Identity Resolution Daily

By the Infoglide Team

The Globe and Mail:  Store owner jailed for keeping $5.75-million lottery ticket

“Crown prosecutors said they will likely be able to collect about $6.1-million, about $450,000 less than what Mr. Malik owes from the original winnings, including interest. That money will be returned to the Ontario Lottery and Gaming Corp., which paid the money to the real winners, plus interest, when it discovered Mr. Malik’s fraud.”

ice.gov: Trade-Based Money Laundering

“ICE’s experience in trade-based money laundering investigations has shown that one of the most effective ways to identify instances and patterns of trade-based money laundering is through the exchange and subsequent analysis of trade data for anomalies that would only be apparent by examining both sides of a trade transaction.”

KING5.com: Get Jesse Investigation: Policing unlicensed contractors

“McClain heads up Contractor Compliance for the agency and has just 27 inspectors to cover the state. The agency registers 55,000 contractors each year, so reigning in folks like Mulinski is a difficult task. ‘Finding them working on a job site is a real challenge,’ he said. Once we find them there, knowing that they are registered, who are employees and who are workers?’”

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By the Infoglide Team

Lottery Scam: Lottery Scam Watch - Keep Track of Your Tickets

“The ticket was bought in May. When the ticket holder came to the store for verification, the clerk allegedly told him he was mistaken and kept the ticket. A police report contends that Melissa Trahan, 27, sent the winning slip to her mother in Mississippi. That woman, Gwen Landry, drove to the state capital, Baton Rouge, and cashed it in for the $800,000.”

Hub Solution Designs: Customer Data Quality

“Sometimes, attempts are made to programmatically improve data quality within a customer record, but because of tight deadlines, data quality across the file is usually not given serious attention.”

CT.gov: Waterford Town Employee Charged with Workers’ Compensation Fraud

“The warrant alleges that Mr. Hall ‘intentionally misrepresented his claimed injury and intentionally failed to disclose his employment and wage earnings while collecting disability benefits.’”

Homeland Security Watch: Senate Introduces its First DHS Authorization Bill

“The Senate bill elevates the assistant secretary for policy to the position of Under Secretary for Policy, to ensure policy coordination across the Department, it strengthens the authorities of the Office of International Affairs at DHS, and it authorizes the National Cyber Security Center, along with a private sector board to advise the Secretary on cyber security policy.”

Workers Compensation: California Fines Auto Body Shops Without Workers’ Comp Insurance

“Failure to carry workers’ compensation insurance is fraud, plain and simple. This is a form of workers’ compensation fraud – not having the appropriate coverage – is more common than you might think.”

Central Coast News: Santa Cruz police crack large commercial burglary case at Safeway

“Safeway loss prevention officers notified Santa Cruz police on Sept. 9 that the company’s store on Morrissey Boulevard had lost a significant amount of merchandise to theft and store managers suspected that an employee, Emanuel Anthony Ruiz, 30, was stealing merchandise. He allegedly took cosmetics, shoes, clothing and over-the-counter pharmaceutical items, including medications, from the store, police reported. Ruiz, with the help of the three others arrested, was then selling the items online, police said.”

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By Robert Barker, Infoglide Senior Vice President & Chief Marketing Officer

When I say “lottery fraud” you probably think of the email scam where an unsolicited message from overseas claims you’ve won a large lottery and asks you to send them money, identity information, or both in order to get a big payoff. Many states (e.g., Texas) and provinces have web pages warning consumers about these rip-offs.

Public education has reduced the effectiveness of this particular swindle. And now state and provincial authorities are shifting resources to address another rapidly growing problem: lottery fraud committed by retailers. The most highly-publicized case of retailer lottery fraud in recent years occurred in Ontario, but cases reported by the California Lottery Commission, perhaps the largest lottery in the U.S., indicate that they have a rapidly growing problem as well.

In July, the California Lottery Commission announced their recent success in using undercover work to catch a retailer in Santa Clara County who was defrauding lottery customers. In another case in San Diego, a retailer was sentenced for paying lottery ticket holders less than they actually won and then redeeming the tickets himself for full value.

The cases being caught and publicized likely represent the tip of the proverbial iceberg. While using undercover agents is effective, it’s a very expensive and time-consuming way to catch fraudsters. More precisely, it’s not a very scalable solution because the number of instances of fraud caught is limited by the number of agents deployed.

A more scalable approach to this problem is deploying identity resolution software to constantly monitor and detect hidden connections among the players in the system, for example non-obvious ties between retailer owners/employees and lottery winners. Retailers who game the system change details about their identities to avoid being found out. That may fool conventional software systems, but identity resolution easily catches them, and there’s a bonus – the same software that catches scam artists can match lottery winners with lists of people identified by the state for delinquent taxes, past-due child support, and similar indebtedness that should be collected before paying out lottery winnings.

Lottery players simply will not play if they can’t trust the lottery system. And if they don’t play, revenues will inevitably decline. While sting operations can help restore confidence in the system, they represent an expensive, manpower-intensive, hit-or-miss approach to the retailer fraud problem. Software is the only efficient and cost-effective solution to the retailer fraud problem in lottery systems.

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The always insightful Loss Prevention Magazine in its September-October issue features a survey by ECR Europe that should be read by not just Loss Prevention (LP) pros, but also the CFOs of every retail company.

Lessons from Low-Shrink Retailers - Nine Ways to Save $18 Billion deserves attention because in researching the loss prevention strategies of five retailers with much lower than industry average rate of loss, they unintentionally unearthed an operational plan that could save the retail industry billions of dollars in shrinkage.

Writes Adrian Beck and Colin Peacock:

“When you look at the average rate of loss for these companies [Target Corporation, Limited Brands, Best Buy, CVS/pharmacy, and The Gap] as a whole (0.9%), compared with the industry average (1.59%), then it is perhaps easy to see why they were consistently selected by the panel of experts. Indeed, together their improved shrinkage performance is worth as much as $1.1 billion a year, and if the entire sector could achieve similar results, then shrinkage could be reduced by as much as $18 billion.”

Eighteen billion dollars is a lot of stolen baby formula and Nike shoes.

How did these companies reduce retail fraud?

The five companies that participated in the survey had these nine common traits:

1. Establishing senior management commitment
2. Ensuring organizational ownership
3. Embedding Loss Prevention
4. Providing strong leadership and developing a team
5. Using barometer management
6. Innovating and experimenting
7. Talking shrink
8. Prioritizing procedural control
9. Empowering store staff

For a full explanation of these ways to shrink shrinkage, please read the article in its entirety.

Interesting, (to us, at least) four of these nine traits can benefit from an identity resolution solution that can rescue retailers from Loss Prevention Magazine calls the “data desert.”

Writes Beck and Peacock:

“…until relatively recently [the five retail companies] have largely operated in a data desert, often making decisions based upon gut instinct and guess work rather than solid data and informed analysis. Indeed, in the absence of reliable and timely data, the industry has tended to focus almost exclusively on the most overt form of shrinkage—external theft—to the detriment of other key problems, such as internal theft and process failures.”

Here’s how identity resolution can help.

Providing strong leadership and developing a team

For pre-employment screening and tapping into external databases to identity current staff with public records of dishonesty, identity resolution solutions easily glide across multiple data sources (e.g., lists of known shoplifters, bad check writers, vendors, returns, perpetrators of organized retail crime, and LERPnet) and finding linkages that indicate fraud.

For more, see Employee Screening: An Ounce of Prevention is Worth a Pound of Lobsters

Using barometer management

Beck and Peacock say it best:

“The need to be led by numbers and not by intuition was a clear message. How this was achieved varied between the companies, but all had invested heavily in ensuring that they could not only monitor the rate and extent of shrinkage at a highly granular level (almost always SKU level), but also that they could analyze data to seek out trends and deviant behavior, usually through some form of data-mining technology or software.” [Emphasis added.]

Innovating and experimenting

Loss Prevention is not a static field. A previously good employee suddenly turns bad. Criminals innovate and adapt to current LP strategy. These scenarios and thousands of others require real-time access to data and a flexible architecture that works with many different platforms, systems and even sister stores in other locations. A good identity resolution solution can help answer all these questions in real-time:

• How many returns has an individual really made?
  • Has John Smith made 3? And Joey Smythe 4 more?
• Are you about to hire someone who has been caught shoplifting in one of your stores? Are they working there right now?
  • Or a sister company’s store?
• Which employees are returning merchandise without identifying themselves?
• Who is purchasing at discount and returning for full price?
• Does a multiple-return item match a missing shipment?
• Are restocking fees affecting high-value customers?
• Is a ship-to address similar to a previously fraudulent address?
• Which customers have multiple identities? And why?
• Do any of those identities correlate to an employee or vendor?
• How can you trigger higher quality investigations?
• How can LP know all about a suspect they’re really dealing with?
• Is there a relationship between an incident victim and an employee eyewitness?
• Does John Smith deserve a red carpet?
• Or a red flag?

For more, see Identity Focused Retailing.

Prioritizing procedural control

Finally, for halting deviance and enforcing compliance in procedure, identity resolution solutions can make automated decisions and impact business processes in real-time, limiting the need for human intervention.

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When ABC needs a political expert, they call in George Stephanopoulos. For health questions, CNN always seeks out Sanjay Gupta. When we need a Loss Prevention (LP) expert, Jeff Stein always helps out. And when working on a story about retail crime, the world’s news outlets employ University of Florida professor Richard Hollinger.

Dr. Hollinger is the author of Crime, Deviance and the Computer, Theft by Employees and Dishonesty in the Workplace: A Manager’s Guide to Preventing Employee Theft and every year he conducts the National Retail Federation’s annual National Retail Security Survey. The research his team has provided for the last eight years helps set LP strategy nationwide. For example, this year’s survey found that employees were responsible for 47 percent of retail theft, up from last year’s high of 41 percent. And when Dr. Hollinger is quoted in the New York Times saying, ”We have never seen employee-theft numbers quite this high” — LP pros began to concentrate more on internal theft.

You could almost call Dr. Hollinger the Alan Greenspan of retail theft — one sentence from him and markets and people begin to move.

On the retail balancing act between security and customer privacy, Dr. Hollinger was quoted in Business Week, saying

“To keep shrinkage low with metal detectors and security might be a draconian environment, like going to the airport vs. going to the mall, which encourages shopping with its fountains and music.”

And Laura Landro of the Wall Street Journal sought him out for commentary when she was apprehended by Kmart Loss Prevention pros.

Back in 2004, his research pointed out the rise in return fraud and his consulting work with The Limited lead to a Washington Post story, where he was among the first to alert retailers to the fact that the Internet is being used for much more than just sending Evites to friends. The WAPO story reported that

“In recent years, scammers have used the Internet to launder the money — people steal merchandise, return it for credit slips at stores, then turn those credit slips into cash by selling them at a discount on eBay or other online auction sites.”

$30 billion, or 1.7 percent of sales, went out the door and online due to retail fraud in 2003 and Dr. Hollinger estimated that that about half of that loss may have been related to bad returns.

His solution? Technology — and for that reason he is an Identity Resolution Daily favorite. Here, he tells WAPO

“Over the decades, retailers realized they were leaving the door wide open for fraud and a number of the major ones realized that . . . there has to be some technological solution to this.”

There is a technological solution, Dr. Hollinger, and we’d love to come to Florida to tell you a bit about how identity resolution can help out with return fraud, Organized Retail Crime (ORC) and other forms of retail fraud.

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The headline reads: 9 Twin Liquors employees accused of theft ring. And we’re apt to see more headlines like this, more evidence of employees biting the hand that feeds, according to the new Retail Theft Survey conducted by Jack L. Hayes International.

Earlier in the week we reported the survey findings that employee theft is up nearly seven percent and that one of 28 of employees is caught red-handed, totaling 66,507 apprehensions last year. This survey also noted that employees steal 6.6 times the amount that shoplifters do.

Austin-based Twin Liquors surely knows now how employee theft can take a bite out of the bottom line, as their nine employees allegedly purloined $250,000 last year from company warehouses.

“In a market where brand recognition, market share and high competition have most businesses working overtime to reduce cost,” writes Retail Solutions Online, “there is little room for the losses caused by internal theft. Industry reports suggest that as much as 47% of all losses are caused by dishonest employees , totaling $19.5 billion annually in revenue loss.

“Obviously with so much at stake, an honest employee is a key element to business health - but is there a magic bullet? How can we tell if an employee is likely to engage in dishonest behavior?”

This a perfect example of the need to screen employees with an identity resolution solution. Integrating with existing systems, an employee screening solution based identity resolution can analyze identity data and transactional characteristics to uncover suspicious relationships between, and actions by, specific individuals.

With this software in place, retailers can aggregate information from existing data stores, both internally and externally, to form a clear, comprehensive, composite depiction of their employees.

It’s much better alternative than having to explain to a TV reporter where the bite marks came from.

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Loss Prevention (LP) pros, Jack L. Hayes International, released its 19th annual Retail Theft Survey today and the results are, well, shocking.

The survey canvassed 23 large retail companies with over 14,000 stores that reported over $537 billion in total annual sales in 2006. These retailers admitted to apprehending 66,507 employees for theft last year, an increase of 6.57% over the year before. The survey also noted that LP pros recovered $56.6 million, thanks to these apprehensions.

However, according to the U.S. Department of Commerce, 75 percent of all employee thefts were never noticed. If that figure is correct, there’s another $169.8 million of stolen merchandise just walking out the back door. And according to the Jack L. Hayes site, “On a per case average, dishonest employees steal approximately 6.6 times the amount stolen by shoplifters ($851.44 vs $128.71).”

This seriousness of the threat to retail’s bottom line is reflected in this quote from Mark R. Doyle, President of Jack L. Hayes International

“This is only the second time in the past 9 years where both the apprehensions and recovery dollars from shoplifters and dishonest employees has increased. Shoplifting apprehensions and recovery dollars were up an amazing 11.2% and 13.9% respectively. And while employee theft apprehensions were up just under 7%, the recovery dollars were up over 16%. The seriousness of retail theft is a much greater problem than many people realize. The theft losses experienced by retailers are driving consumer prices higher, hurting our economy, and even forcing some retailers to close stores or go out of business.”

What’s a retailer to do?

Here’s some suggested reading:

• Knowledge Center: Jeff Stein Returns With Loss Prevention Tips

• Retail Loss Prevention’s Biggest Concern: Internal Theft

• Know Your Employees with Identity Resolution

• Employee Screening: An Ounce of Prevention is Worth a Pound of Lobsters

• Identity Resolution for When Shrinkage is Up and Employee Morale is Down

• Loss Prevention and Sleep Deprivation — The Top Ten Things that Keep LP Pros up at Night

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[Daily Post from Infoglide Software] Identity Resolution for Employee Screening Beats Background Checks

“Good help is hard to find, so the saying goes. Now thanks to identity resolution solutions, retailers are benefiting from this corollary: Hardened criminals are also good to find. Before the hire and even after the hire, it’s good for a company’s bottom line if they can identity potential problems before they happen.”

Jeff Jonas: Entity Resolution Systems vs. Match Merge/Merge Purge/List De-duplication Systems

“Sometimes entity resolution systems get mixed up with match merge, merge purge and list de-duplication systems (collectively “merge purge systems”) … so I thought I would take a moment to point out some of the differences….”

CNN: With 300,000 names on list, terrorist center always on alert

“Twelve watch lists from throughout the government have been consolidated into one master document. The names are persons whom the government has determined there is a reasonable suspicion of being associated with terrorism. After the terror center confirms a name on the list, the inquiring agent ‘can drill down deeper and get more information about that person and make a more informed decision as to whether he represents a threat to the people of the United States,’ Boyle said.”

Center for Democracy and Technology: Surveillance Law Must Protect Privacy and Security

“Congress can enact legislation that meets the needs of intelligence agencies for defending national security, while still protecting the fundamental privacy rights of innocent Americans, CDT Policy Director Jim Dempsey told the Senate Judiciary Committee today.”

AP: Pope: War on terror must respect rights

“Democratic societies have the right to defend themselves against terrorism but must also respect laws and human rights — or they risk endangering the very freedoms they want to protect, Pope Benedict XVI said Friday.”

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Good help is hard to find, so the saying goes. Now thanks to identity resolution solutions, retailers are benefiting from this corollary: Hardened criminals are also good to find. Before the hire and even after the hire, it’s good for a company’s bottom line if they can identity potential problems before they happen.

According to the DOJ, employee theft is growing 15 percent annually and the Department of Commerce says that a third of all employees steal from employers. Hence the nationwide rise in employers making background checks a pre-condition to hire. But there are several inherent problems in standard background checks. For example, job candidates can:

1. Lie about convictions
2. Use a fake identity
3. Have hidden relationships with known criminals
4. Be the perfect employee but certain life changes after the hire can make a thief out of an honest person.

Lying on resumes and job applications is widespread. The San Francisco Chronicle pointed to a survey a while back that found that a fourth of all job candidates lied or gave erroneous information. But background checks only disqualified 13 percent of these applicants. The hard part in catching a liar is that the proof is often concealed in various data silos or legacy systems that can’t be accessed. Since 9/11, the authorities have gotten much better at sharing conviction records. Unfortunately, way too many shoplifter apprehensions don’t lead to convictions. Retailers do, however, keep databases of shoplifting suspects. But that data is worthless if it can’t be accessed due to complex data management issues or even simple constraints like the inability to access data at a sister store.

For employment pre-screening, identity resolution solutions solve this problem by easily gliding across multiple data sources (e.g., lists of known shoplifters, bad check writers, vendors, returns, perpetrators of organized retail crime, and LERPnet) and finding linkages that indicate fraud.

Identity resolution also solves the problems with fake identities and hidden relationships. By applying sophisticated similarity search techniques to resolve multiple identities, a single view of an individual highlights otherwise hidden relationships discovered by analyzing multiple attributes like common phone numbers and addresses.

But what about when good employees go bad due life changing events like financial difficulties, divorce or addictions? Could any of these circumstances have motived this Target Loss Prevention pro to allegedly turn off the security cameras and steal $14,000 worth of merchandise? While it’s true that personal issues do not necessarily a thief make. But if your heretofore great employee is being added to negative databases in his off-time, wouldn’t you want to know about it?

For employee monitoring, an identity resolution solution can check periodically to detect employees who may have been added to these sources of information after being hired.

Background checks are good in theory. But as Yogi Berra said, “In theory, there is no difference between theory and practice. But in practice, there is.”

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Trying to find honest employees can make you feel like Diogenes, the Greek philosopher who walked the streets of Athens looking for an honest man. To help out in his quest, Diogenes carried a lantern with him during the light of day, but purportedly never had much luck. Fortunately, rather than using lanterns, retailers now have more advanced technology tools that can help out with the employee screening process.

An identity resolution solution is particularly well-suited for the Diogenesian pursuit of honest employees because it helps identify the obviously dishonest.

Identity resolution solutions aggregate information from a variety of data stores to form a clear, composite depiction of the identity of an individual. For employment pre-screening, this solution glides across multiple data sources (e.g., lists of known shoplifters, bad check writers, vendors, returns, perpetrators of organized retail crime, and LERPnet), applies sophisticated similarity search techniques to resolve multiple identities, and presents a single view of an individual that highlights otherwise hidden relationships based on the similarity of multiple attributes. For employee monitoring, the same process can check periodically to detect employees who may have been added to these sources of information after being hired.

In other words, it’s easier to shine a light on the honest employees, once you’ve tapped into your own in-house databases and ferreted out the dishonest ones.

How bad is employee theft?

Best keep the light on in that lantern because here’s some stats that will scare you:

“A national survey released in June found that one-quarter of job applicants lied or gave erroneous information. Avert Inc.’s survey, based on 1.8 million workers, also found that background checks led employers to disqualify about 13 percent of screened job applicants.” — San Francisco Chronicle

“In a sample study of 300,000 background checks conducted by U.S.A. Fact, the company found: 5% of applicants had criminal records; 36% had motor vehicle violations; prior employment was unverifiable for 18%; and education could not be verified for 11%.” — Strategic HR Services

“According to the U.S. Department of Commerce, 75 percent of all employee thefts went unnoticed. The average amount taken in retail was estimated at $1,750 per incident, and $3,400 per incident in all other business.” — Lacrosse Tribune

“According to the U.S. Department of Justice, insider theft is growing at a rate of 15 percent annually. A Department of Commerce study revealed that one-third of all employees steal from their employers.” — Information Management Journal

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