Couple sentenced to prison, probation for shoplifting ring

A Salem, Oregon, man was sentenced to three years and eight months in prison and his wife was sentenced to probation for their role in a multi-thousand dollar shoplifting ring. Michael Rascon, 40, and Maria Rojas, 35, were arrested in May on charges of unlawful racketeering, money laundering, attempted organized retail theft and first-degree theft by receiving. The couple each pleaded guilty to racketeering and four counts of first-degree theft and were sentenced Monday.

The Northwest Organized Retail Crime Alliance investigated the couple, who officials thought were buying and selling stolen beauty products and clothing. The alliance is made up of Meyer, Safeway/Albertsons and Target Organized Retail Crime Units. KOIN 6 News reported Rascon and Rojas were “selling stolen items online, buying stolen merchandise and even had ‘shopping lists’ of things that they wanted stolen so they could turn around and sell.”

Undercover investigators made seven purchases, totaling more than $11,000, from the couple with a retail value of more than $37,000, according to a news release. After the purchases, investigators notified Salem Police Department of their findings. Detectives served a search warrant in the 100 block of Connecticut Avenue SE, Birr said. A large amount of new retail items still in their original packaging was located at the residence.

“They were directing people to shoplift specific things for them,” Salem police Lt. Steve Birr said after the couple’s arrest. Rascon is also listed on Oregon Department of Motor Vehicles list of sanction dealers. He was fined $17,500 for seven counts of acting as a vehicle dealer without a current dealer certificate.

Following his sentencing Monday, Rascon was transported to into the custody of the Oregon Department of Corrections. Rojas was ordered to report to Marion County Parole and Probation and participate in the Family Alternative Sentencing Pilot Program, a program designed to divert parents of minor children away from prison by enabling them to serve their sentence in the community under supervision. The couple was ordered to pay an undetermined amount of restitution for their thefts.  [Source: Statesman Journal]

Could Amazon Go eliminate shoplifters? Customers “just walk out”

Amazon Go is a new idea in retailing, now being tested at a store in Seattle, that eliminates the need for customers to go through a checkout line. The so-called “just walk out” experience depends on “the world’s most advanced shopping technology.” Customers simply enter a retail store, choose the goods they want, and leave. The checkout process is automated: The selected goods are charged to the customer’s account automatically.

Solving shoplifting
Most of the information I have read about the system emphasizes its benefits in terms of customer convenience. However, another huge benefit would be to essentially “solve” the problem of shoplifting. Anyone – criminal or not – who enters the store, takes items and leaves will be charged for the goods.
Shoplifting has been a huge and intractable cost for retailers for decades. Solving it is no small feat, and the potential money savings could help to pay for wider use of Amazon Go technology. After all, the high costs of the system are cited as one obstacle to wider implementation.

Amazon Go smart phone app
The Amazon Go system involves a smart phone app that identifies the customer as he or she walks into the store (presumably through a turnstile). In addition, there are computerized systems in place that automatically identify which customers pick up which items from the store shelves, and keep a running, real-time tally of who buys what. No need for check-out lines; it’s all automatic. Customers only need an Amazon account, a supported smartphone, and the free Amazon Go app.

Currently, the first Amazon Go store is being tested in Seattle; Amazon employees are using the store now in a Beta program, and it will be opened to the public in 2017. Goods include ready-to-eat food items, as well as grocery essentials ranging from bread and milk to artisan cheeses and locally made chocolate.

Future of Amazon Go


How fast might the technology become more widespread? The Wall Street Journal earlier reported that Amazon envisioned opening more than 2,000 physical stores in the United States, although the company denies the report, perhaps in the interest of lowering expectations.

Amazon describes the technologies involved as “computer vision, deep learning algorithms and sensor fusion.” Suffice it to say the 1,800-square-foot store relies on cameras and microphones, as well as infrared, pressure and load sensors on the store shelves. Surveillance cameras track customers through the store, as does computerized analysis of the sounds they make as they move about. In effect, the store has a continuous awareness of where everything and everyone are at any moment, and movements are analyzed to determine what items are being purchased. The system also relies heavily on Amazon’s cloud computing service.

Eliminating retail shrinkage
Shoplifting accounts for some 38 percent of shrinkage in the retail community. It appears Amazon Go would eliminate most, if not all, of those losses, which could contribute substantially to any return-on-investment evaluation when deciding whether to expand the concept to a wider audience. Customers would likely also be willing to pay a premium for the convenience of not waiting in line, and automated processes tend to lower labor costs. The retail market depends on physical security technologies to fight shoplifting, and is also embracing a variety of those technologies, especially video surveillance, to boost the level of customer service. Amazon Go is a showcase for how far technologies have come, and it also suggests other ways innovation could be used in the physical security market and beyond. By automating the checkout process, while also eliminating shoplifting and adding customer convenience, the concept of Amazon Go might just be a winner. That is, assuming customers wouldn’t rather just shop online and have goods delivered. [Source: Source Security]

Pedestrian struck by car after shoplifting

A man was struck by a car in downtown Duluth after shoplifting on Tuesday, police said. The Duluth Police Department responded to a pedestrian being struck by a vehicle at First Street and First Avenue East at 4:35 p.m. Tuesday, according to police spokesman Ron Tinsley. The 30-year-old man was transported to a local hospital with unknown injuries.

The man crossed the road while fleeing a business where he had shoplifted, and he didn’t cross at the intersection or within a designated crosswalk, Tinsley said. He was cited for failing to use a crosswalk and theft. The 63-year-old driver wasn’t impaired or distracted, according to Tinsley.  [Source: Deluth News Tribune]

Woman sentenced to years behind bars for burglary, shoplifting

A Fayette County, West Virginia, woman will spend time in prison for burglary and shoplifting. Rebecca Webb was sentenced Tuesday to 2-40 years in prison for two counts of burglary and third offense shoplifting, both felonies, according to Fayette County Prosecutor Larry Harrah.

Harrah said Webb burglarized homes in the Glen Jean and Mount Hope areas of Fayette County from May to September of this year. In October, co-defendant Brian Vanover was sentenced to 1-10 years in prison for his role in the May burglary.  [Source: WV Metro]

How sporting giants Nike and Adidas are pushing the future of retail

The future of retail features a basketball court. This fall, the world’s two largest athletic-gear makers—Nike and Adidas—opened massive multi-floor stores in Manhattan as a way to champion a more immersive retail experience to promote the sports brands in a way that cannot be delivered by department stores and specialty sports retailers. Those features include customization of jerseys and shoes, athletic consultation services, and same-day delivery service in New York City. “Consumers just expect more,” Heidi O’Neill, Nike’s president of global direct to consumer, told Fortune at the company’s new 55,000-square foot store in SoHo. “They expect more immersive experiences at retail like you are seeing here.”

The new SoHo store from Nike is the second major retail space the company has opened on the island of Manhattan. The first was the Niketown store in Midtown, just south of Central Park. A third is planned on the trendy Fifth Avenue, where Nike this month signed a lease to take over a seven-floor, 69,214-square-foot space. Adidas, meanwhile, already operates a large store in SoHo but debuted a new, roughly 45,000-square-foot store on Fifth Avenue this month. Smaller rival Under Armour is also planning a big, splashy New York City push as it plans to open a flagship store in a space that once housed the famed FAO Schwarz toy store.

How Nike Is Doing It
Nike is placing a big bet on mobile integration and shoppers can book one-on-one appointments using a dedicated mobile app. Stores will feature massive digital screens that customers can use to learn more about when products will launch, as well as get info about in-store events. Shoppers can get customized items delivered quickly to their homes or hotels. Even the fitting rooms are swanky: adaptive lighting can show a shopper what gear would look like in a yoga studio or for a night run. The SoHo store is built to boast three sports trial zones. There’s a treadmill surrounded by two cameras that can capture data about a runner’s stride—and then make a suggestion on what shoes might be best. Video screens depict scenes in Central Park or the downtown neighborhood Battery Park. On other floors, there is a soccer trial zone for testing cleats and a half court for shooting hoops.

O’Neill said Nike will continue to experiment with major retail experiences in big cities, but won’t apply the same approach that the company took in SoHo. “We wanted these sports to feel right for this market,” O’Neill said. “Basketball for New York City says ‘we get you New York.’ The running community here is also strong.” The sneaker wall at the SoHo store is the largest at any retail location in the world—O’Neill said that reflects the important sneaker-driven culture and style that New Yorkers embrace. For Nike, the SoHo store is part of a broader push to boost direct-to-consumer revenue to $16 billion by the end of fiscal 2020. That business—which includes sales at Nike stores and the online business—has been outpacing the overall sales growth of late. The reason why it is important for Nike and other athletic purveyors to take control of their own retail experience is because traffic at key wholesale partners, notably department stores, has slowed. And a number of specialty sports sellers, most notably Sports Authority, have gone bankrupt—resulting in the loss of major physical retail shelf space.

The Midtown Manhattan Stadium Adidas Built
When you walk into Adidas’ Fifth Avenue store, it feels like you are entering the tunnel of a football stadium. There are also locker rooms instead of dressing rooms and stands that can be used for seating to watch live games. Adidas also built four customization stations so shoppers can create their own apparel and footwear designs.

“If this store was four floors of product, people would come the first time and then not come again,” said Mark King, president of Adidas Group North America. “The challenge is that when you come here three months from now, it needs to be constantly changing.” King said the store is more fluid—especially the bottom floor which can change to promote new products, host celebrity events or other new initiatives that Adidas might tout. By making the retail store a destination, it plays into the “experience” that shoppers are expecting today if they are to be lured to a brick-and-mortar store.

Executives at Adidas have placed a bigger bet on six global cities—including New York and Los Angeles in the United States—where the company will double down on marketing and retail experiences with the hope that by building a strong brand experience in metropolitan areas, the trends would then fan out to other regions. Building a massive new New York store plays into that strategy. “When you take a city like New York, which sets trends in almost everything, and you create energy here—within literally hours the whole country knows about it,” King said. “You then capitalize on it through retail partnerships in other regions of the country.”

Adidas is also planning to control 60% of the brand’s global retail space by 2020—up sharply by about 30% today. Building new stores, as well as store-within-a-store experiences in department and specialty stores, will help the company achieve that goal. When Adidas controls the retail space, King says it generates higher sales per square foot—better for both the brand and retailers. The new Nike SoHo store is 55,000 square feet and has trial zones to test running, soccer and basketball gear.  [Source: Fortune]

The post Breaking News in the Industry: December 16, 2016 appeared first on LPM.

The concept of the retail return is a relatively new phenomenon. In the mid- to late-twentieth century, retailers began accepting returned merchandise as an attempt to gain a competitive edge. The concept worked.

For many retailers, flexible returns have become synonymous with quality customer service. Nordstrom, for example, has built a reputation for no-hassle returns—an attractive quality for customers who fear the burden of an unhappy purchase. However, as flexible return policies became commonplace, so did return fraud and return abuse. In 1995, for example, STORES magazine reported return fraud and return abuse had become a very serious problem for the retail industry, and warned it was likely to worsen.

Many years later, this foreboding prediction has been realized in a big way. Abusive return fraud schemes have expanded at a disturbingly alarming rate, putting merchants in a seemingly “no-win” balancing act—losing money from fraud and abuse versus needing to keep returns flexible.

Indeed, modern shoppers view flexible return policies not as a privilege, but as a right, and many prefer to make the final purchase decision at home. These customers may refuse to shop at stores with overly stringent return policies, turned off by the very idea of having to “negotiate” a return. The multitude of shopping alternatives available contribute to the expectation that shopping should be fast, flexible, and fair. If one store doesn’t have a compliant return policy, shoppers have many other options, making flexible returns a necessity for any retailer aiming to stay competitive in today’s market.

The Impact of Return Fraud and Abuse

Retailers surveyed by the National Retail Federation in 2015 estimated that $9.1 billion of annual returns are likely fraudulent—a cost inevitably passed on to consumers and shareholders. Although the direct financial losses resulting from return fraud are substantial, the peripheral losses can be just as damaging.

Retail return fraud and abuse is detrimental to sales, gross margins, inventory management and profitability. Consider, for instance, the time and money spent on simply processing the return itself, restocking returned merchandise, reevaluating its worth, or determining where, how, or even if it can be resold. Returned merchandise unfit for resale is doubly impactful, as the retailer loses both profit from the original sale as well as dollars spent on acquiring and merchandising the item itself.

Adding to this problem is that fact that return policy abusers have become increasingly savvy, developing complex schemes to borrow and/or return multiple items or very expensive items, for convenience, cash, or credit. Offenders with even the most basic knowledge of computers and printing are able to use these technologies to deceive retail employees to take advantage of return policies.

Kevin Thomas, former manager of corporate loss prevention investigations for Office Depot, reports that many types of return fraud and return abuse are computer-assisted. “Some of the emerging forms of return/refund fraud involve phony or altered receipts,” said Thomas. “Computer-generated UPCs placed on top of the actual UPC to generate more refund dollars and gift card fraud.” Such sophisticated techniques present an ongoing challenge for retailers—how to minimize return fraud and abuse without creating restrictive policies for legitimate consumers.

Types of Return Fraud and Abuse

Unfortunately, in the perpetual battle to minimize retail loss, return fraud and abuse is one of the most insidious and difficult threats for retailers to control. While some forms of loss, like shoplifting or employee theft, are defined by a clear act—the illegitimate removal of assets— return fraud and abuse is more complex and thus more difficult to measure, assess, and control.

Return fraud and abuse exists on many planes, with varying levels of “right” and “wrong.” The teenage girl who knowingly returns a once-worn party dress is a return policy abuser, as is the organized retail crime ring member who steals electronics in bulk and then returns them for hundreds of dollars in cash or for a loaded gift card.

However, law-abiding consumers make valid returns every day, and retail merchants would be ill-advised to discourage them from doing so. No retail chain wants the reputation of being strict on returns in today’s competitive retail environment. Such draconian policies could permanently cost a retailer legitimate consumers.

Return Fraud and Abuse Defined

The first step in addressing the issue of return fraud is developing an understanding of its many iterations. David Speights of The Retail Equation (formerly The Return Exchange), a leading technology provider of fraud and abuse detection, offers the following three categories as primary return fraud and abuse definitions:

Opportunistic Return Abuse. This type of return fraud and abuse activity takes advantage of consumer service-oriented return policies for personal gain, often on an opportunistic, unplanned basis. One example according to Speights is price arbitrage.

“Suppose an item is purchased for $80 and the customer loses a receipt,” said Speights. “If they later return the merchandise without a receipt, the customer may receive $100 in store credit for their return if the merchandise was bought on sale. It is likely the customer will not point out this discrepancy.” In this case, the customer has committed fraud by taking advantage of the retailer’s mistake.

Intentional Return Abuse. These schemes take fraud a step farther by using the return policy exclusively for personal gain on a regular and planned basis. A key difference between normal return activity and abuse is intent—a return abuser intends to use and return merchandise and often does so on a repeated basis.

The most common example is retail “renting” or borrowing. This practice is defined by the purchase and short-term use of a non-defective product with the ultimate intent of reclaiming the cost by returning it later as if new. Studies have identified retail renting as the most common form of return fraud and abuse, accounting for up to 52 percent of fraudulent or abusive returns. Offenders apply this practice to a wide array of products, from clothing used for a special event to electronics and tools used for particular one-time or short-term events or jobs.

Renting of clothing and accessories has become so prevalent that smaller retailers have emerged to serve the explicit purpose of renting apparel. Members pay a monthly fee in order to borrow the latest and trendiest in fashion for a set period of time.

Retail renting renders legitimate the practice of renting via explicit procedures, though mass merchants and nationwide chains appear unlikely to adopt the practice in the near-term. Instead, larger-scale retailers apply more subtle policies to offset the effects of renting, including setting return time frames, tracking frequent offenders and their affiliates, and applying “restocking fees” that dissuade consumers from buying and returning higher-priced merchandise.

Return Fraud. This most extreme form of return fraud and abuse involves activities that clearly violate the law, from check fraud to return of stolen goods.

• Check Fraud—This type of fraud involves the purchase of an item with a bad check, and return of the item before the check clears. Gift card fraud can sometimes work in the same manner, though it requires more elaborate, time-sensitive scheming on the part of the fraudster.
• Price Manipulation—Price tag or container switching, price alteration, or the practice of replacing one item for another before making a return are all iterations of price manipulation. For example, an offender might purchase two similar items with different prices, switch the packaging, and return the cheaper item at the higher cost. The more expensive item can then be sold on-line or to a fence.

Retail loss prevention managers report even more sophisticated forms of price manipulation are on the rise. “[Offenders will] put a different item’s UPC on the item to buy it for less and then take the UPC off and return it for full price,” said Kristy Schafer, formerly of Shopko, a national chain of general merchandise and pharmacy retail stores.

Such advanced types of fraud require some technical expertise and knowledge of UPC codes and labels to accomplish. Counterfeit UPCs can sometimes be obtained via on-line chatrooms and local fences.

• Returning Stolen Merchandise—Using stolen merchandise for return fraud has become slightly more difficult, as many retailers now require a receipt for a cash refund. However, serial offenders will seek receipts out in order to facilitate fraudulent returns. For example, if a receipt isn’t available, the returner may accept a store credit, which in today’s connected world is easy to resell online at a discount, or resort to tender fraud, or the practice of converting a non-receipted return into a cash return. Other return fraud offenders search store parking lots and trash for usable receipts.
• Receipt Fraud—This can take many forms, though the ultimate goal—to produce a receipt with which to validate a fraudulent return—remains the same. This type of abuse developed in retaliation to retailers’ evolving approach to return policy, which has increasingly required a printed receipt for a cash return.

Retailers have adopted this more restrictive stance in response to certain abuses, such as the emboldened fraudsters who enter a store, grab an item from a display, and immediately return it for a cash refund. Today, most retailers require a receipt issued within the past ninety days before issuing a cash or credit refund.

Conversely, non-receipted returns are usually issued a merchandise credit. Return abusers have turned to various tactics in order to acquire the receipts necessary to guarantee a cash or credit refund. These tactics include printing counterfeit receipts, forging receipts, purchasing receipts from the Internet, or as mentioned, scavenging for discarded receipts in stores, trash bins, or parking lots. Once a receipt is obtained, the offender simply goes through the store, picks up all the items on the receipt, and returns them for cash, a practice referred to as shoplisting.

Organized Retail Crime

Adding to the impact of these return fraud and abuse categories is organized retail crime (ORC). One of the most serious threats facing the retail industry today, organized retail crime costs retailers billions of dollars each year. ORC networks attack retailers with a savvy gained from years of criminal experience, targeting bulk quantities of high-demand goods. Often operating with large pools of cash, ORC groups are able to carry out large-scale return fraud schemes with devastating financial impact.

These gangs employ a multitude of return fraud tactics, ranging from systematically returning stolen items to store service desks for cash refunds or store credit/gift cards to providing cheap counterfeit goods and repackaging them for cash returns.

ORC groups are particularly nefarious in their strategic, pre-planned approach to fraud. They will use retail outlets as ways to launder money, using retail goods for cash conversion or work in collusion with store employees to obtain multiple cash refunds. ORC field operatives may also be violent to intimidate employees to facilitate their escape, putting shoppers and employees at risk.

Furthermore, the profits gleaned from ORC are frequently funneled into other illicit activities, like drug trafficking, illegal immigration, or even terrorism. It is, therefore, imperative retailers form a targeted approach to identifying and intercepting such abuse schemes using software to detect, track, and address offenders and offending patterns.

Internal Return Fraud and Abuse

Internal return fraud and abuse committed by store employees is doubly harmful to retailers, as it stems from the very individuals in charge of protecting assets. This irony also makes internal fraud particularly difficult to identify and assess since interviewed retailers report offenders are increasingly looking for ways to steal more while covering their tracks.

Loss prevention managers must perform elaborate investigations in order to detect, track, and respond to losses from internal sources. Like organized retail crime, internal fraud can result in serious financial losses. Store managers and employees are intimately familiar with store policy, and when dishonest employees manipulate procedure for personal gain, hundreds of thousands can be lost.

Dishonest employees will credit legitimate as well as faked returns to gift cards or credit card accounts for themselves as well as family and friends. Exception-reporting software that detects POS and inventory anomalies, as well as employee hotlines and surveys can provide both deterrence and detection. Likewise, thorough pre-employment screening using background, interview, and testing data along with good store leadership execution lower the probability and effects of internal return fraud and abuse.

Identifying and Addressing Return Fraud

At the most basic level, the benefits of return fraud and abuse prevention should exceed the costs involved in preventing it. The goal is simple—target the types of fraud that undermine profit the most and develop high-impact methods to address those types.

It wastes time and money…not to mention a detriment to customer service…to attempt to target all fraudulent returners, especially since some forms of return fraud are defined by intent. A better approach is to develop a system that accurately identifies “bad” or high-impact returners first by pinpointing the specific behavioral patterns characteristic of fraud and abuse.

Retailers and loss prevention experts use a range of different return procedures to minimize the effects of return fraud. Many employ manual store-level authorizations for handling return authorizations, as well as verifying legitimate restocking. This means store personnel are in charge of interpreting and applying return policy to individual returns and identifying fraud. Fighting return fraud using this method of processing returns is dependent on employees’ subjective assessment of both the return and the customer.

Some retailers use POS refund systems, either purchased from an outside vendor or developed in-house, to process returns. Such systems allow retailers to automatically tie receipted returns to the original receipt value, or, in more sophisticated and integrated systems, allow retailers to swipe a driver’s license or other ID in order to obtain customer information, such as name, address, and phone number. If a POS system is unable to perform this function, the information is typically entered manually.

Automated POS systems are helpful in pinpointing “bad” returners—that is, systematically identifying those repeat offenders whose purchase/return profile is consistent with return fraud. Other systems are designed to go even further by looking for individuals with links to high-impact returners via data mining.

Receipted vs. Non-Receipted

Too often a discrepancy exists between how retailers handle receipted versus non-receipted returns. Many current return policies and systems are not effective in the pinpointing of “bad returners” in possession of some form of receipt. In fact, fraudsters with stolen or forged receipts are often able to make returns with few questions asked.

In a survey of return procedures conducted by LP Magazine, the majority of retailers stated their return procedures differ for receipted versus non-receipted items. A customer without a receipt will frequently be asked for personal information, such as name, address, and phone number. Most store procedures also require employees to assess price and timeframe and obtain management approval before accepting a non-receipted return.

However, procedures are often more relaxed for receipted returns, since receipted returns are perceived as legitimate. Because so many forms of return fraud and abuse are based on forged or otherwise illegitimate receipts, there is significant potential for retailers to minimize return fraud and abuse through a more precise system of targeting bad returns—for both receipted and non-receipted.

Anti-Return Fraud Technologies

Systems programmed to identify bad returners and analyze past behavior before authorizing a return can help resolve this situation. Such systems are able to immediately identify the individual and determine whether or not he or she fits the profile of an abusive returner, regardless of whether or not a receipt is involved.

As Speights explained, this type of software “uses the transaction history of the consumer or employee to identify behavior that is associated with return fraud and abuse. By using predictive modeling techniques, it can create hundreds of variables on each consumer and employee. These are combined in sophisticated mathematical models to determine the likelihood of fraud and abuse.”

The key to effectiveness with such a system is the definition of a fraudulent return. The nature of this definition will vary among retailers, but will consist of objective criteria specifically developed to target fraud, such as:

• The frequency or number of purchases versus returns processed for that customer, whether or not any of these were tagged as fraudulent,
• The type of products the customer purchased,
• The employees involved in the transaction,
• Store locations, and
• The average dollar value of each purchase.

These systems eliminate the subjectivity inherent in employee-handled returns and may help the retail industry stay ahead of the adaptive criminal. More advanced technologies may employ heuristics and actually learn to evolve to serve changing situations, making the challenge of adaptation that much easier.

“Adaptation is a newer idea in fraud-prevention systems,” Speights said. “Certain products are programmed to adapt, and in the future they will be able to detect and prevent fraud even as fraud patterns change. Fraud-prevention systems of the future will receive feedback on their effectiveness and adjust their behavior in real time. Real-time adaptation will be just as important as real-time fraud prevention; in fact, people will not think of one without the other.”

The Future of Return Fraud Prevention

Adaptation is an ongoing process. As retailers begin to use more comprehensive, high-tech return fraud-prevention systems, offenders will, in turn, devise ways to either avoid or take advantage of them—a fact most retailers understand and accept. “As technology evolves,” Thomas explained, “refund fraudsters will continue to develop ways around the system enhancements.”

Examples of this type of system-avoidance involve making infrequent returns, returning items to different stores, or using other IDs or people to make the return. Before such retaliations become a problem, retailers should work to adopt more comprehensive return fraud-prevention systems.

“Large, shared databases will be essential in the future,” Speights said, “because it is the only way to combat multi-retailer fraud schemes. Retailing is heading toward more data sharing in order to prevent fraud, and sharing will be essential to prevent multi-retailer schemes.”

RFID is yet another technological advance with potential for minimizing the impact of abusive returns. Attached to high-priced, high-loss items, RFID integration at the product level may eliminate the need for paper receipts altogether. Assuming tags are not “killed” at the POS, item-level history retrieved at the return counter can inform retailers of details like the product’s point of purchase, and original form of payment.

Although not cost effective for all products, applying this technology to highly coveted products or integrating it with automated return systems could dramatically reduce fraud. Customer service could also benefit, as legitimate shoppers could enjoy easy, quick returns without having to track down receipts.

How will consumers react to more elaborate return policies? The media is already warning shoppers of a shift in return policy as a result of return fraud losses, and suggesting ways to avoid problems at the returns counter. Whether consumers will accept stricter rules as an unavoidable result of return fraud and abuse is not known. However, without some form of systematic adaptation, return fraud is only going to worsen in scale and impact.

The criminal process is ever-changing, continually adapting to the retail environment and the loss prevention strategies within it. Crime is impossible to stop, but it can be curtailed. In the retail industry, this involves staying ahead of the curve, anticipating the offenders’ moves, and developing and implementing proactive solutions before a problem grows too large.

The ever-increasing cost of return fraud positions it as one such problem. By developing and implementing procedures that pinpoint fraudulent returns in a systematic, objective manner, retailers can stay one step ahead of offenders, and protect the bottom line.

This article was first published in 2006 and updated on December 20, 2016. 

The post The Evolving Impact of Return Fraud and Abuse appeared first on LPM.

Changing Roles and Challenges Inside Home Depot Loss Prevention

A discussion on professional development and career growth.

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… Read the full article.

Interview and Interrogation Training: Proper Dress for an Interview

WZ / IAI Tip of the Week

In this week’s International Association of Interviewers interview and interrogation training tip provided by Wicklander-Zulawski, Wayne Hoover, CFI discusses the way that you should dress for your interview with a dishonest associate. The way that the interviewer dresses definitely matters. Every research interview conducted by Wicklander-Zulawski has the suspects mentioning the clothing of the interviewer. One guy talks about when he stole from his company in was in an interview where the interviewers showed up in suits and he was in a t-shirt and jeans. The outcome in the suspect’s mind was, “they don’t care about me.” … Read the full article and watch the video.

Police Superintendent-in-Chief Sends Powerful Message to LP Magazine Audience

How Boston is working to bridge the gap between the community and the police department.

“I’m proud to have you as part of my family. “

That was the tone and the message shared by Superintendent-in-Chief William Gross of the Boston Police Department as he addressed the audience at the 15th Anniversary Meeting for LP Magazine in Sanibel Island, Florida on Wednesday.

The first African-American chief in the history of the Boston Police Department, Gross shared his personal story as a police officer, and how the department has worked with the community—often those in depressed areas who have historically maintained a conflicted relationship with the police—to create a winning culture and a strong, positive relationship between the community and the police department… Read the full article.

Words to Avoid During the Interview

Wicklander-Zulawski / International Association of Interviewers Interviewing Tip of the Week

In this week’s WZ / IAI interview and interrogation training tip, Dave Thompson, CFI discusses the importance of word selection during an interview. As much as interviewers focus on non-verbal behavior, there is substantial influence that could be made with the type of words spoken.

Primarily, any words that are associated with harsh consequences or punishment should be avoided as this would only increase the level of fear that the subject has. If the interviewer uses words such as police, interrogate, prosecute or terminate it may cause an unwarranted fear in the subject’s mind and therefore increasing their resistance. Another simple word that may derail an interview is an improper use of the word “you”. If the interviewer personalizes the conversation too early by using the word “you,” it may cause the subject to become defensive and agitated. It’s important that the interview narrate stories in the third person and minimizes the use of harsh words in an effort to allow the subject to come to a rational decision without tipping the scales negatively… Read the full article and watch the video.

What Does a Loss Prevention Associate Do?

Loss prevention associates perform a range of crucial functions in the retail environment.

Loss prevention—also known as asset protection—is an ever-broadening, ever-growing field that has a lot to offer an entry-level job seeker. According to the Loss Prevention Foundation, the industry’s “wide spectrum of career options and tremendous potential for professional growth” make the job a rare find in today’s labor market. And the projected job growth—5 to 8 percent between 2014 and 2024—is on par with other industries, according to the Occupational Information Network (O*NET). It’s worth a closer look. But just what does a loss prevention associate do, anyway? … Read the full article.

The post LP Insider’s Top Five Professional Development Articles of 2016 appeared first on LPM.

Does Concealment = Shoplifting?

In most states, intent is the driving factor in determining whether to charge a shoplifter.

It is a common misbelief among shoplifters that an individual must exit the store with unpurchased merchandise before being civilly liable for statutory civil damages.It is also a common misbelief among those shoplifters that if the merchandise is not physically damaged, they would not be liable for civil damages.The second misbelief was addressed in an article entitled “No Damage Does Not Mean No Damages.”

This article only addresses the first misconception. It is not intended to influence store policy or suggest a departure in the world of loss prevention from well-thought-out policies designed to both increase the likelihood of successful criminal prosecutions and protect retailers from frivolous civil claims and litigation from those committing acts of theft.This article also only addresses civil law and is not intended to describe the required legal elements for or the higher burden of proof that must be met to prove a criminal case for theft… Read the full article.

Shedding Light on Retail Theft Statistics

Shoplifting, organized retail crime and internal theft all contribute to retail loss.

Loss prevention and retail industry professionals have a responsibility to stay informed about the latest retail theft statistics. This article provides a snapshot of what retailers currently face when it comes to loss and theft.

Inventory shrinkage refers to the difference between the merchandise a retailer shows in its records and the actual physical count of merchandise on hand. This difference can be attributed to operational errors, internal loss, and/or external loss. Shrink is an inevitability in the retail environment, but loss caused by retail theft is something LP and AP professionals work hard to prevent… Read the full article.

Welcome to California: A Shoplifter’s Paradise?

A new law causes retail theft to jump.

On Election Day in California, November 14, 2014, a crowd gathered outside a courthouse wearing fake handcuffs and carrying signs saying “End Mass Incarceration.” On that day, California passed Proposition 47, which would reduce punishment for more than one million people.

Passing by a 60 percent to 40 percent margin, the bill was intended to reduce overcrowding in the state’s prison system and treat low-level criminals with more compassion. As part of the bill, shoplifters would now have to steal over $950 worth of goods to be charged with a felony. Penalties for drug possession and writing bad checks were also reduced. In the early stages, Stanford University’s Justice Advocacy project found that Proposition 47 had reduced the state’s prison population by 13,000 and would save the state $150 million in the first year… Read the full article.

Are Thefts by Senior Citizens Rivaling Juvenile Shoplifting?

Shoplifters age just like the rest of us.

For many years, the stereotype of the amateur shoplifter has been a juvenile shoplifting offender pilfering candy, makeup, and other minor items from retail establishments seeking a deep discount or a cheap thrill at the expense of a neighborhood store or market.

Those of us in loss prevention have long preached that the deeper concerns of the retail theft epidemic that results in tens of billions of dollars in losses each year has little to do with a juvenile shoplifting a candy bar, and more to do with the complex challenges facing the retail community. We discuss the broad scope of criminal activity from the growing concern of organized retail crime, the ongoing reach of employee theft and fraud, credit card issues, robberies, burglaries, the frustrations of paperwork errors, the complexity of data breaches and e-commerce incidents, and a host of other concerns that contribute to the retail shrink problems faced by businesses across the globe… Read the full article.

Exactly What is a Shoplifter and How Much Do You Know?

LP professionals should be well versed in shoplifting techniques.

When asked “What is a shoplifter?”, most readers of the LPM Insider probably have a pretty good idea of how to respond. I do too, but it’s interesting what you learn (or re-learn) when you actually do some research on the subject. If you look up the definition of shoplifting, you will find different variations in wording. Some reference larceny, some concealment, and others talk about intent. But the basic definition boils down to this: shoplifting is the “theft of merchandise from a store or place of business.”

The terms “shoplifting” or “shoplifter” are not usually defined by law. The crime of shoplifting generally falls under the legal classification of larceny and can be a misdemeanor or felony depending on the dollar amount stolen. State by state, larceny laws vary greatly. For the average person, shoplifting is sometimes confused with burglary or robbery. However, all three are different. Burglary refers to unlawful entry into a building with the intent to commit a crime, especially theft. If a burglar is successful, they will not come in contact with another person. Robbery, on the other hand, is the taking of something (usually money or merchandise) using force or fear. Other forms of retail theft, such as price switching and refund or credit card fraud, are not usually lumped into the shoplifting category. Experts believe shoplifting is common because it is a relatively unskilled crime with low entry barriers that can be fitted into a normal lifestyle… Read the full article.

The post LP Insider’s Top Five Shoplifting and ORC Articles of 2016 appeared first on LPM.

Are you in charge of your company’s technology budget? How do you know whether the new loss prevention equipment you’ve just rolled out in five stores is performing as it should? What metrics are you using to gauge its success?

Today’s LP practitioners must be able to provide justification for their technology choices, and evaluating new loss prevention equipment for its effectiveness is the best way to determine whether it is having a positive financial impact. Tom Meehan, CFI, considers two primary methods for testing a new technology’s impact in his most recent Future of LP column for the November-December 2016 issue of LP Magazine. From the column:

Consider the use of electronic article surveillance (EAS) tags; it may vary in effectiveness due to the type of theft risk in particular locations. Sure, EAS tags will likely scare off the opportunistic shoplifters, but will it have the same impact on organized retail crime (ORC) offenders? By taking a look at data for your locations, you can invest capital more intelligently than arbitrarily assigning new technology to your top-shortage stores. There are many ways to test a new product to come up with valid conclusions, but it essentially falls into two main categories: pre/post (crossover) testing and comparable-store (parallel) testing.

Crossover testing occurs in two time periods—before and after the technology is introduced. This is the most powerful study design because we can see how our metrics change with the introduction of a new technology in a store. Before the tech is installed, we get to see what baseline activity is like for a particular metric, and after the tech is installed we can see its direct impact on our metrics of interest. This also allows us to use significantly smaller sample sizes when compared to a parallel design.

Meehan admits that designing pilot studies and testing new loss prevention equipment can have its challenges. He emphasizes the importance of finding the right personnel for the job – someone who can leverage available information sources to extract useful insights. Check out “Going Beyond the Gut: Fact-Based Research” to read the full column. You can also visit the Table of Contents for the November-December 2016 issue or register for a free subscription to the magazine.

The post Using Fact-Based Research to Test Loss Prevention Equipment appeared first on LPM.

Groups team up to fight organized retail crime

Law enforcement officials, local retailers and city prosecutors are joining forces to fight Organized Retail Crime. They have launched the “We Watch, We Prosecute” campaign this week to combat the crimes that cost retailers and citizen in Pima County, Arizona, more than $5.9M according to the group.

The program aims to do this by educating retailers, consumers, and suspects. The group wants the suspects to hear the warning message “If you rip off a store, you will go to jail.” Another strategy is proposed legislation that would require anybody convicted of misdemeanor shoplifting or retail theft to be finger printed. Prosecutors say this would help make a stronger case to charge these suspects with felonies.  [Source: Tucson News Now]

Woman wanted for felony shoplifting, has five prior theft convictions

A Columbus woman who has five prior theft convictions in three counties, is wanted on a felony shoplifting charge in Platte County. Columbus PD stated in an affidavit that 24-year-old Jasmine Taylor and another woman were reportedly seen leaving a store in Columbus with un-purchased goods stuffed into oversized purses the two were carrying. After leaving the store, the two women started heading west.

The person who drove the two women to the store then pulled up next to them, before they reportedly told the driver to keep driving. The two were then seen stopping, where they dumped some of the stolen goods into a storm drain, according to the affidavit. After dumping some of the items, the two women then met up with their driver in a hotel parking lot. Taylor has two prior shoplifting convictions in Platte and Madison Counties from 2010 and 2013 respectively. In addition to three other theft convictions, including two from Platte County in 2011 and 2012, and one in Hall County in 2014.

If you have information about Taylor’s whereabouts you can contact the Platte County Sheriff’s Office at 402-564-3229 or Crimestoppers at 402-563-4000.  [Source: US92.com]

Walmart employee arrested for stealing from store

Police in Idaho Falls, Idaho, say they arrested 27-year-old Reina L. Hensley, of Shelley, on suspicion of grand theft for stealing thousands of dollars from the Walmart in Idaho Falls.

According to police reports, officers responded to Walmart for a report of an employee theft. Authorities say Hensley had stolen more than $5,000 in cash from the business since August. She also stole diapers and food. Hensley was booked into the Bonneville County Jail.  [Source: Idaho State Journal]

Shoplifting suspect threatens Best Buy employees

Austin, Texas, Police are searching for a man who they say threatened Best Buy employees after he was caught shoplifting.  No one was hurt in the incident and the suspect never showed a weapon, he just threatened the employees.

The suspect is approximately 30 to 40 years old and is around 5-feet-10-inches tall. Surveillance cameras caught him inside the store. If you have information, please contact the APD Robbery Tip Line at (512) 974-5092 or Crime Stoppers at 512-472-TIPS or text “Tip 103” + your message to CRIMES.  [Source: KXAN.com]

Five predictions for retail in 2017

This year promises more disruption ahead as retailers try to figure out the changing shopping behaviors they see from customers who are more digitally savvy than ever. Here is Forbes take on five predictions for retail in 2017.

More AR/VR deployed
Virtual and augmented realities are often put together even though they are different experiences for the end user. But for retailers, they should consider them an either/or/and kind of opportunity, one that has the potential to engage with consumers in new ways.

Radical store reivention
Hointer is a solution provider that is helping retailers create innovative in-store experiences. In 2012, the company opened a “beta store” to showcase some of its innovations. The store focused on men’s apparel and an integrated technology/fitting room experience that was much of the talk of 2013. The company has since moved on from there, but at the time the Hointer store was radical – a complete re-envisioning of a specific retail shopping experience. Retail is ripe for another of those.

The rise of omni-channel analytics
Analytics have been around forever, but omni-channel has been a lot trickier. In talking about analytics that are omni-channel specifically, they mean analytics that take data from disparate channels and unify it into a more holistic view of performance. That means trade-area analytics that look across stores and online, behavioral analytics that understand the relationship between online and in-store behavior, shopper journey analytics no matter the path to purchase, and holistic product performance that understands the role the product plays across channels.

Analytics as a differentiator of winners in retail
Retailers’ ability to use data from all parts of their business to drive performance will separate retail winners from laggards.
In-store analytics has been a hot topic for several years but business case issues have hampered adoption. Not that it has issues in delivering a business case, but that it takes multiple internal parties coming together to agree on their piece of the value before a return can be made. Amazon doesn’t have that problem, but their action may spur more retailers to be more aggressive about in-store analytics than we’ve seen in the past.

The rise of “fuzzy product attributes
Attributes describe the characteristics of the product, most often the physical characteristics. But the future lies with what they call fuzzy product attributes – ones that are derived based on customer behavior or interactions with the products before, during, and after the purchase process.
Personalization is a clear priority for retailers, but it is in part dependent on product attributes to make it happen. Consumers browse different kinds of products, while personalization engines look at what is common among those products, and then make recommendations to new shoppers based on assumptions about what is common. That comes down to attributes about the product. Personalization can’t recognize that what is common between three pieces of apparel and two accessories is the fact that they are animal print, if “animal print” isn’t part of the product record. This limits the relevancy the personalization can achieve.  [Source: Forbes.com]

The post Breaking News in the Industry: January 6, 2017 appeared first on LPM.

A September 2015 survey of retailers about the current and future usage of video in their stores revealed some major frustrations and challenges. Although a detailed description of survey results can be found in “The State of Video,” the crucial findings can be distilled down to three key takeaways:

• The adoption of modern video capabilities has been low despite the significantly lower costs of ownership of a vastly improved technology.
• 
While the number of retailers with central monitoring stations has increased in the last five years, in 60 percent of those retailers, they are actively monitoring less than 10 percent of their stores.
• Finally, and despite the industry buzz, video today in retail still remains predominantly a tool to guard assets and people, where the accountability for video surveillance system strategy predominantly rests with the asset protection team.

So how do you, as a frustrated asset protection leader, move your organization forward and more fully realize the benefits of advanced video technology? Based on our experience at leading change, we propose three next steps that you could undertake—steps that could be the building blocks for a new video surveillance system strategy.

Step 1. Complete a Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis

The SWOT tool is possibly the tool most often used by management the world over in the development of new strategies. To use it correctly, the strengths and weaknesses should be those that are internal to the organization. Opportunities and threats should refer to the trends, changes, and events happening outside of your organization that will impact your strategy.

Before any SWOT exercise is undertaken, two things need to happen. The first is a period of data collection, and the second is identifying and then inviting all the most relevant stakeholders to participate in the SWOT exercise, potentially as part of an offsite meeting.

In terms of data collection, here would be some good data to collect prior to undertaking the SWOT exercise.

• Technology audit—Find out what video equipment is in what stores, in what working order, and so forth.
• Total cost of ownership—Identify all the current costs of video, capital, depreciation, maintenance, new-for-old replacement, hours in store spent monitoring, and so forth.
• Internal perceptions—Leverage free online survey tools such as SurveyMonkey to complete an organization-wide survey. Create a set of questions to understand the current perceptions of video amongst all the stakeholders, their perception of the benefits of its use today, and their interest in different use cases for video.
• External benchmarking—Leverage industry surveys such as the RILA survey just summarized and the generosity of your peers who have embarked on a new video strategy to become better informed on how others outside of your organization are responding to the video opportunity.
• Technology now and then—Learn from the vendor community, academics, and industry experts about their current and future visions of video technology in retail and the implications for your potential strategies.

With regard to stakeholders, involving all the relevant stakeholders from the very start of the process will do more to deliver change than possibly anything else you can or will ever do. The failure to include and involve the right stakeholders at the very beginning of a large change project—and this qualifies as such—has been the downfall of many a fine and elegant video surveillance system strategy.

A stakeholder should be defined as anyone inside and outside the organization who will be impacted by change and/or will be required to act to enable successful change. In the case of retail, the internal stakeholders beyond asset protection would include but are not limited to store operations, buildings maintenance, store design, merchandising, information technology, marketing, legal, and finance. Outside stakeholders would include but are not limited to the current video providers, third-party security guard companies, and consumer privacy groups.

Clearly, discretion and judgment would be needed on how and when to involve the different external stakeholders, but for the internal groups where the degree of possible change and acceptance of the strategy will be critical to the success, they should be invited to participate in the SWOT exercise.

For the timing of the exercise, you should plan for at least a day, with the first part of the day dedicated to providing the group a full grounding on all the data collected, possibly with an external speaker to bring the outside in and to act as a benchmark. In the afternoon, smaller cross-functional groups of three to four people should create their own SWOTs. Each group would then report back, and one consolidated SWOT would be created to represent the combined wisdom of the entire group. By going off site, you signal that a degree of importance has been placed to this opportunity for change while also having the benefit of ensuring that you get everyone’s full attention with no distractions.

With the SWOT completed, the actions should be identified to leverage strengths, address weaknesses, exploit external opportunities, and mitigate any external risks. These will form the substance of your strategy.

Perhaps the most important part of a good SWOT analysis is honest and candid input and feedback. If the SWOT is performed by stakeholders who only share what they think upper management wants to hear, the purpose of the exercise is defeated. Only honest, and sometimes blunt, feedback will help move the organization forward.

Step 2. Align the Organization to a Five-Year End-State Vision

When you are building something new, advisors suggest that you start with the end in mind, and so it should be with your surveillance video strategy. The deeper, richer, and more specific you can be about your end state, the easier it will be for your organization to align to it and get behind it.

The creation of the end-state vision can be a natural follow-on exercise from the SWOT exercise, and the involvement of all stakeholders in its creation will greatly help the eventual adoption across the organization.

To create the vision, stakeholders will need to have access to data on current costs, installations, user surveys, benchmarking, and future technology choices. The clearer a vision is, the easier it will be for people to want to support it. Clarity can be gained by using direct statements and visuals that may help support those statements. Avoid using jargon, buzzwords, or phrases like “optimize the value proposition for the enterprise,” as it will cloud your vision.

Just as important as creating a clear vision is ensuring that the vision articulates why video is important. By just stating what video does, the organization may not truly believe or understand why it is important. This statement shouldn’t be as simple as “Video is used to watch bad guys,” but rather something that catches the attention of a manager because it is profound and clearly matters.

Below are some example statements for your video surveillance system strategy, which could all start with “In 2021, our video capability will…”:

• Transform how we operate by leveraging video as a force multiplier.
• Allow for the safest environments possible for our shoppers and associates.
• Create unique insights that help us grow sales, reduce costs, and simplify our operations.
• Deliver a more efficient staffing model by leveraging central stations and remote viewing.
• Be viewed as a technology for the entire company, instead of just for asset protection.

These are example statements that will need further detail and belief if they are to withstand the curiosity and the questioning of senior executives. How will video make stores safer and more secure? How will video in the future increase sales? Be ready to articulate those responses with clarity and confidence.

Step 3. Develop Meaningful Pilots to Prove the Business Case

It can be tempting to take up offers from vendors to trial the latest video technology in a store or two at near-zero cost. But this misses the real point about video or indeed any other technology, which is to understand how technology could help existing tasks be better, faster, simpler, and less expensive. Or how could technology enable new work processes that could deliver new, new to the world, business benefits?

By way of example, we know that video can be set up to alert those in the store, via mobile devices, of unusual activity in the locations of products targeted by organized retail thieves. How would we set up a meaningful pilot to prove the business case? Here are some thoughts.

First, and this may seem a bit back-to-front to many, but before any technology is thrown at the problem, the activity system, the work process, and the behaviors and new skills that need to be put in place should be defined. Only when these are defined can you start to know the specifications and functionalities required of the technology. But more importantly, it is only when you can know the whats, hows, whens, and by whoms, can you get a sense of the likelihood of this use case being a success.

Second, and after all the above detail has been thrashed out, the organized retail crime (ORC) event monitoring activity system and the alerting capability technology choices should be tested for reliability, accuracy, and applicability. Do the alerts always signal ORC activity? Are these ORC events communicated to those in the store in a way that can help them act on them at the right time? Are store associates comfortable with approaching potential ORC thieves?

Third, and once confidence in this ORC use case has been established, then an experiment should be designed to test the actual impact of these ORC alerts by setting up some stores to receive the ORC alerts and others, even though the ORC alerts would be created by the system, not to receive the ORC alerts.

At this stage, consideration could be given as to whether communication would be placed in the stores to alert would-be thieves to the new capability. If this is of interest, then potentially the impact could be measured by adding a second set of test stores.

With this completed test design, the changes in the number of ORC events in the test store before and after the intervention, and relative to the control stores, could be measured. If a meaningful difference is found in the change in the number of ORC events in the test stores with and without communication, then because you have isolated the impact of the communication, you could potentially learn the extent that collusion is impacting ORC.

For store selection, the test and control stores should be matched in terms of risk and shopper profiles to ensure that the results have credibility with management. So if the intervention is only planned for the highest-risk stores, then only select high-risk control and test stores. If there is an idea for a chain-wide deployment, then choose a cross section of stores across the risk spectrum.

Choosing the right hot product category to test the capability will be important. Your choices should consider the extent to which you believe organized thieves are targeting the product, the location of that category in the store, and proximity to staff. Finally, you may want to consider the potential impact on sales of a better theft deterrent intervention such as real-time alerts. Would the presence of better intervention help the store feel more confident to place items on open sales and thus increase sales?

Good examples of possible hot product categories could be spirits, infant formula, or family planning, all of which are frequently locked up in stores or only have a minimal presence of product on display leading to shelf out of stocks.

Finally, you need to define the hard and soft metrics for the test. The hard business measures could be sales, shrink, and on-shelf availability. The softer measures could be store manager and associate interviews and shopper intercepts.

While this use case is one that benefits the asset protection team and the merchant responsible for the chosen category, other use cases worth considering for pilots could include:

• Virtual video visits supplementing in-person visits,
• EAS alarm/video integration creating video bookmarks for each alarm,
• Lighting/video integration saving energy expense by checking on overnight lighting,
• Time studies using remote video to measure processes instead of onsite people,
• Shopper insights to measure traffic, dwell time, and conversion rates through video.

Now, Your Leadership Is Required

Video surveillance system technology can be a real change catalyst for the asset protection organization. It not only can enhance operations and improve results, but it can also create an avenue for asset protection to better partner with the rest of the retail organization. Asset protection always seeks to enhance its influence in the organization and is always looking to have a seat at the table when it comes to making big decisions. What better way to create credibility and partnership than to offer others access to a technology that many would benefit from?

This article was excerpted from “The State of Video,” which was originally published in LP Magazine in 2016. This article was updated January 9, 2017.

The post Three Steps to Build Your Video Surveillance System Strategy appeared first on LPM.

Drug Wholesaler Cops To $100M Prescription Meds Fraud

The United States Attorney for the Southern District of New York, announced that Randy Crowell, a/k/a “Roger,” pled guilty to fraudulently distributing more than $100 million worth of prescription drugs obtained on a nationwide black market. Crowell used a Utah-based wholesale distribution company to sell illicitly procured drugs to pharmacies, which in turn dispensed them to unsuspecting customers.

Crowell purchased more than $100 million worth of prescription medications from this black market at a fraction of the legitimate prices for these drugs, before selling the same as new, legitimate bottles of medication to pharmacies all over the country.

To maximize their profits, Crowell and his co-conspirators focused on some of the most expensive medications on the market, including those used to treat HIV/AIDS. The profitable scheme was potentially dangerous to the tens of thousands of patients ultimately receiving and taking these prescription drugs. Many of the bottles purchased had in fact been previously dispensed to others. To conceal the fact that they had been previously dispensed, the bottles were typically “cleaned” with hazardous chemicals such as lighter fluid before being transported and stored in conditions that were frequently insanitary and insufficient to ensure the safety and efficacy of the medication.

Scheme participants targeted the cheapest possible source of supply for these drugs – Medicaid patients and other individuals who received these prescription drugs on a monthly basis for little or no cost, and who were then willing to sell their medicines rather than taking them as prescribed. They would then sold their medications to low-level participants (“Collectors”) in the scheme who worked on street corners and bodegas and would pay cash – typically as little as $40 or $50 per bottle.

Collectors then sold these second-hand drugs to higher-level scheme participants (“Aggregators”) who bought dozens, and sometimes hundreds, of bottles at a time from multiple collectors before selling them to higher-level scheme participants with direct access to legitimate distribution channels. The corrupt wholesale companies then resold the bottles as new, at full price, to pharmacies, including potentially the very same pharmacies that initially dispensed these medications.

To convince pharmacies to buy these medications, and health care benefit programs to pay for them, Crowell and others acting at his direction created false and fraudulent documents known as “pedigrees” for these medications, which purported to document the legitimate movement of these medications bought and sold from a manufacturer to the pharmacy. In truth, none of the medications purchased or distributed had come from legitimate sources of supply, and the pedigrees were intentionally fabricated so that the medications could be sold, as new, to pharmacies and so that health care benefit programs would be duped into paying for these illegitimate second-hand drugs. [Source: Insurance Fraud News]

Police officer shot, killed; suspect still being sought

Hundreds of law enforcement officers are searching overnight for a fugitive who is accused of killing a cop at dawn on Monday when she tried to chase him down at an Orlando Wal-Mart and arrest him. A second law-enforcement official died in a crash just hours later as officers and deputies scrambled to find the murder suspect.

“We are going to bring this dirt bag to justice, and he’s going to jail,” Orlando Police Chief John Mina said.

Loyd has been wanted for murder since his pregnant ex-girlfriend was shot at her front door on December 13th.He has a long criminal history and on Nov. 30 wrote on his Facebook page: “Goals!!!! To be on Americas most wanted.” He also has a long criminal record and served 10 years in prison and five years on probation for conspiracy with intent to distribute cocaine, according to federal court records.

The violence started at the Wal-Mart when someone spotted Loyd, knew he was wanted for murder and told Orlando police Master Sgt. Debra Clayton, who also happened to be at the store. She was on the job, in uniform and wearing body armor, Mina said. She called dispatch, then started chasing after Loyd. She yelled for him to “stop” but instead the felon opened fired. She shot back but didn’t hit him, Mina said.

Backup officers who arrived 28 seconds later tried to save Clayton with CPR, according to the city, but she was pronounced dead at 7:40 a.m. at Orlando Regional Medical Center. A short distance from the Wal-Mart, a captain at the Orange County Sheriff’s Office spotted Loyd. Loyd pulled into an apartment complex and fired at least once at the deputy, who was in an unmarked SUV. The bullet missed him but hit his SUV. The suspect then carjacked a vehicle and fled. He abandoned that vehicle near Cinderlane Parkway, officials said.

A massive manhunt for Loyd resulted in two motorcycle crashes by Orange County Deputies, one fatal. Deputy Norman Lewis, an 11-year Sheriff’s Office veteran, was killed 2-1/2 hours after the shooting when his motorcycle was struck by a van, the Florida Highway Patrol said. The search is still ongoing. [Source: The Orlando Sentinel]

2017 Retail Predictions

As the new year gets underway, it’s time to look forward to the changes and trends 2017 will bring. For retailers, that includes some new consumer behaviors in addition to the always-expected technological advances. While change might seem overwhelming, it can also provide fresh opportunities for sales. And with a little planning, retailers can stay ahead of competition to meet the demands of their customers. To help guide you into the new year, here are a few of our 2017 retail predictions.

Non-Traditional Revenue Sources. Many retail organizations are beginning to explore non-traditional revenue sources to keep profits up. One of the easiest turnkey ways to build revenue? Credit protection and warranty solutions. These products not only offer a positive impact on the bottom line, but they’re also a great way to build customer loyalty.

Automated Online Returns. As online shopping continues to become more common, you can anticipate a push for easy, automated return processes from online retailers. Convenience can help breed confidence, allowing customers to make a purchase online knowing they can easily return if they’re not satisfied.

Retailer Transparency. From manufacturing details to corporate values, the average consumer desires greater transparency from retailers. Businesses that embrace the same values as consumers can anticipate a boost to brand loyalty, which is a great reason to let your customers know you’ll always be up front with them.

Renting vs. Buying. The year 2017 may also see a rise in rentals — especially when it comes to larger or generational electronics. Knowing that a product’s lifespan lasts only until the release of next generation model may give consumers pause before taking the full purchase plunge. For example, full two-year phone contracts are becoming more expensive. With consumers aware the next iteration comes out in just in six short months, there’s far less incentive to sign up long term and more mobile customers are leasing devices rather than buying them.

Independent Retailers. Over the last several years, there’s been a growing demand for niche, independent retailers. Why? It starts with personalization — having access to a retailer that simultaneously caters to individual needs and likely knows their customer inside and out. For both new and existing brands, this trend leads to improved, more personalized service as well as a smaller store footprint.

Mobile, Mobile and More Mobile. Incorporating a mobile strategy can only benefit your brand — regardless of your company’s size. Simply ensuring a website is mobile friendly, or enabling mobile purchase, creates a sophisticated mobile interaction that improves the customer experience.
[Source: Chain Store Age]

Shoplifter in critical condition after shooting himself inside police car

Police in Austin, Texas are investigating how a suspect handcuffed inside a patrol car was able to get into the car with a gun. APD protocol calls for searching a suspect for weapons before they are placed inside a police vehicle.

Police arrested the young man at Barton Creek Square Mall for shoplifting and possession of a controlled substance. Officers couldn’t figure out his name, so they decided to drive him to APD Headquarters to get fingerprints. On the way, police say the young man was making suicidal comments. When the officer asked if he had the means to do that, the suspect said he did.

“He removed a pistol it appears from the back of his waistband, placed it towards his head while still handcuffed, was able to pull his hands around to the side,” explains APD Interim Chief Brian Manley. Manley says the officer then pulled over and got out of the car and started shouting commands at the suspect. “The officers were trying to get people a safe distance away from the scene while actively handling what was happening.”

According to Manley, after six minutes of pointing the gun at himself, the suspect shot himself in the head. “Absolutely there was a danger [to the police officer]” Manley said. “If this individual had chosen to remove that weapon and fire at the officer instead of saying something, we could be here discussing a very different incident here today.

Police believe the man is in his late teens or early 20s, but he still has not been identified. The suspect was sent to University Medical Center Brackenridge in critical condition.

Note: Keep in mind that the situation described would also infer that the shoplifting suspect had the gun in his possession when apprehended by loss prevention at the store where the incident occurred. [Source: CBS News]

Accused shoplifter arrested in police officer hit-and-run

Police in Massachusetts say a shoplifting suspect, accused in the hit and run of a Plainville police officer Sunday morning, is now in custody. That suspect, identified by police as Robert M. Camara Jr., was brought into police headquarters late Sunday night.

Police were called to the Plainville Target store after they got a report of shoplifting. Cellphone video recorded by a witness shows Officer Todd Holbrook down on the pavement, injured after confronting the suspect. The video only shows part of the incident but police say a moment earlier, Camara struck Holbrook with a car and then left the scene.

Camara will be charged with assault and battery with a dangerous weapon, reckless operation of a motor vehicle, leaving the scene of a crash causing personal injury, larceny over $250, using a motor vehicle in the commission of a felony and operating with a suspended license. Police also brought a vehicle into the station garage for processing. It’s a silver Ford, matching the description of the car investigators had been looking for.

Holbrook was taken to Rhode Island Hospital with non-life-threatening injuries to his lower body. He was treated, released and is now resting at home. [Source: CBS News]

Texas Organized Retail Crime Association (Texas ORCA) announces official launch

The Texas Organized Retail Crime Association has officially announced the launch of Texas ORCA. The Texas ORCA is a group of retailers who partnered with law enforcement aimed at reducing property crimes, keeping shoppers safer and lessening their chances of becoming victims. Texas ORCA was formed because of a need to combine efforts of law enforcement, security and loss prevention to combat the growing problem of Organized Retail Crime (ORC). Developed to allow members to share intelligence relating to the businesses and communities we serve, this shared information includes, but is not limited to, crimes of organized theft, robberies, counterfeiting, check and credit card fraud, prescription fraud, identity theft and other scams.

Texas ORCA welcomes Law Enforcement, Loss Prevention, Investigations, Security and Banking industry professionals to join and contribute to the fight against ORC. Several retailers, led by Macy’s, Walmart, Target, Lowes, Home Depot, CVS, Walgreens, Gap and Nebraska Furniture Mart formed a unified coalition with the Texas Retail Association and several key law enforcement agencies within the state. To learn more and to join the Texas ORCA, visit www.texasorca.org.

The post Breaking News in the Industry: January 10, 2017 appeared first on LPM.

Most readers of the LPM Insider are probably pretty familiar with shoplifting, its definition, its negative impact on retail operations and profitability and the shoplifting penalties for their state. It would be a lengthy process to learn the laws of every state and their shoplifting penalties because of the vast differences and constant change. Shoplifting laws have changed significantly in recent years—but rarely to the benefit of the retail industry.

Shoplifting and petty theft are criminal offenses that are frequently thought of as interchangeable, as they share common elements. Each crime requires the perpetrator to take something valued at or below a certain dollar amount, with the intent to permanently keep it, usually constituting a misdemeanor crime. The taking of something valued over that predetermined amount (as described by law) constitutes grand theft, which is a felony. State laws vary on the cutoff between petty theft and grand theft, and the shoplifting penalties assigned to those crimes vary by the amount stolen and by state. But, in general, to qualify for petty or grand theft, certain criteria must apply:

• The victim of the crime had a “possessory interest” in the stolen item
• The property was “taken away”
• The victim did not agree to the taking
• The defendant intended to permanently deprive the victim of their interest in the property

In the “old days,” nearly all shoplifters who were apprehended by store loss prevention personnel were transported to the police station—and maybe even to jail by the authorities. Even juveniles were transported, although they were usually turned over to the custody of their parents.

Today’s practices are often much different. Various factors, including tight budgets, increases in serious crime, and shrinking availability of patrols have affected police procedures and shoplifting penalties. It is now much more difficult for officers to transport shoplifters, particularly for petty theft offenses. In today’s world, if they show up at all, police will often only issue a citation to the offender that may include a fine and possibly a “notice to appear” in court. As early as 1980, the Los Angeles Police Department quit responding for minor shoplifting incidents.

Changes in shoplifting penalties have also made it tougher for retailers. In late 2014, California passed Proposition 47, which has been described as “the decriminalization of shoplifting.” Now to qualify for felony prosecution for property theft in California, the amount stolen must exceed $950. Since the passing of Proposition 47, California newspapers have included headlines calling the rapid increase in shoplifting an “open season” on retailers.

To make matters worse, California is one of approximately fifteen states without formal organized retail crime (ORC) laws. In 2015, the National Retail Federation (NRF) noted that Los Angeles had the worst ORC activity of all major US cities.

But it is not only California. In Indiana, during a hectic law-making session, legislators “forgot” to include language that would allow the police to arrest suspected shoplifters apprehended by store personnel for stealing something less than $750. The language was subsequently fixed, but the incident is only one representation of what retailers are facing in the fight against shoplifting.

The future does not appear to be getting any brighter for shoplifting penalties and laws any time soon. When waging this uphill battle regarding shoplifting, retailers need to remain vigilant and continue to make their voices heard through their legislators and through organizations such as the NRF and RILA.

The post Changes in Shoplifting Penalties Make It Tougher for Retailers appeared first on LPM.

While some of the tools of organized retail crime and methods of operation continue to evolve with the changes in technology and dynamics of the retail environment, the importance of cooperative partnerships between loss prevention and law enforcement teams remains a key factor in resolving organized retail crime (ORC) ring incidents nationwide. This article offers seven tips for law enforcement teams to maintain security in shopping malls when targeting ORC rings.

1. Know they are in the area. Ensure stores contact either their regional loss prevention managers or law enforcement contacts immediately upon discovery of a hit.

2. The most successful agencies don’t enter a mall when retail theft hits are reported. They set up surveillances in strategic locations in the parking lots or garages. Responding officers should position themselves in the parking lots outside mall entrances, nearest the stores that reported the theft. In an effort to be undetected by the group, the officers should park further out in the lot. In the parking lots, look for people waiting in vehicles that are not running. These groups never have the engine, heat, or air conditioning running. Engine noise or an exhaust cloud could draw attention to the vehicle as the “mule” secretes the stolen goods.

3. In the mall, look for groups of customers who are not showing affection or companionship. These groups rarely hold hands or laugh like normal customers.

4. The mules, or the individuals who carry the stolen merchandise from the store to the vehicle, will usually walk past their vehicle first, then make a U-turn as if they unintentionally missed their car. In that time, they scan the lot to see if they are being pursued without looking over their shoulder in an obvious fashion.

5. Ask store loss prevention or shopping mall security to help with video surveillance of the suspect’s vehicle, if possible.

6. If the group discovers they are being watched and starts to flee, request that department store loss prevention check bathrooms and customers service areas for any of the subjects. These are known places for a suspect to hide until they can arrange transportation out of the area. Restaurant and mall restrooms are also good hiding locations.

7. If shoplifting suspects see an officer approaching them at the vehicle, many will throw the booster bag into the vehicle and lock the door. At this point, the mule will not give consent to enter the vehicle. The mule will rarely have the keys to the car. They will likely have the remote or the car will be unlocked. The actual entry key will be behind the gas cap lid, above the driver’s visor, or under the driver’s side floor mat. These groups do not want to be connected to their vehicles.

This article was excerpted from “Partnering with Law Enforcement to Combat Organized Retail Crime,” which was originally published in 2004. This article was updated January 16, 2017. 

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At a time when store margins are under intense competitive pressure, retail shrink can make or break a retailer’s bottom line. But today’s retail shrink numbers are vulnerable to blind spots and imprecise metrics. In addition, most analysis and response to retail shrink are backward-looking: useful for staffing and long-term mitigation, but less effective in organizing real-time response or quick adaptation to new tactics in retail theft. Given these obstacles facing retailers today, what can they do to start managing inventory shrink?

The Problem with Managing Inventory Shrink

In principle, retail shrink calculations are simple. Inventory management systems (IMS) capture data about incoming goods using RFID, barcodes, or manual checklists. By subtracting sales recorded at point-of-sale (POS) terminals, adding returns and adjusting for other inventory transactions, the IMS would ideally track sales-floor and back-room inventory at the SKU level. But in the real world, SKU records often are incomplete and subject to distortion from a variety of sources, lumped together as “gross variance.” To reconcile these errors on their books, retailers conduct periodic or rolling physical inventory counts to calculate net variance.

But this definition of retail shrink is what accountants call a plug, or reserve number—it’s calculated, not measured. Shrink doesn’t really explain discrepancies between IMS data and physical inventories; it just provides a convenient accounting bucket to collect and reconcile losses that actually stem from multiple root causes – with unpredictable variation across stores, seasons, and regions. In addition to shoplifting and employee theft, inventory discrepancies can occur from administrative errors like incorrectly tagged merchandise, product substitutions markups/markdowns and other retail price changes, or vendor fraud. These are all difficult to measure, frequently underestimated, and difficult to correct.

When retail shrink numbers conceal losses from vendor errors and substitutions, they block legitimate efforts at recourse. For example, markdowns of “phantom” inventory that is never available for sale underestimate actual losses, which may be many times the value of discounted paper losses. When “real” physical shrink takes merchandise off the sales floor without triggering replenishment, it can create frozen out-of-stock conditions that cost a store all the inventory turns on an item, until a physical count corrects the error and triggers replenishment. At a time when organized retail crime gangs raid specific categories and sizes, out-of-stock conditions are most likely with popular items—exactly the ones that will cause the most financial damage.

The Problem with Current Approaches

Loss prevention has developed robust processes and technologies to deter or detect fraud and theft, often backed by enforcement and recovery. These include sales-floor surveillance, POS exceptions, theft deterrent devices, and EAS alarms at entrances, backed by exception-based reporting and analytics. These are valuable, but backward-facing, approaches. They give retailers limited ability to anticipate and respond in real time to organized retail crime campaigns or merchandise processing errors, untangle complex thefts like POS sweethearting, or identify long-term trends in merchandise targeted by thieves.

Distorted IMS inventory records offer little help. Physical counts are badly out of date by the time they’re compiled, and can’t ever be used to guide real-time adaptive alarming or staff deployment. Inventory shrink metrics that fold in receiving shortages and other distortions obscure, rather than highlight, trends like the rise in organized retail crime.

Lacking details of what is missing where, and at what times, loss prevention departments often fall back on historical trends to make decisions regarding high-risk merchandise categories, stores, days and times, or security-camera views of the sales floor. They also lack information about the direct impact of their enforcement and remediation efforts. Operating without real-time data and item-level analytics, retailers do the best they can with their tools and budgets, but don’t come close to solving the problem.

Enter Shrink Visibility: The Power of Integrating Information Sources

A variety of technologies are available to help retailers manage inventory and address retail shrink:

• POS analytics that can help track sales processes and productivity
• Video surveillance to maintain safety and security, and provide context and evidence for retail shrink events
• Electronic article surveillance to deter and detect shoplifting
• RFID-based inventory visibility solutions to enhance the speed and accuracy of store operations

Each solution is valuable in its own right—but together they deliver a new level of business intelligence. The integration of item-level RFID information and loss prevention data creates a real-time understanding of what, when, and how specific items go missing. We call this understanding Shrink Visibility, which gives retailers a complete picture of loss events—at the SKU level and in full context—at the moment they occur. Shrink visibility improves loss prevention effectiveness, and simultaneously corrects errors and gaps in inventory visibility. By integrating multiple store technologies and databases, shrink visibility delivers a more intelligible, accountable, and ultimately more profitable retail environment.

For example, consider how shrink visibility could help a big-box electronics store address the systematic theft—with possible insider assistance—of high-value consumer electronics. Using item-level RFID information to augment alerts from its EAS-based LP system, the retailer can set its loss prevention platform to alert staff whenever the number of tablet computers leaving the store crosses an hourly threshold. By setting alarms to trigger video captures of POS scans and store exits, the store can know when, where, how often, and in whose hands every item is leaving, so the LP team can dig into root causes of losses instead of chasing after symptoms—and even use images of thefts in progress for use as evidence at trial.

Controlling Retail Shrink at Every Check-Point

Capturing quality data in real time enables predictive, analytics-based strategy and response—at the exit, in receiving, and on the selling floor.

At receiving

Automated processes up and down retail supply chains are accelerating purchasing cycles, reducing receiving delays and costs, and helping to distinguish in-store from supply-chain retail shrink. Small process adjustments—like integrating SKU-level information into Advanced Shipping Notices, for example—can automate accuracy checks on receipts and accelerate vendor recourse for any discrepancies. More sweeping changes such as vendor-managed inventory agreements offer even greater savings, but require high-quality information about the source and scale of any loss.

On the selling floor

Addressing retail shrink on the sales floor—especially in high-risk areas with limited staff visibility—is a persistent challenge for loss prevention. Thieves use quiet corners of stores, areas with tall shelves, and fitting rooms to remove EAS tags and labels, conceal items, and stage merchandise for later theft. Staff video surveillance and public-view monitors improve visibility and deterrence, but can’t offer SKU-level information about item movement that LP staff need to anticipate and intercept a theft or staging event.

RFID-enabled item-level tracking in critical zones—high-margin “boutiques,” consumer electronics and media, and secluded areas like fitting rooms—gives loss prevention a powerful tool to analyze the process by which organized retail crime gangs stage merchandise within the store for later concealment and removal. For example, movement of ten identical SKUs of high-end jeans from a designer’s boutique to a fitting room or the sporting goods department is a tip-off to the LP team that an organized retail crime event may be in progress.

At checkout

Many forms of retail fraud depend on collaboration between an “outside” thief and an employee staffing a POS terminal; it’s one reason front-of-store video surveillance often covers checkout stations as well as store exits. But video alone can’t detect paperwork-based crimes. Detection of sweethearting and related crimes requires integration of information across item-level tracking, POS, and possibly video systems. Comparison of item-level and POS data can detect the crime; real-time solutions that allow hard-tag detachment only after items have been scanned can prevent it; and video-capture integration can identify the outside thief as well as the corrupt or compromised employee.

At the exit

Adding RFID capability to EAS exit pedestals produces dramatic improvements in Loss Prevention. RFID tags can detect individual items leaving the store without proper transactions, and trigger video captures to deter future losses and collect evidence against suspected thieves.

Improvements in inventory visibility are equally dramatic. Item-level data from merchandise leaving the store, correlated with tag or barcode reads from POS terminals in the immediately preceding time period, reliably measures total decrement from inventory-on-hand. Basing replenishment on total lift instead of sales keeps planned levels of inventory on the floor and avoids out-of-stock conditions due to undetected retail shrink. Exit reads uncorrelated with preceding POS reads reflect actual retail shrink —errors and theft. And because this is an actual measurement rather than a plug number, the information isn’t obscured by other kinds of inventory distortion. And data from RFID tags on returned goods can be checked against POS data, reducing opportunities for merchandise substitution and other forms of return fraud.

Shrink Visibility: Theft’s Worst Enemy

Retail stores can start their move toward shrink visibility today to achieve rapid improvements in the ways they protect merchandise and manage inventories. By combining proven technologies, retailers can gain important visibility into theft events by opportunistic shoplifters or organized retail crime teams. They can restock or reorder stolen items to prevent out-of-stock conditions. They can identify offenders using information shared across stores, within their own organization or with consulting, retail, or law enforcement partners. And, they can mine the data to identify trends, and change their loss prevention processes to prevent or mitigate future incidents. Shifting efforts from a reactive to a real-time predictive, information-based approach will multiply retailers’ loss prevention effectiveness –thereby managing inventory, improving operations, maximizing sales opportunities, and improving profitability.

This article was first published in 2012 and updated January 17, 2017.

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According to the National Retail Federation’s (NRF) 2016 Organized Retail Crime Survey, all responding retailers said that they believe their companies to have been the victim of organized retail crime (ORC) activity within the past year. Eighty-three percent of those respondents believe that ORC activity has increased in the past year as well.

Major stakeholders in the fight against organized retail crime agree that it’s a major problem that needs addressing.

Is Organized Retail Crime Just Shoplifting with a Sexy Name?

A few years ago, Laura Baverman, former columnist at The Cincinnati Enquirer took an in-depth look at organized retail crime in an article that was picked up nationally by USA Today. In the 2011 article “Retailers Reining in Sophisticated Theft Rings,” Baverman reports, “This [ORC] illegal activity is nothing like shoplifting, an opportunistic crime by one person.” She quotes Detective Brian Kane of the Covington Police Department, referring to people that make up organized retail crime rings, “It’s a job. They get up in the morning and that’s what they do.”

But there are still those in the industry who lump stealing retail goods–no matter what happens after the theft–as shoplifting with a sexy name. “Back in the old days you didn’t have labels like ‘ORC.’ You just had people stealing stuff,” said an LP professional with more than forty years’ experience. “Stopping the opportunist and stopping the ORC professional comes down to the same principles we all know and implement—customer service, employee awareness, and having solid prevention techniques across the board.”

The divide on this particular debate seems to be closing. “It really took people like Paul Jones and King Rogers talking about organized retail crime on a larger scale to start getting the industry to take notice and differentiate ORC groups from the average opportunist,” said Joe LaRocca, former senior advisor of loss prevention for the NRF.

“The conversation has begun to change about organized retail crime,” suggested Mike Battles, CFI, former regional LP manager for Stage Stores. “It’s no longer asking if it’s a real problem, but we now see local and national groups being formed to help support the anti-ORC efforts across the country.”

This article’s findings are the result of more than thirty retail and law enforcement interviews expressly asking for opinions and thoughts on the topic. It does not represent the author’s opinions, personal views, or experience on the subject.

In general, the interview responses led to these five recommendations of how not to investigate organized retail crime. Don’t…

• Go in cold to law enforcement and ask for help.
• Hand detectives a loose-leaf folder of papers.
• Stay in your office.
• Take the law into your own hands.
• Ignore your role in the problem.

Don’t Go in Cold to Law Enforcement and Ask for Help

Going in “cold” to law enforcement and asking for help is like showing up for a blind date with an engagement ring; it only makes sense if you’re desperate, and you probably won’t be successful.

When talking with law enforcement personnel, they readily admit that taking property-crime cases to prosecution isn’t their top priority. “District attorneys never really want to prosecute property crimes because it is the lowest on the priority list,” says a FBI representative that works with organized retail crime cases. “Let’s face it. They are dealing with terrorism, major white-collar crime, as well as homeland security issues. There is only so much time in a day.”

But for heads of ORC task forces or LP professionals responsible for making a dent in their company’s theft problem, the industry needs law enforcement partnerships to prosecute successfully.

“The biggest mistake LP professionals can make is going in cold and unprepared to law enforcement,” advised David E. Zulawski, CFI, CFE, chairman and senior partner at Wicklander-Zulawski & Associates. “A great way to build these relationships is to start with a mutual contact to make an introduction.”

“I have been on both sides—law enforcement and retail. It comes down to collaborating together because sharing and learning from each other are key components to success,” said Mark McClain, CFI, director of global investigations for Walmart. “It’s important to find common ground and set the stage for a long-term mutually beneficial partnership. Don’t show up just when you need something. Get involved and support local community events because the more you’re involved, the more people will be aware of your commitment to solving the overall crime problems, not just those that interest your company.”

Minia Morales, a divisional LP manager for Rent-A-Center, believes educating law enforcement on organized retail crime is critical when starting to build the initial relationship. Morales points out that there are still some law enforcement agencies that don’t fully understand the scope of the problem and believe the ORC problem is just petty shoplifting. “Law enforcement doesn’t see the value of working with retail loss prevention and our backgrounds, but it is incumbent on us to educate them on behalf of the profession,” said Morales. “This education helps build the partnership you need when conducting an investigation. Having a preexisting relationship and level of comfort goes a long way and helps achieve results.”

Morales added, “It’s not one-sided. We need law enforcement as much as they need us. And it’s not about ego. It’s about a partnership built on respect and mutual trust. If you have to conduct trash pulls, stationary surveillance, and inventory recovered product, just do it. This is a partnership and retailers should be sincere partners in fighting crime, not drawing lines on what we won’t do to advance the investigation.”

Every retailer interviewed for this article emphasized building solid relationships with law enforcement. This is not a new topic in the organized retail crime discussion, but it was interesting the lengths that retail ORC task forces must go to increase the odds of successful prosecution or for law enforcement to even take the case.

“It’s a constant battle to combat the perception with many police departments that ‘retail never prosecutes,'” said Jason Adams, CFI, former national manager of organized retail crime at GAP. “GAP Inc. is very consistent with prosecution. But as retailers we have to do our part to make it a priority and an easy next step for our law enforcement partners.”

Adams added, “It’s always our preference to present gift-wrapped cases on a silver platter to our law enforcement partners. We have strict guidelines on when and how to partner with law enforcement. Every police partner is so critical that we try our best to do everything we can to make their jobs easier.”

The law enforcement-retail partnership is seemingly a fragile relationship at times. While retailers must engage these vital partners, it definitely changes the rules once they are involved. Retailers must be able to engage these law enforcement contacts and trust them with their multiple weeks, months, and often year-long investigations because once they are involved, it changes the rules immediately.

“While it is important to engage law enforcement as early as possible in the process, we have to be mindful that it changes the rules,” said Brad Dykes, former director of loss prevention for Cabela’s. “I would definitely bring them in early rather than risk not having the necessary information when it comes to prosecution.” One of the benefits of involving police early is law enforcement’s leverage for potentially turning a suspect into an informant.

“If you start a case and decide to operate independent of police, that may be a good thing or bad thing depending on the police contact,” said Zulawski. “You need to ensure your contact can see the whole picture and isn’t going to feel you are stepping on his toes.” Zulawski points out the importance of knowing your police contact. Some officers might not mind being brought in on the tail end of an investigation while others want to know what’s going on from the beginning.

Rich Milburn, CFI is a twenty-year veteran of law enforcement working on organized retail crime cases with retailers. He offered a different perspective, but agrees that bringing in law enforcement changes the rules.

“It’s true that retailers must bring cases to law enforcement on a silver platter,” confirmed Milburn. “They must have everything documented soup to nuts. But the retailer needs to know the detective is already well-versed in organized retail crime, or it is a waste of time. Retailers must be aware that once they drop that case file into law enforcement’s hands, it changes the rules so everything better be complete.”

Battles added, “The bottom line is we can’t accomplish what either one of us want—successful prosecution—without the other. Sometimes it takes the retailer educating the police about updated changes in legislation. Our laws can change quickly and could have important impact on your cases. Don’t rely on the police to always be up-to-date on every legislative change simply due to the sheer number of new laws passed each legislative session.”

Don’t Hand Detectives a Loose-Leaf Folder of Papers

We’ve all seen him—the totally unorganized coworker with mustard on his shirt, hair a mess, who looks like he just woke up. Would you trust that coworker with your most delicate project? Probably not. The same principles apply when working with law enforcement—organization rules.

“If you show up and throw a loose-leaf folder on their desk and expect them to jump at your case, you will not be very successful,” said Adams. “Also, don’t expect them to drop their entire case load to immediately go over your investigation. Being proactive, making an appointment, and being cognizant of the volume of work that they are tasked with is very important.” As we continue to educate the law enforcement sector on how professional retail LP people are, it’s paramount that we are diligent when it comes to documentation, organization, and thoroughness.

“Presenting your case to law enforcement is a make or break phase of the investigative process,” explained Adams. “It’s critical to ensure the presentation is organized and essentially gift-wrapped for your audience.” Adams always equipped his case files in chronological order with:

• Case summary—the what, when, how, why of everything that has happened in summation style,
• Internal reports filed depicting the case,
• Police reports filed,
• Witness statements,
• Video evidence,
• Investigative notes, and
• Suspect information sheets.

“As LP professionals, we need to understand how over-burdened police are with current case loads,” added Adams. “Put together the case in a structured way that truly conveys the financial loss, the safety implications, community impact, and, if applicable, any other crimes that are above and beyond the retail variety, such as human trafficking and drugs.”

In addition to the case file documentation, it’s always important how you put that file together. In most cases chronologically is the best way to go according to ORC task force leaders. Mike Battles recommended compiling two case files: one case file to present to law enforcement and another to continually update with appropriate information that can be used to periodically update law enforcement’s copy so each file is comprehensive and up-to-date.

A twenty-year industry veteran, Battles organized his case files chronologically by known incidents and separated by tabs into sections:

• Summary and table of contents,
• Photos when possible,
• Police reports,
• Known loss reports with amounts,
• Inventory lists,
• License plates and suspect pedigrees, and
• CD sleeves for video evidence.

The information in these case files should tell a compelling story, explaining the details, suspects, and incidents leading to the logical next step of action by law enforcement.

“Try to demonstrate the full loop of the crime,” said Debra Lussier, senior manager, central investigations team, for The Home Depot. “It is helpful when the full loop of the crime is demonstrated through reports, video clips, policy examples, et cetera. Resources are very slim for law enforcement, so retailers must make the link from relationships and suspects to dollar amounts and impact to your community so they accurately present it to their superiors.”

“A great example is when our team helped educate law enforcement on UPC switching,” explained Lussier. “At first glance, the transaction seems legitimate. But when we’re able to present all the supporting documentation, they understand, and it makes total sense to them.”

Organization of the details is of utmost importance, but according to Mark VanBeest, CFI, former director of investigations at JCPenney, timing is also critical. One of the worst lessons to learn is not having your case information organized and ready when your suspect is detained…and they end up walking away uncharged.

“Organization and case preparation is key,” explained VanBeest. “Your case file must be presentation ready at all times. You never know when it might be time to convey all necessary information in a succinct way if you catch a break in your case or suspect is in custody.”

Not only is organization important, it’s important to understand how law enforcement writes reports and why.

“We are taught to write reports on a fifth-grade level so everyone can understand what occurred,” said retired law enforcement officer Milburn. “Keep complicated policies simple so when detectives need to translate it to a prosecutor, it can be understood and ultimately communicated to a jury or judge.”

“Loss prevention investigators should make sure that law enforcement is presented with all the pertinent case facts organized in a clear and concise manner so that all that is left to do is act,” said Adams. “Remember every interaction with law enforcement shapes future interactions, and if you show up with too many folders, you probably won’t garner much future support.”

Don’t Stay in Your Office

Loss prevention professionals are not salespeople—or are we? To investigators, the idea that they are in a sales role is like nails on a chalkboard. But essentially, all LP professionals are in sales—especially organized retail crime investigators trying to make friends with law enforcement, prosecutors, and other retailers.

Yes, your office is nice and cozy. You can see all your stores via remote monitoring. But are you serving your ORC efforts best by staying in your little domain? Probably not according to the retailers and law enforcement representatives interviewed. Their advice is to get out into the community, shake some hands, meet people, share information, and support your company by supporting your community.

“LP investigators should pretend they’re in sales because good networking can build relationships to help solve crime in the community as a whole, not just for your organization,” said Dave Zulawski.

A fantastic example of networking and building relationships in their community is the work that Stage Stores has done. “Stage Stores hosted their own networking meetings twice a year,” explained Battles. “At the first one, we had twenty people attend. That number grew to more than 130, including area LP professionals, local, federal, secret service, and even postal inspectors in surrounding jurisdictions. People were able to meet, get contact information, and understand each other’s problems so we can help each other as a community. It’s not about just retail. It’s about supporting your community as a whole. There is no better way to make those connections than in person.”

According to Battles, “These events help educate law enforcement on our level of professionalism and our commitment to fighting crime. They will only know that by meeting us in person, attending networking events, and getting involved with online communication boards and email distribution networks. These initiatives help broaden your contacts so you can learn which detectives and others already support fighting organized retail crime.”

“Networking is key,” said Milburn. “If you attend a networking function and aren’t meeting someone you don’t know, you’re wasting your time. It’s always helpful to place a call after you’ve met them face-to-face and exchanged business cards.”

Networking in person is not the only way to broaden your ORC efforts. Sharing data is also extremely important to the overall organized retail crime conversation. There are numerous local ORC groups that have become quite successful over the last few years with attendance growing exponentially each year. There are national information-sharing databases as well.

“Information-sharing systems help identify national trends and enable us to work more efficiently at the national level by helping us tie cases together,” explained VanBeest. “We also believe it vital to our efforts to network with local groups to share data. Sharing data at the grassroots level gives retailers a more eye-level look at organized theft groups where most investigations are initiated.”

Networking and sharing information are always valuable tools. To take that strategy a step further, JCPenney implemented a shared practice among other retailers that helps law enforcement contact them directly with no middlemen.

“Another important step retailers can take is something we implemented from our friends at Walmart,” said VanBeest. “We created a for-law-enforcement-only email address and phone line. So no matter what law enforcement needs, whether it is local, state or federal, all they have to remember is one email address and one phone number. This direct line of communication goes straight to our investigations team, so we can respond very quickly. I would recommend this for any retailer because it’s been a valuable tool for relationship building with detectives and police regardless of jurisdiction.”

Don’t Take the Law into Your Own Hands

As an industry, LP professionals are often caught in the proverbial catch-22. After budget season concludes, they are often left asking themselves pointed questions such as:

• How do I maximize resources for my increasing responsibilities without sacrificing quality work?
• If I’m responsible for shrink, audit, safety, and internal theft, how can I get everything done with a smaller team?

In some instances, these types of questions lead to LP investigators stretching that envelope a bit too far, even crossing into law enforcement’s domain. According to those interviewed, instances of LP people going “rogue” have definitely declined over the years as organized retail crime legislation has passed and task forces formed with accompanying policies. But there was also plenty of evidence that it still occurs, although little agreement on what “going rogue” truly means.

“When it comes to LP people taking the law into their own hands, I think that it’s important that LP understands relevant laws so they don’t violate any that would compromise the investigation,” said Morales. “There are many different companies with varying policies and procedures. For instance, at one company you’re not allowed to conduct trash pulls, at another that’s okay because once it is abandoned on the curb, it’s public property. Of course, you always have to think safety first, and it is my preference to partner with law enforcement on everything we do because it makes the most sense.”

Morales concluded, “In my opinion, examples of rogue activity would be risking their safety by speeding through red lights following a suspect, taking pictures through windows of a private residence, or using a certain type of equipment that only law enforcement has access to use.”

An industry executive for a small specialty retailer shared some firsthand knowledge of retailers allowing police to use their GPS tracking system when the police are lacking funds to purchase state-of-the-art equipment. Other questionable activities he talked about were LP people entering pawn shops to purchase stolen merchandise, approaching known fences in order to gain evidence, conducting surveillance on suspects’ private residences without law enforcement accompanying them, and LP agents meeting suspects in parking lots to ascertain what they have stolen and who they are working for.

Law enforcement also puts LP professionals in awkward positions since they want the cases wrapped up on a silver platter. Lieutenant Chris Neville of the Wilmington Police Department agreed, saying he has no problem with retailers handling a majority of the case since police departments are so strapped for time and resources.

“Some LP people could be crossing the line and putting their safety at risk by approaching fences or conducting controlled buys,” said Home Depot’s Lussier. “Our role is to gather evidence in safe and ethical ways that tells the most compelling story of events to law enforcement. That includes knowing what to leave to the experts, such as approaching an actual fence. However, Home Depot has highly skilled and highly trained personnel who will sometimes conduct controlled buys, but we always partner with law enforcement to ensure all elements for a successful prosecution are being met.”

Marco Alfredo Mitrowke, who has more than thirty years’ experience in the LP industry, believes passionately in ensuring the safety of LP people, retail customers, and law enforcement. “LP professionals are not cops,” said Mitrowke. “We cannot act like law enforcement. Don’t get me wrong, there are some ORC task forces out there doing good work because they have hired former law enforcement that are highly trained in the necessary skills.” Mitrowke went on to explain the fundamental principles about educating LP people that LP is not about catching bad guys. It’s about being partners in the overall business strategy.

“It’s also about being safe,” added Mitrowke. “There have been too many incidents recently as crime continues to ramp up of violence that has only been exacerbated by loss prevention people instead of calmed down. We have a responsibility not only to our companies, but the public around us to keep everyone safe. The issues of liability to the companies we serve certainly outweighs the visions of glory in some big take down.”

Retailers agree that the safety of their customers and associates is of critical importance. How are they ensuring that, despite organizational pressures, ORC investigators are taking appropriate steps to keep everyone safe? Most retailers interviewed described strict policies and guidelines as well as intense training for investigation staff.

“It is most important when establishing an ORC team to put specific guidelines in place, especially around searching vehicles or houses, GPS tracking devices, or trash pulls,” said Dykes. “Conducting investigations in a safe way and not putting the team at risk is of paramount importance to Cabela’s. We ensure everyone abides by the applicable laws and engages in appropriate surveillance activities. The only way that can be done is by establishing those policies up front and communicating them effectively.”

“We always strive to build strong and sustainable relationships with our police department partners,” said Adams. “We know that we can’t do our jobs without them, so building a foundation of mutual trust is essential to any program’s success. At GAP we have strict guidelines for investigation decisions that happen in the moment, such as when, how, and where we follow a suspect. To ensure none of your ORC team crosses into the ‘rogue’ category, retailers need best-in-class training for their investigative team. Make sure that strategic direction is provided on what is acceptable and not acceptable when investigating ORC cases. Making impactful arrests and recovering merchandise is great, but safety and maintaining brand integrity should be your top priority.”

Of course, the retail trade associations feel very strongly about safety and ensuring the retail environment stays profitable and safe. “Ultimately, it comes down to awareness,” said Lisa LaBruno, senior vice president of retail operations for the Retail Industry Leaders Association (RILA). “Loss prevention professionals need to know where the lines are both professionally and ethically. It’s their responsibility to educate themselves and develop policies to ensure compliance before putting themselves and their companies at risk.”

As LP professionals, we face many ethical questions, and investigating organized retail crime is no different.

“I definitely believe LP people can go too far when investigating organized retail crime,” said Jerry Thomas, regional LP manager at HMSHost. “I hear a lot that LP people must help stretch the arm of law enforcement because we don’t have to play by the same rules that law enforcement does. But the question is always—just because we can do something that law enforcement can’t, does that mean we should?”

It is no question we are ushering in a new era of organized retail crime legislation, standards, definitions, and ultimately how the marketplace will treat this crime and the LP agents investigating it.

“Retail professionals conducting organized retail crime investigations now have a greater responsibility because they are treading new ground as the landscape is constantly changing on how we investigate and prosecute organized retail crime suspects,” suggested LaRocca. “Everyone needs to ensure they work closely with their general council and internal department leaders to craft company policies and procedures dealing with these case elements.”

Mitrowke agreed, stating, “As an industry, we are at a crossroads. It should be a requirement for professionals to be Wicklander-Zulawski certified and certified from the Loss Prevention Foundation. These are ways to advance not only your own career, but this entire profession. No longer will we be perceived as ‘wanna-be cops,’ but as true business partners that care about profit-and-loss statements, meeting earnings and the bottom line.”

Don’t Ignore Your Role in the Problem

Let’s consider for a moment the proposed enormity of the organized retail crime problem. When we start talking about billions, it’s difficult to relate. Ponder these illustrations:

• A billion minutes ago, Jesus was alive.
• A billion hours ago, man had not yet walked on earth.
• A billion months ago, dinosaurs walked on the earth.

Okay, so a billion is a lot. Is the retail industry really saying that flea markets, pawn shops, online auctions, and fraudulent returns are responsible for a $15 to $30 billion problem? Given the illustration above, it seems unlikely.

In a former eBay column in LP Magazine, a compelling description of the retailers’ potential role in proliferating organized retail crime asks the question, “Are we to blame?” The article describes a process where retailers are actually generating the demand needed to keep these ORC rings in business. While we are focused on preventing merchandise leaving through the front doors, are we considering the potential that stolen merchandise may be coming in through the back doors?

To learn about some of the ways retailers could be propagating the ORC problem along with actions retailers can take to help prevent the problem internally read the LP Magazine article, “Organized Retail Crime—Are We to Blame?”

This article was first published in 2012 and updated January 19, 2017.

The post How NOT to Investigate Organized Retail Crime appeared first on LPM.

In most large-value cargo thefts occurring at stores, there are two key components: a store employee and a driver. The employee allows access to the goods, while the driver has the means to transport the stolen freight unnoticed. One key tool in combating this problem is the strict rotation of drivers through various delivery routes in your cargo logistics network. This will ensure that the driver and store employee never have time in advance to set up a heist or to develop any type of personal relationship.

When possible, try to implement a procedure where the driver calls into his dispatcher, and then his dispatcher contacts the store to notify them of his or her arrival. This will allow for an extra set of eyes while the driver makes his way in with the paperwork.

Do not allow drivers to break seals, no matter what the weather or circumstance, or to remain unattended in the receiving area. An unattended driver can steal thousands of dollars in merchandise in less than sixty seconds. Do you expect the driver to tell you about the two cartons of iPhones he just stole?

Implementing these simple changes in your receiving area does not require huge resources. It’s low-hanging fruit that can make a big difference. Beyond the receiving area, security gets more complicated. Luckily, we have tools that can help us.

Theft Prevention Tactics

Background Checks. By now, everyone must have an understanding on how necessary background checks are to a supply-chain security program. The strict scrutiny of potential employees is critical to eliminating losses. The most important thing is the necessity to run a criminal check in every county that a potential applicant has lived. Many times, you will see carriers conduct a criminal check only in the county of current residence. This is done primarily to save money.

Instead, run a report showing every known address where a person has lived, and then run a criminal check in each of those counties. The number of “hits” will likely triple. This it is not wasted money, but money well spent in protecting ours and our customers’ assets.

Locks. Do not underestimate the value of a good lock on the back of a loaded trailer. Imagine closing up one of your stores at night and not locking the door. You probably can’t imagine that. Why then would you allow someone carrying your store’s merchandise to its final destination to do that exact thing? By strictly enforcing a lock policy, you can eliminate the majority of thefts in transit.

GPS Tracking. For years, trucking companies have been able to tell you where the tractor that is pulling your merchandise is at any given time. That information proved useful in making sure that just-in-time shipments were, in fact, just in time. However, for many reasons, this technology often proved useless in the event of an in-transit theft or hijacking. The first thing a thief will do is disable the GPS in a matter of seconds. Furthermore, many thefts occur after the tractor is disconnected from the trailer and another power unit is attached to make sure that no other tracking devices can possibly be used.

In the past when this happened, freight was lost—until tracking became available for trailers. These systems give us the ability to track a trailer’s location without being attached to a tractor. Many carriers are outfitting their entire fleets with this technology. Ask your service provider about it.

Partnering with Law Enforcement

Even when you have everything in place in your cargo logistics network, you will still encounter problems. There will always be thieves. Thieves will always come up with new ways to thwart technology, and technology always has some percentage of failure. When this occurs, your relationships with law enforcement will be your last chance for a successful recovery.

Cargo theft prevention task forces are appearing all over the country. It is critical to get to know these officers on a personal level so they have a more vested interest in getting your merchandise back.

Critical Strategy Components

Following are some key items to consider when developing a supply-chain security program for your company.

Communication Is Critical. Effective intelligence gathering and information sharing is a critical part of any supply-chain security program. In many cases, law enforcement will recover a vehicle with all of the contents stolen long before the theft is reported to local agencies. While there is a definite need for timely cargo theft information sharing between law enforcement agencies, you can help the process by promptly reporting thefts to enforcement officials.

Develop relationships with law enforcement in the areas where you operate. Several multi-jurisdictional cargo-theft task forces around the country do nothing but investigate trailer-load thefts. They know who the thieves are and where they like to take their stolen bounty. Make it a point to know every one of these groups. Quick action and communication are the keys to successful recovery and preventing future crimes.

Don’t React Passively to Loss. After a theft has been committed in your cargo logistics network, have it thoroughly investigated rather than simply filing a police report or insurance claim. Because many companies do not aggressively investigate, cargo thieves strike with little or no concern for being caught. In fact, organized retail crime rings often focus on the same companies, hitting them continuously until they are no longer easy targets.

Establish Security Compliance Standards. Clarify your expectations. You want to be sure that your carriers are doing enough proactively and, equally important, will do the right thing if a theft occurs.

• Do they have the latest GPS technology and systems for tracking shipments?
• Are their facilities safe? How safe?
• Do they have the right personnel and processes in place to address their supply chain security program?

Do not assume your shipments are safe in the hands of a third party. Make it your responsibility to ensure they are protecting your cargo the way you want it done.

Commitment to Cargo Theft

Retailers often ask, “Why should I care so much about preventing thefts when I don’t own the merchandise until you deliver it?” The answer is because you, the retailer, stand to lose the most. You lose potential sales when the merchandise is sold on the black market in your neighborhoods. If the load happens to be “hot” ad freight, you lose customer loyalty when the items are not in stock. You lose when the stolen merchandise is used for fraudulent refunds in your store.

There are countless ways that retailers stand to lose from an unsecured supply chain. It behooves retail loss prevention departments to partner with their internal transportation departments, outside logistics contractors, and law enforcement to develop a supply-chain security program and work to stop cargo thefts.

This article was excerpted from “Critical Components to a Supply Chain Security Program,” which was originally published in 2008. This article was updated January 18, 2017. 

The post Protecting Your Cargo Logistics Network from Thieves appeared first on LPM.

Organized retail crime (ORC) involves the association of two or more persons engaged in illegally obtaining retail merchandise in substantial quantities through both theft and fraud as part of an unlawful commercial enterprise.

The primary objective of these professional crime rings is to steal from retail organizations for the purpose of turning retail products into financial gain, rather than for personal use. Typically coordinated under well-planned procedures and rules, organized retail crime can operate on a local, regional, national or international scale. These intricate criminal operations are responsible for tens of billions of dollars in losses each year that can devastate a retail business.

Operations can cover a spectrum of possibilities from simple to extremely complex; involving organizers, boosters, fencing operations, re-packagers, and even illegitimate wholesale operations. Members are often recruited and well-trained, with each collaborator having a specific role to fill in the operation. Sophisticated techniques may be utilized, to include advanced communications and the latest technology. Working together, teams can steal thousands of dollars worth of merchandise from multiple retailers in a single day.

Organized retail crime is not a new challenge, but one that may have been referred to in different ways or by different names over the course of retail history. For many years there have been theft groups that have moved from store to store and market to market, stealing large quantities of goods and selling product through a variety of different venues. This is no different than what we’re facing today in many respects. However, while many of the basic concepts may be the same, the execution—and the potential consequences—have been greatly magnified.

Defining the Problem

With the reach and sophistication of these networks, the advancements in technology, the potential profitability of the illegitimate venture, and the diverse ways that they can impact the retail business, today’s professional criminals are attacking retailers with a voracious appetite. They are highly motivated and exceedingly mobile, and the ability to resell or move product has climbed to an unprecedented plateau.

With organized retail crime accounting for more than double that of other property crimes such as robbery, larceny, burglary and auto thefts combined, the gravity of the losses attributed to ORC operations have grown so significant that it has captured the attention of retailers, the law enforcement community, and society as a whole. Loss prevention departments across the country are banding together with local, state and federal law enforcement agencies to combat one of the most insidious and sweeping threats to face the success and profitability of the retail market.

Organized retail crime is a pervasive issue, and can occur anywhere and in any community. Every region of the country has reported problems. Whether in urban markets such as New York or Los Angeles or rural areas across the nation, ORC has shown no prejudice in mounting multi-million dollar theft and fraud rings. Key concepts used to define events that may be considered organized retail crime might include but are not limited to:

• Groups of two or more people working together to steal or illegally obtain company merchandise; or otherwise defraud retail organizations
• Merchandise and other products involved in theft incidents is intended for resale rather than for personal consumption or usage
• A wide geographic area of activity is typically exposed
• Diverse merchandise brands and retailers are typically targeted
• There is often a hierarchy of structure within the criminal organization to include thieves, fences, and leadership.

Recognizing the Target

Businesses targeted by organized retail crime can be as diverse as the types of products targeted, whether department stores, specialty stores, supermarkets, pharmacies, convenience stores, category killers or other types of retailers. Every area of retail can be affected, and no company is immune from the prospective threats. Attacks can come through the front door, back door, internally, over the internet, or anywhere along the supply chain.

Potential product lines can include almost anything; however targeted products almost always share some or all of the following key characteristics:

• The product is considered valuable or in high demand
• The product is easily accessible to consumers (and thieves)
• The product is easily concealed to avoid detection when stolen
• The product has expansive availability and demand, especially in different stores or markets
• The product is innovative or offers premium performance that is highly attractive to “customers”
• The product is easily sold and converted to cash quickly

Based on this simple model, it’s easy to see that ORC groups can potentially steal a wide array of products, from over-the-counter drugs, razor blades, baby formula, cigarettes, batteries, video games, CDs, DVDs, gift cards, jewelry, large or small electronics, designer clothing, power tools, high end meats, or any number of items that are in high demand. Essentially, product is only limited by the needs of the criminal element, the ingenuity of those attempting to steal our products and the expedience through which the product can be sold and converted to cash.

Understanding the Threat

The potential profits associated with this type of theft also remind us that we should never underestimate the intelligence, ingenuity, motivation, or ruthlessness of those involved. The presence of determined, organized criminals working and stealing throughout our organizations pose a real threat to both employees and customers alike. From in-store thefts to cargo hijacking and every possible opportunity in between, these incidents frequently involve fear, intimidation and violence. Corruption, hostility and competition can be fierce in organized crime, with the potential for perpetrators to harm each other as well as those that might stand in their way.

Organized retail crime activities can also result in dangerous products ending up in public venues. Counterfeiting, re-packaging, the changing of expiration dates, handling products in dirty and unsanitary environments, and product adulteration and dilution operations can result in item contamination, health and safety concerns, in addition to eroding brand credibility and lost sales.

Dealing with the many aspects involved with organized retail crime requires an advanced level of skill and training, but also necessitates sound judgment and common sense. Anyone that may potentially become involved in dealing with this type of crime should use extreme caution. Following the policies and guidelines of our organization as well as the direction of supervisors and ORC experts should be our protocol at all times.

To overcome the threats posed by organized retail crime it’s important to learn and understand the hierarchy of the ORC structure and roles of the players involved. Strategic methods need to be examined in detail in order to fashion a strong approach and an effective result. Shared tools and common language must be established so that cooperative efforts between law enforcement and retailers can be fostered. Every effort must be made to educate our team, heighten awareness amongst company decision makers, and protect our customers and employees from these incidents. Sound judgments, safety, prevention and awareness should be our ultimate objectives as we develop the strategies necessary to help us detect issues, deter incidents, protect resources and resolve these criminal episodes.

By capitalizing on opportunities to enhance our knowledge and education, we are making an investment in our own future. To learn more about organized retail crime and the certification process, visit losspreventionfoundation.org.

The post LP 101: Organized Retail Crime appeared first on LPM.

Created by Turning Point Justice (TPJ) and the National Association for Shoplifting Prevention (NASP), the Crime Accountability Partnership Program has not only saved communities more than $30 million in resources, but it has saved many people from a self-destructive, criminal future.

Offered free to retailers and their law enforcement partners, the Crime Accountability Partnership Program significantly reduces the drain on police resources in responding to petty shoplifting, helps reduce court case backlogs and frees up valuable public and private resources, enabling police and loss prevention personnel to focus on more significant issues.

Adopted by several major retailers, the Crime Accountability Partnership Program was designed by criminal justice and loss prevention professionals and uses TPJ’s Cloud-Justice technology and NASP’s court-approved educational programs to provide a coordinated and collaborative response to low-level shoplifting by retail, police and criminal justice partners.

Guided by restorative justice principles, the program requires that offenders accept responsibility for their actions, pay restitution to the retail victim and complete the appropriate NASP education course to build their competency and prevent repeat offenses.

In 2016, the program allowed partner retailers to reduce calls to law enforcement between 40% and 60% while effectively educating and holding offenders accountable.

Since 1989, through their partnerships with more than 2,000 court systems and 4,000 criminal justice professionals across the U.S., NASP has delivered their offense-specific educational programs to more than 500,000 shoplifters. With experienced criminal justice case managers – who use the same techniques and educational programs for Crime Accountability Partnership participants that are provided in the criminal justice system – NASP has court documentation showing that after participating in their programs, less than 3% of those convicted criminals have reoffended.

To encourage fully transparent partnerships, the Crime Accountability Partnership Program provides participating law enforcement partners with access to as much information as they wish on cases occurring within their jurisdiction – including intelligence information on all incidents. The program’s technology also screens for and tracks repeat offenders, organized retail crime professionals and other known offenders across retailers and jurisdictions.

To learn more about the Crime Accountability Partnership Program, contact Paul Jones, LPC at Turning Point Justice, (561) 419-7993, ext. 103 or visit either NASP at shopliftingprevention.org or TPJ at turningpointjustice.com.

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Bill Turner, LPC, has been a reader and contributor to Loss Prevention magazine (now LP Magazine) since its inception in 2001. Now, as the publication celebrates its 15-year anniversary, Turner looks back at the publication’s past five years in a feature article in the January-February 2017 issue. This third and final installment to “Fifteen Years of Loss Prevention,” which appeared in the September-October issue, covers LP Magazine’s history from 2012-2016.

Certain subjects were featured heavily in the magazine during the last five years. Shoplifting and organized retail crime (ORC), crisis management, and employee theft received a lot of attention. Coverage about loss prevention technology has been comprehensive. From Turner’s article:

As called out above, some subjects saw fewer articles in the magazine over the past five years. Just the opposite is true for articles dealing with technology. I counted a whopping thirty-five articles dealing with various forms of loss prevention and retail technologies from 2012 to 2016. And, of course, the first one, in the May–June issue of 2012 centered around RFID. Bob DiLonardo noted that, once again, RFID in retail was a matter of when and how, not if. He said the primary message from the recently held RFID Journal Live’s tenth-anniversary conference was that RFID works and that seven years of developing standards was paying off. It was also noted that a Bloomingdale’s case study had been used to champion the technology for the retail industry. A feature article on American Apparel in the July–August 2014 issue highlighted its dedication to and reliance upon RFID technology for loss prevention and inventory control purposes.

Check out “Fifteen Years of Loss Prevention, Part 3” to read the full article and learn more about the history of LP Magazine during 2012-2016. You can also visit the Table of Contents for the January-February 2017 issue or register for a free subscription to the magazine.

The post Recapping Fifteen Years of LP Magazine appeared first on LPM.

Violent drug gangs increasingly turn to credit card thefts as big moneymaker

Less and less gangs are feuding over drug wars, and turning more and more to less deadly credit card fraud to make money, according to NYPD officials.   They report they are devoting more resources to target repeat offenders and gangs carrying out these scams, including adding detectives to grand larceny squads in each borough, as well as having gang squads conduct raids to try to get suspects off the streets. The raids often involve catching them in the act in more serious offenses like weapons or drug possession.  Surveillance videos from recent schemes show how often gangs are using credit card fraud to fund their operations. One recent video taken at a big box retailer showed suspected gang members using one stolen credit card to purchase multiple iPads. Other videos show how suspects use parking meters, fast food restaurants or taxis to test stolen card numbers; once the card is approved, the suspects move on to other locations.

“These gang members are tech-savvy,” said NYPD Chief James Essig. “They are wizening up, and they realize street violence only brings more heat on them.”  Investigators said some of the money raised is used to buy weapons or pay for vacations or expensive cars. Some suspects even post videos on social media showing off alleged trips or purchases allegedly made using bogus credit cards. Retailers want banks to increase chip technology and require pin codes for credit card transactions to help cut down on fraud. The Federal Trade Commission cites national studies that show about $15 billion is stolen from more than 13 million consumers each year.

As for the NYPD, they say that going after street gangs for drugs and violent crimes still makes the most sense because it makes communities safer and jail time is often more severe. Fraud investigations are detailed and labor-intensive, and arresting a gang member for credit card fraud alone can often result in penalties of probation or a year in jail.  Still, fraud arrests continue to grow in New York, as are the number of street crews getting into the credit card fraud business. And with the NYPD putting on additional pressure, investigators say they see street crews increasingly venturing out to the suburbs and exurbs where smaller departments have fewer resources to try to counter these rip-offs.  [For more: NBC New York News]

Where’s that sweater you want to buy? High-tech tags help retailers track it down

RFID tags may finally be taking hold. In just the last two years, the share of apparel retailers using or piloting RFID technology has doubled, according to a 2016 survey by consulting firm Kurt Salmon and you will almost certainly see more of them.

The technology isn’t cheap. But retail industry experts say the potential to bring some perks of online shopping to brick-and-mortar stores while making it easier to keep up with impatient, time-pressed customers is convincing more companies the tiny tags are worth it.  Old-school inventory tracking methods, relying on employees hand-counting product on the sales floor, are too time-consuming to do often enough to provide the kind of accuracy retailers need to reliably tell customers whether an item is in stock at a local store or fulfill online orders from stores, industry experts said. RFID technology takes out much of that legwork.

About two years ago, before active wear-maker Lululemon Athletica’s push into the technology, the company internally tested its buy online, pick up in store service in New York. More than half the time, Lululemon was unable to fill the test orders because of supply issues, Jonathan Aitken, the company’s information technology director, said at a retail industry trade show last month.  “That’s a terrible guest experience,” Aitken said.
Information from the techie tags also helps Lululemon keep sales floor displays stocked, and when a size or style does run out, employees use handheld devices to check whether an item is available without going back to the storeroom. Shoppers can get the same information through the retailer’s app, which Aitken thinks boosts sales since customers won’t assume products not found on the rack are sold out.  Early adopters already are working on more creative uses for the technology.  [For more: Chicago Tribune]

Michael Jordan’s Steak House part of hotel’s data breach

We earlier reported that Intercontinental Hotels had been one of the latest victims of a data breach. More information indicates restaurants and bars at 12 InterContinental Hotel Group properties, including in Chicago, reported a data breach involving people who used credit cards from August 2016 to December 2016.

Customers at Michael Jordan’s Steak House Chicago, brunch spot Center Court and Eno bar at the InterContinental Chicago, are impacted, according to a statement issued by the hotel group.

The hotel chain launched an investigation after reports of unauthorized charges on some payment cards used at the properties. Cards used at the front desk of these properties were not affected. An investigation of other properties in the Americas region is ongoing, the hotel said.

The hotel hired a cyber security firm that determined that malware was installed on servers that processed payment cards used at restaurants and bars. The malware searched for track data (cardholder name, card number, expiration date, and internal verification code) read from the magnetic stripe of a payment card as it was being routed through the affected server, the hotel said.  [For more: ABC7 Chicago]

Sophisticated shoplifting gangs are costing US retailers $30 billion a year

Organized Retail Crime (ORC) continues to hurt retailers, and shows no signs of letting up.  It may not have the grit and the glamour of film noir, but one of today’s most elaborate strains of organized crime drains about $30 billion from US retailers annually, and without much consequence.

ORC affected 97% of the 67 American retailers surveyed by the National Retail Federation in 2015, and four out of five of them said that it’s getting worse. Though only crocodile tears may be shed for corporate giants like Walmart and Target, the massive theft of items like teeth whitening strips, laundry detergent, and energy drinks across the US can really hurt small businesses, and shoppers’ wallets. In some cases, it is even limiting access to much-needed items.

The National Retail Federation defines ORC as large-scale theft or fraud with the intent to resell items for financial gain. It can include everything from smash-and-grabs or the production of counterfeit products, to elaborate inside jobs involving company employees. In increasingly organized ways, fleets of “boosters” (industry slang for shoplifters) target an area and pluck shops dry of crucial yet pricy items—popular goods include baby formula, allergy medicine, and pregnancy tests. Then, goods are listed for sale online on sites like eBay and Craigslist, and on Facebook groups–or simply returned to the retailers they were stolen from, a category of hoodwinking called “return fraud.”

In 2014, “return fraud” during the holidays cost major retailers $1.9 billion, and 71% of those surveyed by the National Retail Federation experienced return fraud by ORC gangs. The process usually involves producing counterfeit receipts and returning stolen goods for hard cash, store credit, and gift cards that can be converted to money in Coinstar machines or online.  “They know what they’re doing. They have this down to a science,” said Robert Moraca, the vice president of loss prevention at the National Retail Federation. “The insult is that the retailer has stuff stolen from them and then they have to buy it back.”

[For more: Quartz Media]

Javelin, Visa offer different takes on whether card fraud is moving online

Different methodologies may account for differences in numbers and opinions.  According to a report released last week by Javelin, card-not-present fraud went up 40 percent this year, but according to a new report from Visa, there has been no increase in online fraud. The increase in card-not-present fraud was part of a general increase in fraud, reported Javelin.

“We’ve been measuring fraud for over a decade and this past year is very significant because we hit a record high as far as the number of victims of identity fraud,” said Al Pascual, research director and head of fraud and security at Javelin Strategy & Research.  The Javelin study is based on a survey of about 5,000 consumers,” he said. “Visa data is based on millions of actual transactions. That is a very important distinction.”

Javelin defended its numbers. “We conducted our independent study and are reporting on number of victims of CNP fraud in 2016, in this case,” said Pascual. “Our findings are consistent from what we have heard from others in the space, including merchants, issuers, and other networks.” The Visa report also went into more depth about the status of the EMV migration.

As of the end of the year, 39 percent of all merchants and 49 percent of the payment volume was on chip-enabled terminals, said Visa’s Ericksen, and counterfeit fraud was down 52 percent at the merchants who made the switch. The number of chip-enabled Visa cards in circulation nearly doubled over the course of the year, to more than 408 million, and the number of merchants with chip-enabled terminals more than doubled, to 1.8 million.  [For more: CIO]

Dollar General plans to create 1,000 jobs in Georgia in 2017

Dollar General is planning to create 1,000 jobs across the state of Georgia this year with the addition of new stores as well as a new distribution center. The Goodlettsville, Tennessee-based company said in a news release that it wants to add 1,000 discount stores and create about 10,000 jobs across the country in 2017.  News outlets report that Dollar General currently has more than 700 stores and more than 5,000 employees in Georgia.   The growth plan in Georgia includes opening a new distribution center in Jackson. The land, purchased in May, sits in Butts and Spalding counties, south of Atlanta. Gov. Nathan Deal said in a statement last year that the center will create 500 jobs.  The company has not given further details about where the new stores will be.  [For more: AP Big Story]

LP Worldwide: Employee stole £330,000 which she blew on gambling habit

Bosses at a construction company have described their “utter disbelief” after a trusted and respected colleague stole more than £330,000 (US $413,390) from the firm to feed her online gambling habit. Beverley Pearce, 54, was jailed for 32 months at Cardiff Crown Court on Friday after stealing funds from Brecongate Building Solutions.

The defendant had worked at the company for 16 years as an account manager and paid herself up to five times a month from the company accounts. From 2011 until her theft was discovered in 2016, Pearce had taken a total of £339,817.82 from the company account she had exclusive access to. The court heard she had blown the money on an online gambling addiction. Brecongate’s managing director Paul Jones said Pearce was capable at her job and had earned the respect of her colleagues before her criminal behaviour was uncovered. “She was experienced and very competent at her job,” he said. “When it was discovered what she had done, it was devastating, we were in utter disbelief.”

The company’s commercial director Ryan Powell added: “Initially we didn’t know the extent of it, we just felt like we were dreaming, like it wasn’t reality.” The magnitude of the theft was only unearthed when another employee noticed 90 unauthorised transactions from the company had been made to the defendant. She emailed an apology but it was “too little, too late.” At that point the police was called and that was the last time they saw their trusted employee of 16 years.  [For more: Wales Online UK]

When a data breach happens, will California pay for protection?

California law makers are looking at a new law that would require the state government provide ID Theft protection or mitigation services in the event of a government data breach at no cost to those affected for 12 months. Assemblyman Matt Dabaneh said the idea is the central purpose of the reintroduced Legislation. State law already extends the same requirements to businesses or individuals put the measure, AB 241, forward.

The legislation would potentially impact hundreds of thousands of records and millions of Californians in future years. Between 2012 and 2015, the state Attorney General said it received reports of 657 data breaches that involved the personal information of more than 500 California residents, according to the California Department of Justice’s 2016 data breach report. Government accounted for 5 percent of those breaches and 2 percent of total records breaches between 2012-15, the report said.

For big breaches, offering identity theft protection is costly. In 2015, the federal government spent a reported $133 million to provide ID theft protection services to an estimated 21.5 million people whose personal information was stolen in the much-publicized hacking of the Office of Personnel Management.

In a separate incident, Utah spent millions of dollars for two years’ worth of ID protection when Social Security numbers were stolen from the state’s health department.

Dababneh introduced legislation nearly identical to AB 241 in 2015. That bill (AB 259) stalled in Appropriations. A committee analysis found Dababneh’s legislation in 2015 would incur “potential major costs in the tens to hundreds of millions of dollars, depending on the scope of a data breach to any of various state agencies.” Further findings from that analysis:

Even one event affecting 100,000 individuals could result in potential costs of $12 million to $36 million (General Fund) to provide credit-monitoring services for one year. Based on information surveyed from credit monitoring services, bulk enrollment costs for credit monitoring services in which the vendor is provided with a complete list of individuals at once from the breached entity generally range from $10 to $30 per month per person ($120 to $360 per year per person), depending on the type of monitoring package offered by the vendor. [For more: Government Technology]

The post Breaking News in the Industry: February 9, 2017 appeared first on LPM.

Police are asking for help to identify traveling ORC ring targeting Cabela’s

Union Gap, Washington, police are asking for the public’s help to identify a group of traveling thieves. Three suspects are running an Organized Retail Crime (ORC) ring, traveling from coast to coast, hitting Cabela’s stores. Take a good look at the three theft suspects on the video who are wanted in Yakima County… two men and a woman.  [Video] They’re bold, well organized and detectives across the country are hoping someone watching knows their names. The video shows them in action at the Cabela’s in Union Gap, just south of Yakima. The woman is wearing a big, baggy coat. One of the men stuffs expensive high-tech items in it like GPS units and and Range Finders used for hunting. The second guy acts as a lookout.

Union Gap detectives say the way they finish their heist proves this crew is prolific and the most sophisticated thieves they’ve seen. “They did not remove any of the security measures,” said Union Gap Det. Curtis Santucci. “They concealed them in the jacket of the female and out the door they went. They did not set off any of the alarms, so it’s presumed that they are using some type of security device that’s defeating the door alarms.”

It’s believed these three are just a branch of a bigger group who’s traveling the country together, hitting Cabela’s stores in Montana, Colorado, Minnesota, Illinois and as far east as Delaware. “They were in a mini-van. Silver, light blue in color and it probably had Illinois temporary plates. Cabela’s loss prevention had given out information from prior incidents and intelligence they gathered that they believe the group was stationed out of Illinois and that they typically use minivans with Illinois temporary plates. From groups that they have contacted in the past, they were of a Romanian descent.”

Their score in the Union Gap heist alone was more than $6,000. If you recognize the three suspects or know anything that can help identify them and possibly lead to taking down a big cross-country organized retail theft ring, call Crime Stoppers at 1-800-222-TIPS, or use the P3 Tips App to submit your information.  [For more: Q13 Fox]

NBA warns fans to beware of counterfeiters during All-Star weekend

The NBA All-Star game is just a few days away and the NBA is warning fans to be cautious.  As fans invade New Orleans, Louisiana, they want everyone to know to be aware of cheap merchandise and phony knockoffs.  Basketball fans from around the world will descend on New Orleans for the NBA All-Star 2017 this weekend, and the league wants everyone to beware of fake merchandise and poorly made knock-offs.

“It’s been three years since the NBA last held the All-Star Game in New Orleans, which means NBA products will be at a premium throughout All-Star,” said NBA Executive Vice President and Deputy General Counsel Ayala Deutsch. “We expect official NBA merchandise will be in high demand, and it is our responsibility to protect fans by supplying them with the right information and tips to avoid purchasing products of inferior quality.” The NBA says counterfeiters not only victimize fans, but legitimate, tax-paying retailers in the New Orleans area.

To make sure fans don’t fall for fake merchandise, the league offered the following tips:

• Look for the hologram sticker or holographic hangtag and a sewn-in or screen-printed label identifying the name of the NBA licensee (e.g., adidas, Stance, Mitchell & Ness)
• Shop at NBA-authorized retail locations, such as the NBA Store – A Fanatics Experience with locations at the Smoothie King Center, Mercedes-Benz Superdome, Sheraton New Orleans Hotel, Royal Sonesta New Orleans and InterContinental New Orleans – rather than buying items from street vendors, flea markets, or other questionable sources
• Shop online at NBAStore.com
• Beware of ripped tags or irregular markings on apparel

“At a major, high-traffic sporting event like NBA All-Star here in New Orleans, our collaboration with the NBA is crucial to preventing counterfeiters from preying on unsuspecting fans,” said Raymond R. Parmer Jr., Special Agent in Charge of ICE Homeland Security Investigations New Orleans. “We would encourage all fans to heed the tips provided to ensure they are not purchasing fraudulent merchandise. HSI is committed to protecting fans and the American economy from counterfeiters seeking to illegally profit from this great event. We must remember that counterfeiting is not a victimless crime; it costs U.S. businesses billions of dollars each year while severely impacting American jobs.” [For more: Fox8 Live]

Man convicted of stealing $500K in cigarettes from warehouse

A New Jersey man has been convicted in federal court of breaking into a Connecticut warehouse and stealing more than 8,000 cartons of cigarettes worth about $500,000. Andrew Oreckinto was convicted of theft from an interstate shipment. He faces up to a decade in prison.

Prosecutors say surveillance cameras recorded the 52-year-old Oreckinto breaking into New Britain Candy in Wethersfield, Connecticut, in March 2011. A glue-like substance was used to disable door locks. Wires to an outside surveillance camera and a phone line were also cut. Authorities linked Oreckinto to the theft by analyzing his call history. Oreckinto is currently serving a five-year prison term in New Jersey for stealing $100,000 worth of copper cable and selling it for scrap.  [For more: The Seattle Times]

LP Worldwide: Australian businesses must now report if they’ve suffered a data breach

After being debated for years, the Privacy Amendment (Notifiable Data Breaches) Bill 2016 finally went through the House of Representatives last week, and has now been passed by the Senate, making it legislation. All it needs is the royal sanction to become law – a step that’s basically just a formality.

The bill applies to organisations subject to the Privacy Act, so state governments, local councils and businesses with a turnover of less than $3 million a year are exempt. But other organisations and big businesses in Australia will soon be legally obliged to inform the Australian Information Commissioner and affected individuals of any ‘eligible’ data breach.

The legislation defines an eligible data breach as an “unauthorised access to, unauthorised disclosure of, or loss of, personal information held by an entity” where “the access, disclosure or loss is likely to result in serious harm to any of the individuals to whom the information relates”. Other than the description of the breach, notifications should include the kind of information accessed and details on how their customers are to deal with the incident. The bill states that failure to comply with the mandatory notification scheme will be “deemed to be an interference with the privacy of an individual” and penalties including fines of up to $360,000 for individuals and $1.8 million for corporations.

It has taken three years for both sides of Parliament to pass this bill. When the Labor Party first introduced the Privacy Alerts bill in 2013, the Coalition steamrolled the effort on the basis that there were no clear definitions for the terms “serious breach” and “serious harm”. The new notification scheme has been welcomed by many and is being seen as an important step towards protecting Australian consumer data.  [For more: TechRadar]

Most US firms would pay to avoid data breach shame going public

According to a recently released survey released by BitDefender, the majority of businesses in the US would pay big money rather than have to deal with the aftermath of a data breach that goes public.

The report reveals that two-thirds of 250 IT decision makers at enterprise firms say their companies would pay $124,000 to avoid public shaming after a data breach, and 14 percent would even go so far as to pay $500,000. The willingness to pay a vast sum of money highlights just how much devastation a successful cyber-attack can cause. When data breaches occur, this can not only lead to the theft or destruction of customer and corporate information, but companies will take a financial hit to remedy the situation and to compensate customers. They may also have to pay regulatory fees if they do not have acceptable levels of security in place, and perhaps most importantly, a hit to reputation in the aftermath can impact future business.

A recent example of just how seriously data breaches can impact a businesses’ future is the buyout deal between Yahoo and Verizon. In October last year, Verizon said that plans to buy the tech giant for $4.83 billion could be materially damaged after Yahoo admitted to a data breach which took place in 2014 and exposed 500 million user accounts.

BitDefender’s survey, conducted in October last year by iSense Solutions, also suggests that up to 34 percent of companies in the US may have been breached in the past 12 months, and the majority, 74 percent, do not know how it happened. According to the company, board members are now facing increasing pressure to make sure corporate networks are as safe from cyber-attacks and the possibility of data breaches as possible, and IT-related jobs are transforming as a result. However, budgets are not adequate for the task. Only two-third of those surveyed said cyber-security investment levels were enough. In total, 48 percent of the firms surveyed have increased cloud security spending in the past year, surpassing that now spent on physical security. This increase makes sense as so many corporate services and systems are now hosted through cloud technologies rather than in-house servers, but according to respondents, security budgets will need to increase by an average of 34 percent in order to keep future corporate networks safe.   [For more: ZDNet]

Retail groups meet with lawmakers on swipe fee reform

More than 60 retail representatives have come together to lobby federal legislators to keep reforms on swipe fees in place.   The Retail Industry Leaders Association (RILA); the National Retail Federation (NRF); the Association for Convenience & Fuel Retailing; the Food Marketing Institute (FMI); the National Restaurant Association, and many others visited Capitol Hill to tell lawmakers “how pro-competitive debit reforms have positively impacted their businesses and ask Congress to stand with Main Street retailers by opposing any efforts to weaken or repeal the law,” according to RILA.

The 2010 Durbin Amendment, part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, put in place debit card swipe fee regulations which, in part, capped those fees at 21 cents per transaction plus five basis points, or .05 percent of the transaction. However, those reforms have come under fire from federal legislators looking to repeal the regulations.

By repealing debit swipe fee reform, Congress is standing with card companies and big banks on the backs of Main Street retailers. These reforms have saved retailers and our consumers billions. Repealing these reforms would harm merchants and our customers,” said Austen Jensen, vice president of financial services for RILA. “The electorate has spoken and they do not want to bailout big banks for providing another bonus check for Wall Street.”

President Donald Trump has also put Dodd-Frank on his administration’s radar. Trump has ordered a review of the law to be conducted by his Department of Treasury secretary.

“If debit reform is repealed, the card industry will go back to anti-competitive practices that cost retailers and their customers billions of dollars a year. If that happens, the fees will go nowhere but up and the opportunity for competition will be lost. Retailers are on Capitol Hill to tell lawmakers that debit reform needs to be preserved for the sake of American consumers and our nation’s economy,” said Mallory Duncan, NRF senior vice president and general counsel. Debit swipe fees are retailers’ second highest operational cost only to labor.  [For more: Convenience Store News]

Target, Gap, Best Buy and other retailers going to DC to oppose border tax

Chief executive officers from Target, Gap, Best Buy, AutoZone, and other retailers will be in Washington, D.C. to meet with congressional leaders on Wednesday in opposition to a proposed border adjustment tax, Reuters reports. “Given that retail is the largest private sector American employer, retailers support sound policies that spur economic growth and job creation,” said Brian Dodge, senior executive vice president of public affairs at the Retail Industry Leaders Association, in a statement. “Later this week, several top retail executives will visit Capitol Hill to meet with lawmakers and discuss pro-growth policies that will benefit both American consumers and job creators.”

A border adjustment tax, a House Republican proposal, would change the way profits are tallied, lower corporate taxes, and impose a 20% tariff on imports. Most of the clothing, electronics and other consumer goods Americans buy are imported. The CEOs are expected to meet with Kevin Brady, chairman of the House Ways and Means Committee, and members of the Senate, according to Reuters. It’s unclear whether President Trump will be involved with the meeting.

“Border adjustments and tax reform could create uncertainty and volatility across the entire retail ecosystem as importers face a non-deductible tax on imported goods and the U.S. dollar makes a significant re-rating higher,” said Cowen & Co. In an earlier note, Cowen outlined some of the issues that would arise if the border adjustment tax went into effect, including a rise in prices and possible bankruptcies among those companies that can’t shift their pricing and supply chains.  [For more: Market Watch]

The post Breaking News in the Industry: February 15, 2017 appeared first on LPM.

Each year, USS holds its annual KickOff event, which combines a company-wide meeting with specialized sales training and planning sessions over the course of a week.

This year, the entire sales team traveled from across the globe for two and a half days of in-depth product training and sales coordination hosted by CEO and Founder Adel Sayegh and Chief Operations Officer Claude Verville. These regular, cohesive meetings provide an opportunity for the sales team to not only interact with their support system at USS headquarters, but to also get a sneak peek at upcoming innovations from the R&D team and sales support efforts being implemented by the marketing department.

With more than 235 years of combined loss prevention (LP) experience, these all-hands training sessions equip the sales team with an opportunity to educate each other on new and recurring LP and organized retail crime (ORC) trends, as well as share tips and tricks for successful implementation of USS’ innovative products and services.

Brent Onan, vice president of sales, East, offered his insights regarding the value of the training sessions and how they directly support USS’ mission within the industry. “Our commitment is to our people and our customers,” he said. “We’re excited to train and develop our teams to better support our customers!”

Pete Bacol, vice president of retail sales – West, echoed similar sentiments. “The better we know our product, the better we can serve our clients. In a company that thrives on innovation and is constantly releasing and improving its products, the value of product training equates directly to a better customer experience.”

In addition to serving as the commencement of the organization’s new fiscal year, the annual KickOff event presents the opportunity to recognize individuals who excelled during the year prior, with this year’s event seeing eight recipients awarded for their efforts and contributions.

For more information, visit www.ussinnovate.com.

The post USS’ Annual KickOff and Sales Training Serves as Running Start for 2017 appeared first on LPM.

Subway employee killed while protecting his mother during armed robbery

An 18-year old Subway employee was shot and killed in Houston, Texas, while trying to protect his mother Wednesday night during an armed robbery.

Two men showed up around 9 PM, closing time, demanding money. When one of the men pointed a gun at the victim’s mother, the teen stepped in front of her and was subsequently shot in the neck and later died. The gunmen ran out after the shooting occurred, without any money, and were last seen driving a tan or gold colored sedan. The teen worked at the restaurant with his mother and they were getting ready to close for the night when the incident occurred.

Investigators said the two men were described as young black men wearing hoodies and dark pants. One is about 18-to-20 while the other is younger, possibly in his mid-to-late teens.  Police said the two suspects may be linked to another Subway restaurant robbery that happened after the shooting. The mother of the young man was the only witness, but they are also looking at video surveillance from the restaurant. Anyone with any information is asked to call CrimeStoppers at 713-222-TIPS. [For more: Houston Patch]

The American Greed Report: Organized Retail Crime

These are busy times in the shoplifting industry. Yes, we said industry. What used to be thought of as petty theft is now a $30 billion a year business that retailers and law enforcement call “organized retail crime.” It features roving bands of shoplifters, midlevel operatives who fence the stolen goods, and bosses who control the enterprise. “It’s definitely the biggest problem retailers face,” said Robert Moraca, Vice President of Loss Prevention at the National Retail Federation.

Rico Vendetti of Rochester, New York, profiled in the latest episode of “American Greed”, had the drill down pat. From his apartment above the tavern he owned, Vendetti controlled a retail crime ring whose foot soldiers—professional shoplifters known in the industry as “boosters”—stole an estimated $700,000 worth of merchandise from big box stores and supermarkets. Then Vendetti and his team sold the goods online.
The key to the business is the numbers, says FBI Special Agent Eric Sakovics. “It’s a very large number of these boosters who would steal anything from a TV to flea medicine. They bring them back to him, and then he would resell it. And in this case, he was reselling it 50 cents on the dollar for retail value online,” Sakovics said. But here is the good part, Sakovics said. “He would pay his boosters 25 cents (on the dollar). So he was a making a 25 percent profit off retail value.”   [For more: CNBC]

Police investigate $30k jewelry heist at Pittsburgh pawnshop

A burglar stole an estimated $20,000 to $30,000 worth of jewelry from a Pittsburgh pawnshop along Route 30 early Wednesday morning. The masked burglar, who was caught on security camera, was seen using a brick to smash display cases containing gold rings, necklaces, gold chains, antique jewelry and other items from Jake’s Haggle Hut, said Jeff Steinmeyer, store manager.

The burglar also used the brick to smash a front door window to gain entry, state police said. No cash was stolen in the burglary. Clothing that may have been worn by the burglar was found along Millersdale Road, Steinmeyer said. Store officials were notified by the pawnshop’s security company of the break-in, which occurred at about 2:40 a.m., Steinmeyer said. Jake Cunningham, store-owner, notified area pawnshops of the items that were stolen in the event that someone would try to sell the stolen jewelry.  [For more: Tribune-Review]

Five habits that could cause a data breach at your company

Data breaches have become a hot-button topic in recent months as many major companies such as Yahoo and Target have been hit by high-profile attacks. Here are five common things you could be doing, that may put your company at risk.

Clicking on random advertisements
Fake advertisements are one of the oldest tricks in the book. Today, they are more sophisticated than ever and harder to recognize. Many house ransomware, which can hold assets “hostage” through encryption until a fee is paid. No website is safe, even major ones as ads like these have been found on websites such as the New York Times and AOL.

Forgetting to lock your accounts
Something we have all done, such as getting up from our computer for just a moment, is all it takes for someone to pop a USB in and corrupt or steal files. It takes even less time to simply keep information safe with a password.

Sharing information too freely
A common theme among data breaches is allowing a bunch of random employees unrestricted access to highly sensitive data. Make sure only those that are needed and trusted have access. A Cloud Access Security Broker (CASB) is a good option, especially when dealing with third party vendors, as this can notify you if someone attempts to access shared information from a foreign location or after work hours.

Using public WiFi for work
Public wifi is not private at all and akin to inviting random people to view every bit of information you access while on the public connection. If necessary to connect while traveling, a VPN or virtual private network that can be reached from any location is suggested. Also be sure to monitor your network often, especially with frequent travel.
Connecting with strangers online. Social networking sites such as LinkedIn have become a hotspot for attacks. Spammers and bot attacks through social media have exploded recently. Be wary of connecting with new people you have not met in person. If unknown people friend you on a site, it might be a good idea to verify them by speaking on the phone first.  [For more: Apex Tech]

Catch up to the future of credit card fraud with our FREE Special Report, Credit Card Fraud Detection and Prevention: Lessons on Credit Card Skimming, e-Commerce Scams, and Theft Investigations.

Ex-employee to pay $1.3 million, go to prison for theft from Alabama nonprofit

A Madison man was sentenced to two and a half years in prison and ordered to pay over $1.3 million in restitution after stealing from his former employer, a Huntsville nonprofit.

Reggious Sanchester Bell, 30, was sentenced for stealing more than $1 million from the Huntsville Rehabilitation Foundation, which does business as Phoenix and contracts to provide jobs and counseling services for people with disabilities, the Justice Department announced.
Bell pleaded guilty last year to one count of federal program theft and two counts of federal income tax evasion. U.S. District Judge Karon O. Bowdre sentenced him late Tuesday. Bell under-reported his income and under-paid taxes for 2011-12, according to the announcement from Acting U.S. Attorney Robert O. Posey, IRS Criminal Investigation Special Agent in Charge, Veronica Hyman-Pillot and FBI Special Agent in Charge Roger C. Stanton.  [For more: AL News]

NC man convicted in $1m fraudulent credit card scam at Walmart and Sam’s Club

The United States Attorney’s Office for the Eastern District of North Carolina announced that today in federal court, Ambrose Mendy, 31, of Raleigh, was convicted following a two-day trial before United States District Judge Terrence W. Boyle. The jury found the defendant guilty of Conspiracy to Commit Access Device Fraud, Conspiracy to Commit Money Laundering, and two counts of Access Device Fraud.

The defendant was charged, along with nine co-defendants, in an indictment alleging a scheme to manufacture and use counterfeit credit cards. The indictment alleged that the defendant and others would acquire stolen credit card numbers online and encode them onto plastic cards containing magnetic strips. The indictment further alleged that the conspirators would use the fraudulent cards at Walmart stores located around the state to purchase more than $1 Million worth of Walmart gift cards. The indictment alleged that the conspirators then took the genuine gift cards to Sam’s Club stores and used them to purchase more than $1 Million in cigarettes and stored-value Visa cards, which could then be sold off for cash.

Prior to trial, various co-defendants pleaded guilty to Conspiracy to Commit Money Laundering and Aggravated Identity Theft. The defendant proceeded to trial on the charge of Conspiracy to Commit Access Device Fraud, Conspiracy to Commit Money Laundering, and two counts of Access Device Fraud. After a two-day trial, the jury found the defendant guilty of each charge. Three remaining co-defendants are at large. These defendants are Malamin Ousman Sonko, Salifu Jallow, and Ardoulaie Francis Lowe Nicolas.

The investigation of this case was conducted by agents of the United States Secret Service, with the assistance of the Defense Criminal Investigative Service and numerous local law enforcement agencies. At trial, the United States was represented by Assistant United States Attorneys William M. Gilmore and Melissa Kessler of the Economic Crimes Division.

If you know of the whereabouts of codefendants Malamin Ousman Sonko, Salifu Jallow, and Ardoulaie Francis Lowe Nicolas, please contact the United States Secret Service at (919) 855-1052.  [For more: Department of Justice]

Three admit smuggling more than 40,000 counterfeit Apple, Sony products into Florida

Three people pleaded guilty Wednesday to smuggling 40,000 fake iPhones, iPads, iPods, Sony camcorders and accessories into Florida over the course of five years.  Married couple Andreina Becerra, 31, and Roberto Volpe, 34, and Rosario La Marca, 54, entered guilty pleas on charges of conspiracy to traffic in counterfeit goods, to smuggle goods into the United States and to structure financial transactions; and trafficking in counterfeit goods.

According to court documents, Becerra and Volpe received more than 360 shipments from a Chinese company that included the fake electronics complete with counterfeit labels and packaging.  Becerra and Volpe would receive the products at their Miami home and ship many of them to La Marca, who was operating out of New Jersey, investigators said. The retail value of the items, if they were legitimate, would have been upwards of $15 million, court documents said. The counterfeit electronics were also shipped to individuals in New York, Massachusetts, North Carolina, Pennsylvania, California, Oklahoma, Louisiana and other areas for distribution, investigators said.

The group wired more than $1 million to the Chinese manufacturer to purchase the fake Apple and Sony products and packaging, a 31-page indictment said. The scheme ran from July 2009 through February 2014, officials said. The three, along with their Chinese supplier, Jianhua Li, were indicted in April 2015. Li has pleaded not guilty to the charges. When they are sentenced later in the year, Becerra, Volpe and La Marca face up to 15 years in prison and more than $2 million in fines.  [For more: WFTV9 News]

The post Breaking News in the Industry: February 27, 2017 appeared first on LPM.