The Bunker Blog

According to the latest NRF survey, U.S. Retailers probably lost around $9.6 billion to refund fraud in 2009. $2.7 billion of that was lost through the holidays alone. The survey also found that 69% of retailers had changed their refund policy specifically to address refund fraud issues.

The top two methods of refund fraud were returning of stolen merchandise (93% experienced) and returning of merchandise purchased with fraudulent or stolen tender (75% experienced).

So, how does it work? Typically, there are at least two groups involved with these schemes. The boosters shoplift (steal) the merchandise, and the refunders return the stolen merchandise for cash or store credits. In some cases the refunders use counterfeit receipts. There have even been cases where crafty thieves have come into a store and completed an exchange of items, but making a very small purchase so that they pay a small amount. With some retailers, this produces a cash receipt which can then be used to return the exchanged items at another location, or in the same location at a different time, for cash.

Usually, the same people who steal the merchandise will not also return it for fear of being recognized, etc. This is not always the case, though. However, the more organized teams will send someone else into the store to do the return. Since they know that stores now collect ID information for non-receipted returns in a lot of cases, they will often have several people who can go into different establishments and return the stolen merchandise. It takes a good deal of work to establish enough evidence in these cases to be able to successfully prosecute, but it can and is being done.  Anybody want to share success (or failure) stories?

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Below you will find links to two recent news stories about parents who take their kids shoplifting. I keep writing about this for two reasons: First, because it makes me angry that any parent would ever involve their kids in criminal activity of any kind; and secondly, because, according to my stats, you like to read about this. I’m not sure why that is, but I assume it makes you angry, too.

In one incident, according to police and Kohl’s Loss Prevention personnel, two women actually used their kids to conceal merchandise so they could take it outside without being noticed. I know, it’s an old scheme, and those of us in loss prevention have seen it over and over again. Still, it boils my blood to think that it’s not enough that these parenting geniuses would steal in the first place, but they involve their kids.

I have written about these incidents since I started this blog. One of the all time lows, in my book, for any parent is the case where mom and dad are so busy “getting away”, that they leave their ten year old daughter behind. Can you imagine how scared that kid must have been?

It seems like, at least once a week, there’s a new story about some so-called parent who brought their kids along an a shoplifting excursion. Some even use the kids as a distraction so they can ply their trade. The sad part is that the kids are being taught that shoplifting is okay, and even fun! It’s a game.

I’m not a big proponent of creating new laws, especially since we seem to have a hard time enforcing the ones we have, but it seems to me that we need to have special laws, with special penalties, for people who involve their kids in crime. The kids don’t have a choice, in most cases, but the parents, who are adults, do.

Moms Use Kids To Shoplift

2 Women Take Kids Shoplifting

• LP Community: Free Training For LP Professionals
• 2 Women, 4 Children, And A Shoplifting Story

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Back a few years ago, I was involved in a case where one of my fellow loss prevention agents was involved in theft from our store. I must tell you, that was a rough case for me. Not only did I consider this person a friend, but I trusted him with my safety when we made apprehensions together. To find out that he was involved in stealing from our employer was a milestone for me in my career.

The issue is one of trust. Loss prevention agents and managers must conduct themselves in a way that is always above suspicion. I learned early on that all eyes are on LP, and many people look for signs that the LP team may not be as honest as they appear. Any lapses in judgment are noticed, and can bring severe consequences.

LP generally has a lot of access to many systems and areas of a retail establishment. They are the folks who make sure the merchandise is protected, and the doors are locked at closing time. When an LP agent goes bad and begins stealing, it can be a devastating blow to a store or company.

In the case I referenced above, I actually had to install a separate video system for the LP room in my store, and to run some extra cameras that were connected to this “remote” system so we could see what this rogue was doing when no one else was around. This had to be done because he was very aware of where our normal video system could and could not view, and he was very good at making subtle changes to the cameras, without disabling them, that would allow him free access to locked cages, etc, where some of the higher end electronics were secured. Since he worked a lot of closing shifts, he was the person who secured the dock doors, and who walked out with the closing manager at night. Everyone trusted him, even me.

When items began to disappear, he was the first one to begin reviewing video evidence. He complained that it was very sad that someone had found a way to access the locked rooms to gain access to the missing merchandise. He also commented on how convenient it was that the merchandise taken was just out of camera view. But, he made some mistakes, which I won’t detail here in this account. After a few days, we began to suspect him, even though I did not want to believe it.

At the direction of my manager, I placed hidden surveillance cameras in strategic areas in the store so that we could observe this LP agent’s behaviors when he worked alone, which was often. After only a few days, we got the evidence I hoped we wouldn’t get. We saw the LP agent remove the merchandise from the locked room and place it outside, using a dock door. Then, after closing, he would go to the back of the store and retrieve it.

Needless to say, he was prosecuted for felony theft. As it turned out, he pled out in court, and I never had to testify against him, although I would have. He betrayed our trust, and that was the worst part of it all.

After that, the LP department in our store was much more restricted in our access, and there were some checks and balances put in place to help deter this type of activity in the future. But, the damage was done, and we had lost some of the trust and confidence of our store team. Even though we had identified this issue and resolved it pretty quickly, the damage to our department’s image was done.

Here is another story about a loss prevention agent who was caught stealing from his employer. This guy was taking merchandise and then selling it on eBay. When LP goes bad, it is extremely difficult to rebuild trust.

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If you run a business that sells merchandise, or if you have cash on hand, you probably need a Closed Circuit Television system. The question you must answer is “How much do you want to spend on it?” There are a lot of choices out there, from eBay sellers like this, to corporate solutions like American Dynamics , Checkpoint, or Pelco

Remembering that you usually get what you pay for, it would pay any business owner to shop around, do their homework, and then make an informed decision about what solution best suits their needs.

Small brick and mortars my opt to use a single camera system, recorded to a time-lapse VCR or, even better, to a DVR system. Larger business sites may need multiple cameras, recording simultaneously through a multiplexer. It depends on the need.

There are some obvious reasons why cctv makes sense:

1. Cameras are proven to deter theft.
2. Cameras can provide you with evidence that could help you recover losses, if a theft does occur.
3. Cameras provide evidence that can protect you against liabilities and lawsuits.

If you own/operate a small or even medium sized business, do you use cctv to protect your assets? If not, why not? Is it cost? If that’s the case, maybe you should look at some of the less expensive, yet still effective, solutions out there.

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According to fdlreporter.com, the crime of shoplifting is increasing at a steady rate of 20 percent! It is also one of the most common crimes in America today, accounting for 30 percent of all reported crime!

According to the FBI, shoplifting is one of the nation’s fastest growing crimes. It’s increasing at the alarming rate of 20 percent a year

Full Story HERE

When you consider that theft related losses account for roughly 60 percent of all losses incurred by retailers, you can see that this is a growing problem that demands an answer. Loss prevention must be proactive, and not reactive, in providing solutions that will deter theft but not deter sales. It’s a tough dilemma, especially when you are dealing with a 20 percent rate of increase in the problem.

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