disruption. Any disruption in production or delivery will result in potential lost sales, decreased revenue, margin erosion, and profit loss.” These risks can exist at each origin location, at each intermediate location through which the product travels, and along each transportation link between points.

Companies must design operational plans that will serve to identify potential threats; evaluate how, when, and where they may occur; develop effective approaches to mitigate losses; and build programs that improve efficiency and business recovery. Theft is a primary consideration, but specific risks will vary depending on a variety of factors specific to the unique supply-chain network. The potential risks must be identified and analyzed at each point along the network, building the plan that serves as the cornerstone of retail supply chain resiliency.

But where do we start? What are our greatest risks? What are the primary factors that will influence the success of the plan? How do we determine where to focus our attention and resources? These are just some of the questions facing our industry leaders as we access the risks and construct our plans.

Where Does Your Supply Network Begin?

The first step of this process is to secure the products that we wish to offer for sale. As retailers we want to offer quality products, obtain the appropriate quantities of product balanced with customer demand, get those products in the hands of our customers as quickly as possible, and manage the entire operation through the most economical and cost-effective means. Where the product is coming from can significantly impact each of these key management variables.

The point of origination for our products could involve a vast array of sources from across the world, and through different channels depending on any number of factors that might influence supply, demand, purchasing, and product movement. Does the product have to pass through customs? If the products are manufactured internationally, are the products flown in or does the product pass through our ports system? Are climate or weather issues a consideration? Are there political, labor, regulatory, or other business considerations?

A host of issues must be managed to simply secure the products that we wish to offer for sale, each of which can significantly impact the success and profitability of the entire business, and each of which can pose potential points of risk. Even before the product is owned, such risks can impact supply, product costs, and other factors that can directly influence the business.

Yet while the point of origin is important in setting a foundation, it is the point where we establish ownership that is a critical determination. This not only establishes the right of proprietorship, but also the assumption of responsibility for the products. With the current complexity of the world trade market, the actual point where we assume ownership of products can be determined in many different ways, and at different points depending on specific contract negotiations and other factors.

Ownership determination will vary from company to company and in some instances may even vary depending on the particular product. But at the point where we assume ownership, are we getting what we paid for? Is it the correct quantity? Is it the correct product? Is it the correct price?

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International Security Concerns

Another primary point of risk is found when goods cross international borders. Customs is responsible for controlling the flow of goods into and out of a country. Generally speaking, imported goods may not legally enter the United States until Customs and Border Protection has authorized delivery of the goods.

Officers may inspect cargo before it is loaded onto vessels at a foreign port destined for the United States, while in transit, and at the first port of entry where the goods arrive. Inspectors may board ships, planes, rail cars, and trucks in order to thoroughly inspect shipments. The goal is to achieve a sufficient level of security without jeopardizing the efficient flow of legitimate commercial trade at the border.

The process is critical for many reasons. However, several potential challenges can result from the inspections process. Inspections can cause substantial delays, product damage, spoilage of perishable items, and compromised shipment integrity that may lead to other loss prevention concerns. Transportation costs can increase when containers sit at the ports waiting to be cleared. Regardless of the circumstances, there are costs, and risks, and protocols that must be managed. If the process is not managed properly, our risks increase, leading to shrink concerns, lost sales, lower profits, and customer service issues.

C-TPAT

Unfortunately, some risks extend beyond product loss, theft, damage, or like issues, and carry the potential to create much more impactful considerations. The Customs-Trade Partnership Against Terrorism (C-TPAT) is a voluntary government-business initiative designed to build cooperative relationships that strengthen and improve both international supply chain and US border security.

The C-TPAT initiative asks businesses to ensure the integrity of their security practices and communicate similar guidelines to their business partners throughout the international supply chain. These principles have been adopted by the World Customs Organization and the international trade community, and similar programs are being developed and implemented worldwide. All ultimately have the same primary goal—to stop abuses of commercial trading lanes by terrorists and others who seek to corrupt the process.

The premise of C-TPAT is fairly simple—if a company has well-conceived and appropriate internal controls in place, they can enhance the likelihood that their products will arrive on time, intact, and without dangerous or unwanted goods substituted for the products that they expected to receive. This requires stringent internal controls regarding facilities, personnel, retail supply chain procedures, computer systems, and other critical functions not only at US facilities, but all over the world. Importers are expected to partner with foreign suppliers and worldwide business partners to secure their supply chain and ensure that internal controls are adopted and implemented.

Risks In-Transit

The temptation for thieves to attack goods in transit dates back to the days of piracy and highwaymen. The reason is simple—goods in transit are the most vulnerable to predation. Retail merchandise moves fairly anonymously across the nation’s roads, rails and highways, through jurisdictions with varying resources and differing abilities and/or willingness to prosecute if and when individuals are apprehended. As a result cargo-theft incidents are often less likely to be given high priority when compared to many other types of crimes.

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Deterring these losses therefore mandates attention to security and loss prevention practices, strong operational controls, cooperation among participants in the retail supply chain, and a variety of investments in safeguarding cargo security. But it also requires enhanced awareness. For retailers moving goods attractive to thieves, paying attention to in-transit product and loss prevention management should be a fundamental and daily part of doing business. This isn’t as simple as a box falling off the back of a truck, and shouldn’t be perceived that way. Such incidents can be highly sophisticated operations that can be dangerous as well as financially devastating.

As the retail supply chain grows more complex, so does the criminal element that leeches off of our legitimate business. One of the biggest challenges involves organized retail crime (ORC) and the potential disruption that can result. ORC incidents can occur at any point along the retail supply chain, whether at the point of manufacture, on loading docks, rail stations, distribution centers, or potentially anywhere along the transportation route. Thefts can range from smaller, subtle quantities that are part of larger shipments to aggressive, armed hijackings involving entire truckloads of merchandise.

ORC groups will take advantage of practically any opportunity to steal product that is vulnerable to theft and will potentially produce large profits. Thefts are often preplanned, highly coordinated, and well-executed. Many operations are managed to the point that they know exactly what they are targeting and have the ability to move, reload, and redistribute stolen goods within hours. The stolen goods may be moved quickly to a warehouse, off-loaded, repackaged, re-manifested, and placed on another vehicle—often before the theft is discovered by the company or reported to the appropriate authorities.

In-Transit Methods

Members of organized groups have for decades stolen full and partial shipments and/or loaded trucks while they were in transit. These incidents can occur in a number of different ways. For example, many hijacking incidents occur while a driver is away from the truck, such as at dinner or on a break, and thieves simply break into the vehicle and drive off with the goods. In other instances, hijackers will target a vehicle and forcibly enter the cab while the driver is in the vehicle. Freeway on and off-ramps, rest stops, and other common stopping points are particularly dangerous.

Another common method is to coerce the driver into making an unplanned stop by having someone gain the driver’s attention while they’re driving. This individual may falsely inform the driver that something is wrong with their vehicle or may use other persuasive tactics to convince the driver to stop the vehicle. Once the driver pulls over and the vehicle stops, accomplices arrive to steal the rig.

A technique favored by ORC groups targeting trucks or containers loaded with high-tech and high-value merchandise is the “grab and run.” Often traveling in vans or similar vehicles, they follow a targeted vehicle, waiting for the vehicle to stop. Once the rig stops, several individuals will forcibly break into the cargo area and off-load as much product as they can. This is also a common technique used when employee vehicles are used to transport valuable goods, such as jewelry, from one store to another.

Naturally, deception is another common method. Thieves may tamper with trailer/carton seals and/or locks in order to conceal trailer break-ins, or tamper directly with the container or trailer to commit these thefts. Leakage incidents may involve the theft of entire cartons, or removing desired product from within a carton and resealing the packaging to attempt to conceal the theft. ORC groups have even used individuals who present themselves as legitimate drivers at shipping facilities, using counterfeit paperwork or even electronic shipment information in order to gain access to and make off with valuable loads.

Effective, well-planned strategies must be developed, combining the latest advancements in technology with industry best practices, robust security procedures, and fundamental loss prevention methodologies. Such practices would include enhanced awareness efforts, improved response, advanced information and communication management, safety practices, employee screening programs, and robust training programs that provide necessary and appropriate information to our employees at every step along the way.

Distribution Centers

Distribution centers are often viewed as the foundation of the retail supply chain network, establishing a centralized location from which we can stock and distribute products to the stores or directly to customers. While designs and functions may be similar, each facility is also unique based on the organization, the types of products, and the special needs of the business. These complex operations can house volumes of merchandise, equipment, supplies, and employees in order to meet and maintain our primary business objectives.

While often viewed as simply a project-specific, labor-intensive venture, the actual mission of the distribution center operation is strategic and tactically calculated. Coordinating the concurrent needs of the stores, our customers, suppliers, buyers, inventory control, transportation systems, and other services and service providers is a formidable task to keep product moving efficiently and contributing to our companies’ profits.

“Today’s distribution center can house thousands of SKUs, with some of the larger facilities managing the inventory for several hundred stores in a single location,” said one industry expert. “Teams must ensure the accountability of the freight at all times throughout the product cycle, to include accurate receiving protocols, proper storage of the freight in its designated location, cycle counting, and order pulling and shipping of merchandise to the correct location.”

This isn’t simply an exercise in moving boxes from one site to another. This is about product flow and speed to market, driving replenishment, maximizing sales, and maintaining quality customer service while minimizing losses, damage, and theft of goods. All of this requires cutting-edge loss prevention management, with progressive programs and proactive strategies that build on modern technologies and contemporary supply-chain management strategies and design. Every function, process, and practice must be continuously reevaluated to help control costs and maximize efficiency.

Depending on the company, a retailer may purchase and sell tens of thousands of products. Goods typically arrive in bulk and are stored in the distribution center until needed by the retail location. Products are then retrieved and assembled into shipments before being forwarded to stores or directly to customers. Throughout every stage of the process, there are opportunities for loss.

The efficient processing of goods through the distribution center plays an essential role in the business operation. Every facility must be designed to provide for the safest, fastest, most secure, most efficient and cost-effective control and movement of our retail products, and our loss prevention efforts must complement the process. Vulnerabilities extend well beyond basic physical security measures and access controls, and we must show the same proactive, cooperative insights that have helped to build our success in other areas of the business.

DC Risks

Identifying the potential source of theft risks within a distribution facility are typically not hard to determine. Access to the facility is managed. Activities within the facility are controlled. In the stores, there is public access to the building. However, this is clearly not the case in the DC environment. In plain terms, the most likely way for theft activity to be successful in our distribution centers is if employees are involved.

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Often, the greatest opportunities for losses in the distribution center involve collusion between multiple parties—especially between drivers and the employees that load and unload trailers. Merchandise within the distribution center is at its greatest risk when trucks are being loaded and unloaded, which is a time frame that is particularly chaotic with individuals largely concerned with emptying or filling the trailer and getting the truck away from the dock. With attentions focused on labor and speed, employee interest can be diverted, leading to enhanced risks and greater opportunity.

The possible infiltration of our associates by organized criminal groups is also a threat within the DC environment. Perpetrators may gain access through temporary agencies when services are needed, such as during peak selling seasons. Employees with ORC ties may simply hire into the company in order to gain access to merchandise, information, and opportunity. Existing employees may be recruited by ORC operations to participate in illicit activities. Individuals that hired in with honest intentions may also observe and exploit opportunity, and make poor life decisions as a result.

While the direct theft of merchandise is an ongoing concern, the theft or disclosure of information can be just as problematic. Shipment and product information, seals and seal sequences, delivery schedules, truck routes, and other relevant information can be divulged to assist with hijackings and similar operations. Blank forms may be pilfered to create fraudulent documents. Alarm information, CCTV placement, internal layouts, rosters, schedules and shift changes, and other important operational information may be shared or exposed. Additional actions may include intentionally damaging or blocking CCTV or other security equipment, removing batteries from alarmed doors, leaving outside doors or security enclosures opened or unlocked, purposeful distractions, or simply looking the other way. Any and all opportunities may be exploited depending on the complexity and motivations of those involved.

Establishing a Culture

The retail supply chain network demands control to drive efficiency and productivity. Setting the tone early and often by maintaining direction and enforcing rules sends an important message and helps establish a culture of safety, control, and honesty. This is why the fundamental aspects of loss prevention provide such an important barometer of program success. Failure to control basic support functions is an indicator of greater opportunities which in turn can significantly influence the scale of involvement throughout the entire network.

Creating and implementing policies that serve to establish workable controls is an important step. But this must be coupled with appropriate resources to support the control measures as necessary, to include adequate attention and staffing. Programs must be regularly reviewed and monitored to ensure effectiveness, efficiency, relevance, and application. Most importantly, this must have the support of all levels of management, to include implementation, maintenance, enforcement, and resolution.

Finally, as an industry, we must improve our knowledge, awareness, and education regarding the entire retail supply chain network. Programs such as the supply chain course within the LPC certification coursework provide a tremendous resource. But we must also open more effective channels of communication with subject-matter experts, especially those within our own organizations, to gain a more comprehensive understanding of this critical aspect of the retail business.

As emphasized by one industry leader, “Within our industry there is a tendency to place the roles of loss prevention in the stores and in the retail supply chain in very different buckets. However, closer inspection defiantly puts things into a different perspective, as these roles are often much more similar than they are different. I would encourage each of you to pause for a moment and reflect on some of your dealings with your fellow loss prevention peers who work in the supply chain. If you haven’t already done so, take some time and get to learn more about this aspect of the business. If possible, look for opportunities to do some cross-training in these partner departments. Make the effort to expand your professional horizons. These lessons will go a long way in building relationships and adding value your organization and your future.”

For some, this may open the doors of opportunity that lie within the supply chain for growth and development. For others. it may serve as a simple reminder of a side of the business that doesn’t always hold our full attention. For all of us, it should serve as a notice that the role of loss prevention is expanding, and we have a definitive responsibility to keep pace.

This article was first published in 2014 and updated September 12, 2016. 

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Controlling Retail Shrink in Stores with No Loss Prevention

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A question frequently asked by the typical retail customer—and even some loss prevention professionals just getting started in their careers—involves many of the smaller stores where they shop, and how shoplifting and other retail shrink concerns are managed in retail stores with no loss prevention team.

First and foremost, there are very few retail companies that actually attempt to manage their stores with no loss prevention program. Considering the significant impact that retail shrink can have on the business, most retailers recognize the crucial need to manage merchandise losses and protect all of the various assets of our retail stores. As a result, a loss prevention program often exists, but is managed in a different way than might be expected in a traditional department store setting where resources are devoted to loss prevention personnel that are specifically charged with identifying and apprehending shoplifters.

Similar Expectations, But a Different Approach

For example, in many of the smaller, “specialty” stores, it may appear to the untrained eye that these retailers manage the stores with no loss prevention. However, most of these companies have many different programs in place that are intended to help the store manage merchandise theft and other losses. Often the program is locally managed by having loss prevention personnel cover multiple store locations in the capacity of an “area,” “district,” or “regional” loss prevention capacity. The focus of the loss prevention initiatives in these settings is often placed on prevention and deterring theft and other incidents before they happen rather than utilizing store resources to actively attempt to apprehend shoplifters.

From an asset management standpoint this will involve several different levels of deterrence. Physical security tools are often the first resource that comes to mind. This might include common tools such as locked showcases, security lanyards and other physical security devices. Closed circuit television (CCTV) technology can be utilized in many different forms, and can be monitored both locally and remotely, some of which can be accessed by a smartphone app and the touch of a finger.

Managing the various operational controls through the effective use of loss prevention audit programs is another important means of controlling retail shrink in these settings. Limiting opportunity is a prime factor in theft prevention, and stores that fail to run a tight ship in terms of these critical control measures are those that are most likely to have retail theft issues.

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Most certainly, investigative measures play a significant role in controlling losses. Some companies might have loss prevention team members that cover multiple store locations dealing with shoplifting and related theft and fraud issues. Others will create task forces to deal with different scenarios. For example, organized retail crime task forces may be created that may even be collaborative efforts with law enforcement teams or other retailers. Software programs often come into play that help monitor point-of-sale transactions and other store functions. Covert surveillance operations are a common tool. Critical skills such as interview and interrogation training then play a much bigger role in program success.

But perhaps the most important skill for loss prevention professionals to possess in stores with no loss prevention staff present on a day-to-day basis is the ability to teach and train. Loss prevention professionals must reinforce the value of good customer service skills within the sales team, and the critical role that this plays in deterring theft and controlling losses. They must strive to increase store awareness of ongoing shrink issues and the latest shrink trends. By the same respect, a skilled loss prevention professional in this type of setting will be able to tie good loss prevention practices with all of the primary aspects of the retail setting: merchandising, operations, housekeeping and other related retail roles. The ability of the loss prevention team to carry business acumen and retail perspective and then apply those skills appropriately in the stores then becomes a badge of success; leading a program rather than simply supervising a team or executing a role.

Complement the Culture

Different types of retail require different types of management, and the loss prevention culture must be modified to best meet the needs of the business. It’s not simply a matter of the size of the building or the product being sold. It’s about the countless other factors that can and will influence the way that the business operates. One type of program isn’t necessarily better than any other. But they are different, and that should be our focus. Whether learning something for the first time or revisiting fundamental concepts of the business and the profession, all of us must adapt in order to remain relevant.

An education in retail loss prevention is an ongoing process, but in many ways constants are just as important as change. The fact remains that every successful retail organization must have an effective loss prevention culture in order to be successful. Some of the best loss prevention practices are invisible. Whether shopping in these stores or considering a career move in loss prevention embracing that mindset might take your professional development in a new direction. Keep in mind that it’s often just as important to understand what we don’t see, and how that might ultimately change our perspective and a loss prevention career path.

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Fifteen Years of Loss Prevention

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Based on another project, I have spent two months combing over every issue of Loss Prevention magazine. Being a reader from the very beginning and contributing content every now and then, I thought I was pretty familiar with the magazine’s history, its development, and the changes in the industry over the years. I wasn’t wrong in that thinking, but it is amazing how much more you learn when you actually sit down and re-read every issue from cover to cover.

What you realize is that some things have changed, some things have remained the same, and some subjects formerly of great interest and concern to the retail LP industry have literally come and gone. Some issues are here to stay, and new developments and technology are forming the future direction of our business.

I quickly knew that there would not be enough room in one article to accurately describe the changes in the industry evident in the pages of the magazine over the past fifteen years. So this article will be the first in a three-part series. We will begin by looking at the first five years, from the inaugural issue in fall 2001 through 2006. In the November–December 2016 issue, we will cover the middle years of 2007 through 2011. And in the January–February 2017 issue, we will conclude with 2012 through today and look at current concerns and what the future may bring to our industry.

It’s about Time

You are reading the ninetieth issue of Loss Prevention magazine. As Jim Lee and Jack Trlica tell the story, it began with the belief that retail loss prevention professionals needed their own magazine. The magazine’s mission, as originally drafted, was to “provide the industry with a high-quality, contemporary magazine of high interest to retail loss prevention management and professionals.” The concept was introduced in June 2001 at the National Retail Federation (NRF) loss prevention conference in Vancouver, British Columbia. The response from the majority of the LP professionals and vendors in attendance was “it’s about time.”

With that positive encouragement and the support of retailers and vendors alike, the inaugural edition was published and distributed to the industry at the beginning of September 2001. Just days later, the horrible events of 9/11 changed the world. As Tina Sellers stated in the tenth anniversary issue of the magazine in 2011, “9/11 was the trigger that shifted retail loss prevention’s focus from traditional shrink reduction programs to true asset protection measures.” She was right. A lot has changed in our industry since 2001, and Loss Prevention magazine has been there every step of the way.

Looking back over the past fifteen years, there are certain subjects that have become mainstays and building blocks of the magazine’s very foundation. Organized retail crime and shoplifting, crisis management, exception reporting, electronic article surveillance (EAS), credit card fraud, certification, high-shrink programs, the National Retail Security Survey, data protection, people, education, diversity, employee dishonesty, and LP technology are subjects that have been written about and discussed in the magazine over and over again.

Numerous LP professionals have made huge contributions and are a critical part of the magazine’s foundation and success. It is impossible to list them all, but there are certain individuals who have contributed hours and hours and page after page of interesting and thoughtful content over the years. Among them are Doug Wicklander, Dave Zulawski, Bob DiLonardo, Richard Hollinger, Walter Palmer, Read Hayes, King Rogers, Mike Marquis, Gene Smith, Adrian Beck, Shane Sturman, and of course, Jim Lee and Jack Trlica. A big thanks goes to each of them.

And we shouldn’t forget the solution providers who have been tremendous supporters over the years. There are many, but certainly ADT/Sensormatic/Tyco and Learn It Solutions/Enable-u/Verisk Retail deserve recognition as two that have been with the magazine from the very beginning.

I think a way to get a good feel for the changes to the LP industry over the past fifteen years may be to briefly look at some of the magazine’s mainstay subjects listed earlier and their evolution since 2001.

Shoplifting and Organized Retail Crime (ORC)

The very first issue and the very first cover of the magazine in fall 2001 featured an article by King Rogers titled “Organized Retail Theft.” Perhaps it is appropriate that this fifteenth anniversary issue also includes a feature article on ORC.

In his 2001 article, King talked about the evolution from professional adult thieves from foreign countries operating on the east coast to highly organized former felons targeting household products and over-the-counter pharmaceuticals. By the next time organized retail theft was the topic of a major article (in the July–August 2002 issue), the name had changed to organized retail crime. The older term of organized retail theft showed up periodically, but organized retail crime is now used almost exclusively. In that July–August 2002 issue, Target described its investigation strategy that specifically addressed ORC. Highly trained mobile teams, law enforcement partnerships, intelligence gathering, and state-of-the-art technology were the main components of that strategy.

In a later issue, Rogers described ORC as one of the primary trends in retail loss prevention. Numerous articles referenced ORC as part of a bigger story, but the next in-depth look was in the May–June 2002 issue. In that issue GAP talked about its efforts to combat ORC and the importance of partnerships with law enforcement. It was GAP’s opinion at the time that 25 percent of the company’s overall shrink was attributable to professional boosters. The article went on to describe the lookouts, boosters, mules, and a director as the components of an ORC crime ring.

The cover story of the January–February 2005 issue looked at ORC though the eyes of the grocery store industry. It described ORC’s attack on baby formula and outlined professional shoplifting’s possible ties to terrorism. Once again, the partnership with law enforcement was emphasized. An article on Internet fraud in the March–April 2005 issue made one of the first mentions of Limited Brands’ dedicated ORC team. The last major article on ORC during the magazine’s first five years was in the March–April 2006 issue. It described NRF’s and the Retail Industry Leaders Association’s early attempts to connect retailers in the fight against ORC in the form of RLPIN and InfoShare, respectively.

Simple shoplifting is a basic component of ORC and has been a primary focus and concern of LP departments forever. While the subject comes up often as part of the National Retail Security Survey (more on that later) and is mentioned frequently in other articles, I found it interesting that there are only about four feature articles in the magazine’s history that concentrated on ordinary shoplifting. One of those in the September–October 2002 issue looked at what shoplifters say about shoplifting. They said that they fear cameras the most, followed by guards, EAS, and alert employees. The January–February 2004 issue raised the growing concern about pharmacy theft incidents of all types, including shoplifting. A database connecting drug store chains was just being developed at that time.

Crisis Management

As noted earlier, 9/11 was probably the biggest single event that reshaped the thinking and direction of the retail loss prevention industry. As such, it is no surprise that crisis management has been the subject of numerous articles in the magazine. The cover story of the second issue (January–February 2002) featured retail’s response to 9/11. Discussing a wide range of issues including communications, business continuity, physical security, and mailroom security, it basically outlined concerns that would become some of the top priorities of retailers going forward.

In the September–October 2006 issue, Bobby Senn of the New York City Fire Department wrote a very touching and compassionate article describing his experience on 9/11. He talked about how he miraculously escaped certain death when the south tower fell. He further described the lasting effect on him five years later and how telling the story is his way of remembering and paying tribute to his lost comrades and all the other people who lost their lives that day.

Planning for a terrorist attack against US retailers was a topic in the January–February 2003 issue. The need for enhanced food security and numerous other threats were discussed. Seven steps to implementing a workplace violent crisis response plan was a feature article topic in September–October 2004. As with many articles on crisis management, formal planning and regular training exercises were emphasized. The same issue contained an article discussing general business continuity planning. The need for every company to have a formal plan and the importance of having the complete support from senior management were described as critical.

In a November–December 2005 feature article, Jack Trlica described the devastating effect of Hurricane Katrina on major retailers. He talked about the issues of power, tracking down employees, securing data, communications, and looting after the storm.

LP’s role in preventing workplace violence was a topic in the March–April 2006 issue. Preventive practices, screening protocols, types of threats, and early warning signs were described.

Fraud

Fraud of all types is a major concern and area of focus for most retailers and their LP departments. So it makes sense that the subject is covered in numerous articles in the magazine over the years. The subject of identity theft was the cover story of the March–April 2003 issue. It was written by Frank Abagnale, the author of Catch Me if You Can. Abagnale is now an internationally renowned consultant. However, in his younger years he was a master forger and confidence man. In the article, he describes the increasing threat of identity theft, the most common types, how it’s done, and how to protect yourself and your business from it. An interesting side note is that, according to Jim Lee, the cover on the issue containing Abagnale’s identity theft article is one of the favorites, if not the favorite cover in the magazine’s fifteen-year history. It depicts a man’s head being zipped open down the face, revealing a totally different person’s head inside. Lee said it was so popular that only two or three copies remain in the magazine’s office.

Abagnale followed up in the next issue of the magazine talking about check fraud and its threat to retailers, which was interesting to read, but it’s one of those subjects that was then of major concern and is virtually non-existent today.

An initial retail survey around refund fraud and abuse was the topic of a July–August 2003 article. Rates of return in various retail segments and numerous types of return fraud were outlined. A year later, in the March–April 2004 issue, internal fraud perpetrated by retail buyers was the topic. A company’s vulnerability and methods used by dishonest procurement individuals were pointed out.

The March–April 2005 cover story showcased Internet fraud, one of the magazine’s first major articles covering this new and growing concern. The article described electronic fencing, paperless fraud methods used to purchase gift cards, and how easy and relatively anonymous these types of fraud are. An interesting sidebar in this article talked about controlling fraud at eBay. This was at a time that eBay’s sincerity in wanting to deal with fraud was being questioned by many retail LP professionals.

Identity fraud was back again in a feature article in the September–October 2005 issue. This time, recent data breaches of various retailers and banks were described. The article further discussed data protection methods for both businesses and individuals.

The National Retail Security Survey (NRSS) and Employee Theft

Richard Hollinger, PhD, and the University of Florida have conducted the NRSS every year since the early 1990s. In the March–April issue of 2002, Dr. Hollinger expressed concern that participation hit a new low in 2001 with only 120 retailers filling out the survey. He wondered if the survey was even worth continuing and asked how participation could be increased. The survey did continue and participation was up to 150 by 2006. Over the years, participation has seen its ups and downs, but the survey is still going strong today. Dr. Hollinger has speculated that retail mergers, acquisitions, and bankruptcies have made it more difficult to grow participation numbers. In the final installment of this series in January–February 2017, we will compare and contrast the findings of the NRSS over the years.

In addition to often discussing the NRSS and its findings in the magazine, Dr. Hollinger has written a column in almost every issue discussing all aspects of workplace dishonesty. Those articles are too numerous to recap here, but his insights and research have been invaluable to the industry in its fight against employee theft.

Others who have contributed greatly to the subject of dishonest employees include the Wicklander-Zulawski team. From the very beginning in 2001 through today, Dave Zulawski, Doug Wicklander, and the team have written a column in every issue on interviews and interrogations. Their tips, techniques, and how-tos are invaluable reading for any LP professional and have been instrumental in teaching a whole generation how to be better interviewers. Because there are so many, it’s impossible to capture them all here, but the magazine owes a huge debt of gratitude to the WZ team for their contributions and continual support over the years. Given that employee theft is such a big part of retail loss prevention, it’s interesting to note that, like shoplifting, there are very few feature articles in the magazine concentrating solely on the subject. But as mentioned above, the efforts of Dr. Hollinger and WZ have more than covered the subject.

Loss Prevention Technology

Unlike employee theft, feature articles on retail technology affecting retail loss prevention are numerous. In fact, stand-alone technology articles are probably the most numerous of any type in the magazine’s fifteen-year history. From RFID to EAS, biometrics, exception reporting, video of all types, and self-checkout, it’s all here.

RFID was the cover story in the September–October issue in 2002. In that article, Trlica speculated that RFID would be a key component in the future of supply chain management. Six senior retail and solution provider executives quoted in the article touted RFID as the biggest retail game changer ever. In an interesting turn of events, we learned in the November–December 2003 issue that Walmart, which had earlier pushed for total RFID saturation in the industry down to the item level, was modifying its position and approach and would only concentrate on RFID at the carton and pallet level in its distribution centers.

Walter Palmer was bullish on RFID’s future and its impact on retail in his article from November–December 2004. In it, he described the creation of global standards, the shrinking size and cost of RFID chips, IT infrastructure needs, and end-user demands from Walmart and the Department of Defense. Citing numerous benefits, despite some privacy concerns, he concluded that RFID’s future was bright and advised LP professionals to study up and get involved. RFID and EAS as complementary technologies were discussed in the March–April 2005 issue. A lot of time has gone by since then, but basically we are still talking about the same thing—how RFID will dramatically change the retail industry in the future. In the third installment in this series, we will take a closer look at where RFID stands in retail today.

The May–June 2002 issue contains the magazine’s first major article on EAS source tagging. Topics such as which EAS technology to use (AM or RF), the need to deploy EAS in all stores, leverage over manufacturers, and costing were all discussed as part of the questions to be answered to make source tagging viable. The article touts source tagging of CDs and DVDs as a big success and a primary driver of reduced shrink in that category. The November–December 2003 issue found DiLonardo, one of the foremost authorities on EAS, discussing its overall economic proposition. He discussed the fact that early adopters of EAS were struggling with continued cost justification and how source tagging may improve ROI.

Biometric technology was a topic in the March–April 2004 issue. The article described the various types being developed such as finger, eye, DNA, human scent, vein-scan, ear shape, and gait recognition and how they may be used in retail. But the author admitted that mass deployment of the technology could be several years away.

Point-of-sale (POS) exception reporting was the subject of three major articles from 2003 to 2005. In the March–April 2003 issue, JCPenny described the development of its homegrown POS exception reporting system and the success the company had dealing with various POS transaction types. In the cover article from May–June 2004, Walter Palmer covered the benefits and ROI of POS exception reporting in detail. He described the excitement in the LP industry around the subject and projected that additional data streams beyond POS would be added to further leverage the technology. In the July–August 2005 cover story, Jon Grander of Brown Shoe Co. described how exception-reporting data can go beyond investigations and be used as a training tool to modify associate behavior.

Remote video monitoring made the cover of the September–October 2005 issue. The pros and cons of that technology and how it would affect the next generation of LP were discussed. In the article, many industry practitioners gave their opinions on the current and future state of remote monitoring and its ever-increasing value to the retail LP industry.

No discussion of evolving retail technology and LP concerns would be complete without talking about self-checkout. In the January–February 2006 issue, DiLonardo was back describing what it was, how it worked, and the challenges it presented to the LP world. He concluded that self-checkout was here to stay and would eventually grow as a self-service tool well beyond retail.

Shrink Reduction and Loss Prevention Programs

Obviously these two subjects go hand-in-hand and are usually the core focus and concern of most retail LP professionals. A September–October 2003 article looked at Stage Stores’ program for high-risk locations. Lee Bland discussed identification of metrics and outlined the key components of their program including general shortage interviews, awareness programs, operational audits, and physical security issues. She emphasized the need to keep any target store program flexible and concluded by noting that their program had resulted in a 48 percent shrink reduction in targeted stores.
The very next month, in November–December 2003, we got a look at GAP’s approach to specialty retail target store programs. It’s no surprise that the basic pieces and parts of GAP’s plan closely mirrored that of Stage Stores. One interesting addition was that GAP gave cash bonuses to target store managers who met their shrink goals. The company cited a 20 percent shrink reduction as a result of its program.

In the May–June 2005 issue, Dan Faketty began a series discussing a six-step strategic approach to a targeted loss prevention program. One technique he suggested was videotaping interviews with professional boosters who were caught, so the videos could be used as associate training tools in the future.

People, Education, and Diversity

One of the primary missions of Loss Prevention magazine has always been to serve as an ongoing source of information and education to the professionals in the retail LP industry. That education, in some form, is present in virtually every article published. And no discussion about the magazine would be complete without acknowledging the great people who make up this industry.

The focus on people comes in many forms. One is the in-depth interview of an individual by Jim Lee in every issue. Quite often, the subject of the interview is a top LP professional in his or her company who offers great overviews of the issues facing our industry and how companies are dealing with them. But the interview isn’t always at the VP or director level.

One interview that has always been popular and is still talked about today is the one from July–August 2003 showcasing the “go-to people inside LP.” In that interview, Lee talked to six individuals who occupied the number two positions in their LP departments and inquired about how they supported their organizations and their bosses. Interviewed were Jim Carr of Pep Boys, John Matas of Macy’s East, Nick Russu of JCPenney, John Selevitch of Limited Brands, Suni Shamapande of Nike, and Pat Swansick of Hollywood Entertainment. The group talked about the strength needed in their roles, the difficulties of the position, how they managed their bosses, how they lead, and the challenges they needed to overcome.

It’s interesting to look at where these six individuals are thirteen years later. Only one is with the same company, and all but two have left traditional retail. Carr is currently the senior director of asset protection at Rent-A-Center. Matas is the vice president of loss prevention, investigations, and ORC at Macy’s. Reports are that Nick Russu is now in the plumbing business in Texas. Selevitch is currently the director of digital operations for this very magazine. Shamapande is a director at Pricewaterhouse Coopers specializing in retail and LP consulting. And Swansick joined the Oregon Department of Justice as an investigator.

As mentioned, virtually every article published in the magazine is educational in some form. One of the early educational articles that stands out is a two-part discussion by Walter Palmer in the September–October and November–December 2005 issues entitled “Selling Your Proposal to Senior Executives.” Palmer discussed the importance of aligning to corporate strategy, mastering the ins and outs of ROI calculations, creating positive emotions, using statistics effectively, and citing proven research. He further talked about presentation and creating a call to action.

And no discussion of people and the LP industry would be complete without discussing the need for improved diversity. It can be argued that the subject is still the elephant in the room and needs to get better. Over the years the magazine has recognized this and pushed for improvement. Mimi Welch, a noted consultant and diversity educator, wrote a column on diversity in the majority of the issues for the first five years. The column began under the title Women in LP. Welch wrote extensively about women’s issues, their challenges in the LP field, and how to improve the balance in our industry. After two years, she changed the title of her column to Diversity in LP and broadened her focus beyond gender to include all aspects of diversity, including color, background, diversity of thought, and the value that diversity brings to a team. Welch returned for this fifteenth anniversary issue with a contribution in this issue.

In his November–December 2013 Parting Words column, Jim Lee talked about the progress of diversity in the LP industry, the need to set directional goals (not numeric), looking at diversity as a business improvement strategy, creating forums such as diversity councils, and making sure that each candidate pool contained qualified diversity individuals. He went on to call out thirteen women in senior LP positions at that time, but noted the need for continued improvement in all facets of diversity. But that’s getting ahead of ourselves.

I hope you have enjoyed this overview of the first five years of the magazine. It was hard to include everything, but I hope I’ve given you a good taste of the beginning years, emerging LP trends, and the magazine’s contribution to the industry. We will continue the journey in the next two issues. Many, if not all, of the articles mentioned are available on the magazine’s website. If not,PDFs are available by contacting editor (at) LPportal (dot) com.

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ORC and Diverters

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Organized retail crime (ORC) has been in the crosshairs of shrink reduction efforts for a long time now. But for many retailers, battling ORC has seemed less like a victory story and more like an arms race—for every stride made, the opposition adapts. ORC is a part of the retail marketplace, and it operates under the same basic principles as retailers. There is an opportunity to make a profit by supplying a demand, so various ORC players take it upon themselves to become the suppliers. But where exactly is that demand?

It turns out that a significant portion of the demand that ORC players are supplying comes from retailers themselves. Retailers are fueling the ORC system by buying product that may well have already been on their own store shelves, stolen, and completed a round-a-bout loop through the ORC underworld.

Tony Sheppard, LPC

Tony Sheppard, LPC

Tony Sheppard, LPC, national manager of the Organized Retail Crime Unit at CVS Health, has taken it upon himself to combat this self-defeating loop. “Companies are very often unintentionally purchasing stolen product,” he said. “And if they are, they’re the ones creating the demand to steal that product.”

He explained, “A retailer puts product on the shelf. A booster steals that product and sells it to a fence. That fence can turn around and sell the product right back to the consumer. That could be at a flea market, online, in mom-and-pop stores, and other places. But when it comes to health-and-beauty-aid (HBA) products and over-the-counter drugs (OTC), typically this stolen product goes from a mid-level fence to a wholesaler. And then the wholesaler packages it in bulk and turns around and resells it to retailers. Sometimes these are national retailers. Usually they are regional chains, but that’s not to say that large companies aren’t doing it as well. Lots of retailers don’t realize that they’re buying stolen or potentially counterfeit product.”

The key to this convoluted scheme, the groups who “launder” stolen product back into legitimacy, are diverters. Diverters go by many names—wholesalers, salvage companies, alternate source suppliers—but they are the end medium through which retailers are buying stolen product and so fueling the demand that powers organized retail crime.

The Booster-Fence Ecosystem

The easiest way to understand exactly what diverters are and how they operate is to take a close look at the ORC ecosystem that they’re a part of. Boosters—the people who steal products intending to resell them—and fences—the buyers of stolen goods—vary enormously when it comes to the scale of their operations. As these actors deal with increasing volumes of stolen goods, the geographic area in which they operate tends to increase, as does the sophistication of their techniques. So for ease of discussion, they can be categorized into a hierarchy of three tiers.

The level 1 booster is someone who steals relatively small amounts, works alone, and operates locally. If they live in Phoenix, they might never leave Phoenix to steal. They might steal things from their neighborhood CVS and walk right across the street to Mom and Pop’s Market to sell them. It’s not uncommon for drug addicts to fall into this category, stealing just enough for them to get by for the day. “To me, anyone who steals something to resell I would classify as a booster,” said Sheppard. “If they come in and steal five packs of toothpaste and sell them across the street, I’d still consider that ORC, because they’re part of the ORC web.”

When a booster begins to travel to nearby cities to steal, when they increase their sophistication and volume, often teaming up with a partner or a group, they can be considered level 2 boosters—regional players. In comparison, the level 3 booster is a team of coordinated criminals who operate nationally and may sell their product directly to diverters.

The level 1 fence is directly reselling product to consumers. They often appear to be legitimate businesses—they might be a local corner market, a swap shop, or a booth at a flea market. They sometimes recruit and train boosters, and they may buy product from level 1, 2, or 3 boosters. While most of the product a level 1 fence buys goes straight back to the consumer, they may move product daily or weekly to a level 2 fence. “If I bring ten boxes of Crest Whitestrips to him, he may not put that directly on the shelf,” explained Sheppard. “He may hold it and sell it to a higher level fence.”

The primary function of the level 2 fence is to repackage stolen product and sell it to the level 3 fence—the diverter. They don’t buy from the small-timers. They buy from level 2 and 3 boosters, or in some cases from level 1 fences. “For example, in one case we had a fence that drove around a van every day collecting product that seventeen level 1 fences had bought that day,” said Sheppard. “Then they repackage it all, and it goes straight to the wholesaler.”

Path of Stolen Retail Goods

Level 2 fences clean the product, removing stickers, security devices, or other markings that could identify which retailer the product had been stolen from. Then they repackage the product for distribution. They typically operate out of a residential house, a warehouse, or a storage unit. Storage units are appealing because they can be rented cheaply and easily, making it simple to evade detection by switching locations frequently. Some may rent several storage units and spread their product between them to minimize their losses if they do happen to be raided by law enforcement. The level 2 fence is the middleman between boosters and wholesalers. They typically don’t have a storefront, and though they may sell some of their product online, the bulk is sold to diverters.

The level 3 fences (the diverters) complete the circle, selling stolen product back to retailers. They operate as a legitimate wholesaler or distributor, mixing legitimate product with stolen product and selling it back into the retail commerce stream. In many cases, they don’t know that the product they’re buying was stolen, though they probably begin to suspect so.

“A lot of these companies don’t realize that they’re inadvertently buying stolen or counterfeit product,” said Sheppard. “They see a good price, and it’s hard to fathom that someone stole four pallets of Mucinex, so they buy it. I think that the majority probably are suspicious, but they just don’t think about it that much. Over the course of time, maybe they notice irregularities, like a label that hasn’t been removed, or they get suspicious based on the prices. I think they probably get an idea that something’s wrong eventually, but they just look the other way.”

Why Do Diverters Exist?

So why do diverters exist in the first place? Why does the retail marketplace tolerate an avenue for stolen merchandise to be resold to them? “People may ask, ‘How could somebody possibly buy from these places? They must know these goods are stolen.’ But there are other reasons diverters are able to sell goods more cheaply than manufacturers,” said Sheppard.

Diverters exist because smaller retailers—local and regional chains—rely on them as suppliers. If you’re a local retail chain with ten stores, you can’t buy directly from the manufacturer because you can’t meet their minimum order requirements. So the diverter will buy from the manufacturer and then resell to you and a dozen similarly sized companies.

But diverters acquire legitimate products from other places too—anywhere they can get products cheaply enough to resell at a profit. They buy closeout goods. If a manufacturer is set to release a new season’s line of razor blades, they aren’t going to just throw away last season’s razors. Instead, they sell them to a diverter. Similarly, when a large national retailer buys product embedded inside a display, the retailers sells the inevitable excess to a diverter.

Retail overbuy is another source of legitimate product. Massive international retail companies get the absolute lowest prices from manufacturers because of the unrivaled scale of their purchase volumes. Because of their volume discount, they know that they can sell to diverters at a profit, so they may buy an extra million pieces beyond what is needed for their own purposes because reselling to the diverter can easily make small margin at very little risk or effort. This allows other retail chains to get legitimate product from a diverter more cheaply than from the manufacturer.

And that’s what it comes down to—buyers are incentivized to find the lowest prices for the products they decide to stock. For certain products, diverters will have the lowest prices. So retailers will continue to buy from them. “I think the bulk of retailers are clueless about diverters,” said Sheppard. “The buyers don’t work in LP, and I don’t think the thought that the product could be stolen crosses their minds. All retailers buy from diverters, though they don’t like to advertise the fact. Sometimes it’s for no other reason than the manufacturers being out of stock of a product.”

Reboxing and Counterfeit Goods

Diverters buy the cheapest goods they can find. With so many different avenues for legitimate goods to be resold, is it any wonder that stolen product gets mixed in? Even when diverters rebox product, they’re not trying to claim that it’s from the original manufacturer. Some companies, like CVS, won’t accept product unless it’s in a manufacturer spec case—a precaution against, among other things, counterfeiting—though most retailers don’t have that requirement. So how do retailers know that they’re not buying counterfeit goods when buying from a diverter?

Counterfeit goods do occasionally enter the US retail stream. But diverters want nothing to do with anything counterfeit. If retail buyers learn that they received counterfeit goods from a diverter, they’ll spread the word, and that diverter will be blacklisted.

“I’m only aware of a few instances of counterfeit. It only makes sense for specific items and price points,” said Sheppard. “The fact is, when you buy something from somewhere other than the manufacturer, you’re taking that risk. You’re not certain of where that product comes from. But the diverter is never going to knowingly buy counterfeit product. They’ll get cut off completely.” If counterfeit goods do show up, it’ll be the level 2 fence bringing them in from overseas. Some diverters have substantial programs in place to inspect incoming goods, specifically looking to make sure they’re not buying counterfeit.

And, of course, manufacturers are also very concerned with keeping counterfeit products off retail shelves. “Most manufacturers are very helpful with these cases,” said Sheppard. “They’re very concerned with brand integrity. During one of our investigations, we sold a fence tens of thousands of dollars of product, and 95 percent of that product was donated from the manufacturer. They have a vested interest in protecting their brand.”

shutterstock_236633497Online Marketplaces and Meeting Places

Counterfeit goods can be sold online, as can product stolen by ORC actors. While some amount of stolen product is posted for online sale by fences of all levels of sophistication, the bulk of it ends up back in the retail supply chain. “If that sheer amount of product is being stolen, where could it possibly be resold? The bulk of HBA and OTC online is stolen product. You’ll sell some there. But even though online is popular, you’re not going to compete with Walmart. So to sell that much Prevagen, Prilosec, Claritin, or Zyrtec, you’ll have to sell it to retail,” explained Sheppard.

The more important aspect of fences having an online presence is, just like with so many other groups, networking. Occasionally, people who have experience operating with ORC and the grey economy will train level 2 fences and will tell them who the diverters are. But usually diverters find fences online. “If a booster comes in and steals twenty boxes of Prilosec from ten stores, people think that ends up all being sold online,” said Sheppard. “But without question the bulk is sold offline. I do think some investigators spend inordinate amounts of time going after online fences who, from a volume standpoint, aren’t massive pieces. No, the online world is more of a meeting place between the booster and the fence or between the level 2 and level 3 fence. If I am getting started as a fence and list product on eBay, these diverters will buy that product from me. Then they’ll reach out to me privately and say, ‘Hey, any time you have forty-two-count Prilosec, I’ll buy as much of it as you have, no questions asked.’ Well, then I want more of that product, since it’s a guaranteed sale.”

What to Do?

To whatever extent retailers are bringing in stolen product from diverters at the loading dock, they are fueling external theft from their shelves in the front of the store. This cycling of product is an ORC engine that can be stopped—or slowed—at either end. But while most retailers have worked extensively to battle external theft, how much effort has been put toward battling the symmetric problem of unknowingly buying stolen products?

According to Sheppard, “I feel that’s the biggest opportunity—the point between the wholesaler and the retailer. I think that if we the retailers just scrutinize who we’re buying product from, then that’ll go a long way toward eliminating these issues. I’m not saying we shouldn’t buy from diverters, because everybody does, though some will tell you they don’t. I’m just saying we should take basic steps to make sure the people we’re doing business with are legit. There are companies who are literally buying 20 or 30 million dollars of product from people who they’ve met one time, and they don’t even know where their warehouse is.”

One issue is that it’s a tough topic to discuss. Naturally, retailers aren’t thrilled with the idea of sharing all the information of their suppliers with customers or competitors. If a customer goes to buy an OTC drug from the store, that customer assumes that they’re buying into an unbroken chain of custody—from the manufacturer to the store to their shopping basket. “Retailers just don’t like to talk about this,” said Sheppard. “They want you to continue to assume that everything you buy comes in pristine, straight from the manufacturer. One of the arguments that’s made against buying stuff Feature 4_Insideonline is you don’t know who you’re buying from—it could be counterfeit, it could be stolen—but that’s true of retailers too. It’s one of those topics that’s taboo. They don’t want to advertise it to the average consumer.”

And that’s when the retailer is aware of the issue. Remarkably, many retailers don’t even know that they are opening themselves up to this kind of exposure. Or if they do, that knowledge might be limited to certain individuals or teams within the organization. “A lot of companies don’t even know they’re buying from diverters,” said Sheppard. “When it comes to small chains, they don’t have much of a choice in who they’re buying from, and they don’t have a clue that they’re buying this stolen product. At most retail companies, not even LP is aware this is happening, or if they are, they don’t have a seat at the table. Some retailers have small dedicated teams that pursue diversion losses aggressively. But others don’t think that it’s as big of an issue as we here at CVS think it is. They focus on internal theft. External theft is seen as a cost of doing business.”

So what can a retailer do to ensure they’re not contributing to the demand for stolen products? “There are a number of steps they can take, like we’ve done here at CVS. I think the first step is they should scrutinize who they’re buying from,” Sheppard advised. “They should know where the wholesaler’s warehouses are, and they should inspect those warehouses. Is there a vetting process? Do they run background checks on the owners? Do they look to see if the company has ever been sued before? Do they check to make sure there aren’t seven different lots of Prilosec in the same box?

“Finally, I think the communication piece is a big part of the solution. That’s why CVS lets me talk about this. Any company reducing demand will benefit everyone. If we get more companies to scrutinize their diverters, it’s going to benefit CVS because it’s going to reduce theft. If people were more aware and more open about what’s happening and get together and look at this stuff together, without question there’d be a drop in this level of activity. When any one large retailer takes a look at their suppliers and finds an issue with one and stops buying from them, that translates into an instant reduction in demand for items targeted by ORC. It’s a simple chain of cause and effect—stop buying, less stealing.”

Like many issues in retail loss prevention, the issue of injecting demand that ORC feeds off of is an industry issue as well as an individual company issue, and one that can only be truly addressed industry-wide. A company doesn’t know if diverted goods originated on their shelves or their competitor’s. And to some degree, it doesn’t matter since in either case it’s incentivizing ORC actors to continue to operate. Closer collaboration with buyers within the company, as well as fellow LP professionals across the industry, can help to slow this ORC engine and reduce loss for everyone.

SIDEBAR

The cover story of LP Magazine’s inaugural issue fifteen years ago was titled “Organized Retail Theft—From Prison Training Grounds to a Store Near You.” In that article, King Rogers outlined the scope and mechanics of ORC—referred to at that time as ORT—calling for more intensive study, greater awareness, and better legislation to combat ORC.
•LP-PREMIER-1-final (Page 1)And in that decade and a half, a lot has changed. LP Magazine has changed. The LP industry has changed. Retail has changed. Laws have changed, consumers have changed, and criminals have changed. But the battle between retailers and ORC groups rages on. While the basic elements of ORC remain the same, its methods have evolved considerably in response to the technological, methodological, and educational deterrents implemented by retailers.

Rogers got his wishes. We have better information about ORC—universities, industry groups, law enforcement, and internal organizations have all studied the problem extensively. We have better awareness. ORC is one of the most talked about and targeted avenues of loss. And we have better legislation. Federal and state laws have been implemented that address ORC directly, as well as provide a legal framework for associated issues. There is more work to be done on these fronts, but progress has been made.

But it hasn’t been enough. ORC hasn’t gone away, and some might argue that, in fact, it has increased. If anything, it is now at least a known quantity. Maybe ORC is a permanent fixture in the retail arena. Or maybe the ever-accelerating technological revolution will one day render ORC a solved problem. In any case, successfully fighting ORC will depend on tackling both ends of the supply chain—boosters taking product out of the store as well as diverters shipping product in to the store. This conclusion is as true today as it was fifteen years ago, when Rogers ended his article with this: “There is an old saying that you can’t kill a snake unless you cut off its head. In the case of organized retail theft, until the illicit wholesalers are dismantled, the problem will continue.”

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