Knowledge Center: Jeff Stein on Loss Prevention - Then vs. Now
By Jeff Stein, president of Executive LP Services and MonitorClosely.com
Then: I have been in Retail Loss Prevention for over twenty years. When I first started, all of our shoplifting apprehensions were initiated and identified from undercover store detectives walking the floor posing as customers or sitting or standing in a look out perch that was usually made by the security staff (now known as Loss Prevention or Asset Protection Department), after hours bringing in our own tools and expensing 2×4’s and plywood.
Now: Aside from Color PTZ systems, staffed from store open to close with a member of the Loss Prevention Department, there are now Elaborate Digital Surveillance Systems that can identify suspicious behavior, sending real-time alerts to store detectives. EAS systems can now identify when someone is walking into the store with a booster bag. There are audio alarms that can attach to high ticket items as well as high tech shelving units that can send real time alerts to store employees alerting them that stacks of merchandise were removed from a shelf.
Then: For internal investigations we used look out perches, integrity shoppers and covert CCTV (B&W pin hole cameras) rigged in a hole or speaker grill that we put in one of the drop down ceiling tiles when we could. Another covert mission would be for one of us to climb into the ceiling before the store opened and sit on one of the steel I beams in the ceiling looking into a hole in the ceiling trying to watch an employee while working at the cash wrap stand. Oh yeah, I would hate to leave out how we would find a big cardboard box and strategically place it in a stockroom and then we would climb in and hide in it, peeping out of a little eye hole to see who is stealing merchandise or going into employee’s handbags and stealing money, etc. As EAS tags became more popular that was another red flag to help prevent, deter, and at times identify theft. More often than not there were false alarms. We did not have exception reports twenty years ago, instead we would manually review the register receipts, have makeshift spreadsheets and use a lot of pencils and highlighters to try and find fraudulent refunders, voids, etc.
Now: As businesses evolve into further advancements in technology, our employees become more and more clever in the ways they steal and defraud their employers. Theft and fraud cost U.S. retailers $41.6 billion last year according to the National Retail Federation and it was employees not shoplifters who caused the biggest losses ($19.5 billion versus $13.3 billion). That’s why companies spend hundreds of thousands of dollars a year trying to combat internal theft. We now have some of the most advanced and user friendly exception reports that once set up, do all of the work for the investigator, replacing the old pen and paper methods of reviewing register transactions, P&L’s and general ledgers. Of course there is the Digital Surveillance system integrated with the POS system, so the investigator can in many cases watch fraudulent transactions being rung up from their home or office.
With fraudulent refunds being one of the largest methods for employees to steal from their employers, reviewing the refund exception report is as common as filling up your car with gas before a long road trip. Quoting from the Fraud, Phishing and Financial Misdeeds blog, “Refund fraud [from both employees and customers] is estimated to cost retailers $16 billion a year based on a study conducted by Dr. Richard Hollinger at the University of Florida.” The fraudulent refunds that went undiscovered because employees and customers know how to stay under the radar by slightly changing their identity and or address can no longer hide anymore, since indentity resolution technology like Infoglide’s can integrate with existing systems and analyzes identity data and transactional characteristics to uncover suspicious relationships between, and actions by, specific individuals.
Remember the strange case of Robert Dooley? He was the former Internal Revenue Service employee who over three years allegedly stole $330,000 in goods from Home Depot stores and then returned them for store credit in nine different states. With an identity resolution system in place retailers can prevent incidences like this.
Editor’s note: Please come back again in two weeks for Part II of Jeff Stein’s “Loss Prevention – Then vs. Now.”
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