Identity Resolution Daily

By Jeff Stein, LPI, president of Executive LP Services, LLC and owner/operator of MonitorClosely.com Franchise

Years ago, Loss Prevention (AKA the Security Department) had one major responsibility and that was to apprehend shoplifters and employees. You were reviewed based upon how many apprehensions you had. A secondary responsibility was to respond to alarms, mostly false alarms. In other words, the Security Department (better known today as Loss Prevention and Asset Protection) were known as Cops and Robbers. We were there to catch the bad guys. Today’s LP executives need to wear so many more hats than the cop role that we once did.

What hat to wear today? Loss Prevention, Store Detective, Security, Cop, Investigator, Human Resources, Data Analyst, Operations, Marketing, Finance, IT, Recruiter, Alarm Specialist, Camera Specialist, Trainer, Negotiator, and lets not leave out Interrogator. Being a subject matter expert (SME) in all of these areas is hard to do, but the more of an expert you are in each area, the better you and your department will be. It’s also helpful to surround yourself with great people who have expertise that complements your strong suits.

There are several tools, resources, and tricks of the trade that can help in several of these areas. For example, there are several great recruiters (Downing-Downing, Retail Placement Solutions, Jennings Executive Recruiting, LLC, etc.) out there and LP specific e-recruiting websites (www.lp-securityjobs.com) to help you with your recruiting needs. Industry publications like LossPrevention and LPinformation provide information on new techniques and best practices, and the National Retail Federation (NRF) and Retail Industry Leaders Association (RILA) offer research and training on a variety of key areas.

There are, of course, a bunch of alarm and camera companies that can automate your systems and provide you with state of the art equipment to make you look like a hero. There’s also very useful business intelligence software available, from exception reporting and returns management solutions to Infoglide Software’s proven identity resolution technology (AKA entity resolution and analysis technology), which increases the effectiveness of those solutions. Even Congress is stepping up to see how they might help with the problems of organized retail crime (ORC) and e-fencing, a brand new issue that didn’t even exist ten years ago.

As retail Loss Prevention continues to evolve, it’s important to always seek new information and innovations that can keep you one step ahead of the ‘Robbers.’

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[Daily Post from Infoglide Software] Survey Finds Operational Plan to Reduce Retail Industry Shrinkage by $18 Million

“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.”

Marketwatch: U.K. bank group Lloyds TSB to mount defense against U.S. lawsuit

“Lloyds TSB Group PLCsaid Tuesday it will defend itself ‘vigorously’ against U.S. legal claims that the U.K. bank violated federal anti-money laundering provisions. ‘We do not believe there is any basis for this action so we are disappointed that the U.S. Government has commenced proceedings in this case,’ the bank said in a short statement. Lloyds TSB said it’s confident that it will be vindicated.”

New York Times: U.S. Plan for Airline Security Meets Resistance in Canada

“‘Either the United States places no value whatsoever in the Canadian list, which it helped develop, or I have to suspect what’s going on here is a pure and simple data-fishing exercise,’ Mr. Gaspar said.”

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By Jeff Stein, president of Executive LP Services and MonitorClosely.com

According to the U.S. Chamber of Commerce, 20% of all new business failures are a direct result of employee dishonesty. In 2006 retailers lost over $41.5 billion in inventory shrinkage. “This total is ten times the value of street crime losses annually in the USA,” according to Criminal Law Lawyer Source.

And in the preface to Biting The Hand That Feeds: The Employee Theft Epidemic, Terrence Shulman points out the FBI finding “that employee theft is the fastest growing crime in the United States.”

According to a National Retail Security Survey report, retailers lost:

• $19.5 Billion to Employee Theft

• $13.3 Billion to Shoplifting

• $5.8 Billion to Administrative Error

• $1.7 Billion to Vendor Fraud

These are some scary numbers for the small- to mid-size business owners who do their very best to make a profit, let alone retain their profits. So what can you do to help prevent and deter losses from occurring in your business without the resources and funds of a large corporation?

You absolutely have to be involved and know all aspects of your business.

• Reconcile your daily deposits - If the funds are off, inquire and reconcile ASAP.

• Spot check your people all the time.

• Use sealable bags, so once the deposit bag has been completed, no one else can tamper with it.

• Use clear garbage bags. It is too easy for an employee to put merchandise in the garbage and then retrieve it later.

• Break down cardboard boxes before they are carried out to the dumpster.

• Keep your books, store, and stockroom clean and organized. The more organized these areas are, the harder it is for employees to hide thefts and frauds.

• If you are a retailer with a cash register, refunds and voids are the easiest way for an employee to steal cash from you. Whenever possible, review all transactions of this nature with your employees. Ask to see the merchandise. Then do a hands-on count of that item to see if it reconciles properly.

• Install a Closed-Circuit Television (CCTV) system.

CCTV systems are important. Besides acting as crime deterrent and theft identification, the cameras can increase employee productivity, discourages inappropriate behavior, reduce liability, defend against potential litigation and can and should also be used to reward good behavior.

If you don’t know these already, here are the Top Ten Warning Signs of Internal Theft:

1. Discrepancies in daily or weekly counts
2. Missing paper work (manual receipts, post voids, no-sales)
3. Change in employee’s attitude/personality
4. Excessive use of gift card by employee
5. Frequent visitors or personal phone calls, having friends in store after hours
6. Inaccurate of falsified counts / paper work
7. Employee ringing own transactions
8. Employee asking to borrow money from other employees
9. Unexplained cash overages or shorts
10. Improper use of register key

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He’s back.

Jeff Stein, Loss Prevention guru and guest blogger returns tomorrow with some great Loss Prevention tactics for small to mid-sized retailers.

In 2006 retailers lost over $41.5 Billion in inventory shrinkage, according to a National Retail Security Survey. And with your very own employees responsible for almost half of that loss, how can the little guys keep in business without the resources available to a large corporation?

Here’s an easy tip from Jeff: “Use clear garbage bags. It’s too easy for an employee to put merchandise in the garbage and then retrieve it later.”

Jeff’s expertise in Loss Prevention began over 20 years ago, starting at his first LP job as a store detective for Haynes Department Stores. Now the president of Executive LP Services and MonitorClosely.com, Jeff kindly lends us his time and knowledge in bi-weekly posts.

Identity Resolution Daily’s Knowledge Center is a series of guest posts authored by some of the nation’s leading experts in identity resolution, loss prevention, fraud prevention and risk management. We also from time to time feature guest posts from authorities in federal government, retail, insurance and financial services sectors.

In tomorrow’s post, “Don’t Let Others Shrink Your Profits,” Jeff shares some great ideas on how to keep your employees from walking out the back door with your merchandise. Plus, don’t miss his “Top Ten Warning Signs of Internal Theft.”

Previous Knowledge Center posts by Jeff Stein:

• The Risky Business of Loss Prevention — “Loss Prevention is dangerous work. We are the first line of defense…

• Tech Tools to Trap ORCs — “One of the guys we caught actually had a typed report on how to shoplift. It was a complete instruction manual on…”

• Loss Prevention - Then vs. Now — “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…”

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By Jeff Stein, president of Executive LP Services and MonitorClosely.com

Every August the feds release their compilation of on-the-job fatalities. And nearly every year I’m a bit surprised that retail Loss Prevention/Security doesn’t make the top ten list. Relieved, but still surprised. Fortunately, we’ve yet to make the top ten. However, I do not believe that the public realizes, appreciates or understands how dangerous this job can be. Over the years several from our LP family have lost their lives, been severely injured and or been assaulted while trying to protect the assets of their employers. The most recent death happened last month at a Kmart in Julian, CA:

“Petty Officer David Busby II, a U.S. Navy gunner’s mate, survived one tour of duty in Iraq.

“But it was an encounter with a shoplifter that claimed his life Saturday.

“The 34-year-old father, who moonlighted as a security guard at a Kmart in Ramona, was fatally shot after confronting a theft suspect in the parking lot.

“He left behind a wife, Lauren, and a 15-month-old son, Wyatt, who live in Julian.”

—From the San Diego Union-Tribune

I was nearly killed myself while trying to apprehend a shoplifter on October 28, 1989, so I know first hand that this is a dangerous profession. I have had guns, knives and other weapons pulled on me. And of course, I’ve been in numerous knockdown brawls. Several years ago, while working alone, two males shoplifted some Polo merch. I went to apprehend them and they dropped the bags and ran. I chased them through the parking lot and then into a field. When they got to the edge of the woods, they stopped, turned around pulled out knives and said, “Come and get us.” I skidded to a stop. They then ran into the woods. Luckily, the cops caught them coming out the other side.

Back in 1989, I was run down by a getaway driver in the King of Prussia Mall in PA. The police report read: “Suspects – Unknown, Victim – Jeffrey Stein, Charges – Attempted vehicular manslaughter.”

Two males had cut the cables off some men’s leather jackets and ran out of the store to a waiting getaway car. My boss at the time began wrestling with one of the guys across the street. The other guy jumped into the getaway car, and as I went to go help my partner subdue the suspect, the guy in the getaway car intentionally ran me down. I jumped up onto the hood of the car to avoid impact. I remained on the hood for approximately 75 yards until I just couldn’t hold on any more. I then went over the roof of the car, estimated to be going 40 miles per hour according to the police reports. I hit my head on the curb. Local ambulance called for the heli-vac.

I was then transported to the hospital via helicopter, hooked up to a respirator and spent the next three days in the ICU. I suffered a fractured skull and fractured inner ear bone.

The getaway driver was never apprehended. The one person who was caught never gave up the others involved, saying he only knew them by their street names. After getting out of jail, he subsequently was arrested several more times. The last time was for armed robbery and they threw the proverbial book at him and gave him five years just for the shoplifting event where I was run down.

I do not remember that incident at all, but I could tell you everything about that day—right up to the chase—like it was yesterday. Because of this crime, I have a permanent loss of smell, diminished taste and constant ringing in my right ear. I truly consider myself very lucky.

Here are several more recent stories that illustrate just how violent Loss Prevention can be:

• Shoplifting Gone Bad: “The individual that was being detained yelled out to the driver, ‘shoot him, shoot him, shoot him.’”

• Dunbar man charged after shoplifting arrest: “Jones was accused then of punching his ex-girlfriend in the head and breaking a window in her vehicle, police said.”

• Suspected Shoplifter Stabs Security Guards: “Though the security officers did get one handcuff on the Magana, he continued to fight with them until the three fell to the ground in a struggle.”

• Caught on tape: Shoplifting case turns violent: Security video then seems to show a car trying to run down a security guard in the parking lot.

• Shoplifting suspect on life support: “As employees were trying to return Flores to the store, a struggle ensued. Gundlach said Flores hit the ground at some point.”

I’m sure many of the readers of this blog have their own stories about serious incidents that they or a co-worker have experienced—and we would like to hear them.

Loss Prevention is dangerous work. We are the first line of defense. We make the initial stop, detention and apprehension of criminals—many with long, long arrest records.

I would like to suggest to the National Retail Federation, Retail Industry Leaders Association and all of the other large retail groups need to work together and set up trust funds for the families of future Loss Prevention professionals who sadly lose their lives while trying to protect the safety, security and profits of so many.

As we all know, ORC’s are building momentum. We also know that drug rings and terrorists groups and are behind several of these very organized retail crime rings. So is it going to get any safer? I do not think so.

Let’s all work together to do something for the families of the fallen. And let’s help to educate the public that in the large retail malls, strip centers and stand alone stores, we are there to protect them.

Your thoughts? Please leave a comment below.

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Twenty-year Loss Prevention (LP) veteran, Jeff Stein, returns tomorrow with a chilling new guest post on the often mortal peril LP professionals face in the line of duty. Over all, “Last year was a safer one for workers in the United States,” reports CNN, “5,703 died on the job, down slightly from the 5,734 fatalities in 2005. The rate was 3.9 per 100,000 workers, slightly lower than the 4.0 per 100,000 in 2005.” However, as the front line defense against everyday shoplifters and not to mention increasingly active Organized Crime Rings (ORCs), loss prevention pros too often end up “taking one for the team” while protecting the assets of their employers.

A tragic shooting at a Kmart in California last month that killed an Iraqi war veteran prompted Jeff to write a post that should be read by everyone in in retail, not just those in the Loss Prevention department.

Before helming Executive LP Services and MonitorClosely.com, Jeff’s career began two decades ago as a store detective at Haynes Department Stores. Back in 1989, Jeff spent three days in an intensive care unit after he was run over by a getaway driver.

In tomorrow’s post, Jeff recounts this terrifying experience, plus the brandished guns, knives and other weapons he’s encountered while apprehending shoplifters.

Please come back tomorrow for this must-read post.

Previous Knowledge Center posts by Jeff Stein:

• Tech Tools to Trap ORCs

• Loss Prevention - Then vs. Now

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A few weeks ago, we began publishing Knowledge Center, a series of guest posts authored by some of the nation’s leading experts in identity resolution, loss prevention, fraud prevention and risk management. To date, we’ve had some great analysis from Jeff Stein, president of Executive LP Services and MonitorClosely.com and Barry Graubart, VP of product management, Alacra. If you missed any of these posts, please see below.

In the future, we’ll also feature guest posts from authorities in federal government, retail, insurance and financial services sectors.

Want to be a guest blogger on Identity Resolution Daily? If you’ve have some insight that our readers would find valuable, please leave us a comment and we’ll be in touch.

By Jeff Stein:
Tech Tools to Trap ORCs

“My partners and I once apprehended an ORC ring called the “Brooklyn Knapsack Gang.” They were teenagers from Brooklyn who’d take buses and stolen cars to NJ & PA to steal Polo merchandise. They all carried knapsack bags over their shoulders and wore baseball hats. (Baseball hats helped them conceal their eyes so Loss Prevention could not see…” (more)

Loss Prevention - Then vs. Now

“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…” (more)

By Barry Graubart:
Complexity of Identity Resolution and Anti-Money Laundering

“…when comparing customer records to Anti-Money Laundering (AML) or Terrorism watch lists, banks and other financial institutions frequently have very limited access to information (on the watch list side). Terrorists, money launderers and drug traffickers don’t often provide a SSN or a street address. Instead, AML pros are limited to matching a name and, at best, city or country. Further complicating matters is the fact that…” (more)

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By Jeff Stein, president of Executive LP Services and MonitorClosely.com

Early in my career in the late 80’s we caught several Organized Retail Crime (ORC) groups, but law enforcement’s technology wasn’t there yet and it was hard to see how professional and organized these bad guys were. Getting lucky was usually the only way we could get a glimpse into the depths of these ORCs. We didn’t have an identity resolution solution like Infoglide Software’s that could tell who was who and who knows who. Instead, happenstance connected the dots for us when working at a different mall or retailer and we’d apprehend someone we’ve seen before.

My partners and I once apprehended an ORC ring called the “Brooklyn Knapsack Gang.” They were teenagers from Brooklyn who’d take buses and stolen cars to NJ & PA to steal Polo merchandise. They all carried knapsack bags over their shoulders and wore baseball hats. (Baseball hats helped them conceal their eyes so Loss Prevention could not see them suspiciously looking around) One of the guys we caught actually had a typed report on how to shoplift. It was a complete instruction manual on how to shoplift, what to say if caught, where to go to sell the merchandise, how much they would get paid, etc.

ORC has plagued retailers for years. Large rings are getting bigger, better and more violent. This problem has become so serious that the FBI has joined in the fight.

In response to congressional legislation intended to combat the growing problem of ORC, the FBI has teamed with the National Retail Federation (NRF) and the Retail Industry Leader’s Association (RILA) to create the Law Enforcement Retail Partnership Network (LERPnet), a secure national database that allows retailers and law enforcement to share information. According to a LERPnet press release, the system addresses communication issues like this:

“Hypothetical scenario: Retailer A is burglarized of 40 laptops. Later that afternoon, the same criminals enter a neighboring state along the same highway corridor and steal dozens of notebook computers from Retailer B. Retailer C, along the same highway but in a different county, is victimized that evening.

“Under the current system, the incidents are reported separately to local police officers. Law enforcement in different counties and states often does not know about similar nearby incidents since the crime did not occur in their jurisdiction. If a pattern is ever recognized, it is often too late: the thieves have sold the items to a fence operator or have sold them on an online auction site.”

This three month-old organization now boasts 45 members including JCPenney, Wal-Mart, Safeway, CircuitCity, Walgreens and Williams-Sonoma, reports StoreFrontBacktalk. The data-mining will only get better as more retailers sign on.

Back in the day, we could have used the ability to collaborate quickly with other retailers and other law enforcement jurisdictions. Again, luck played way too big a part in our successes. Oftentimes, it was the police themselves who connected the dots just by processing a suspect a bit slower than normal. For example, say we had apprehended a shoplifter who was using a booster bag. Normally the police would cut these guys loose pretty quickly. But every now and then a delay in processing would give the officers a chance to dig a little deeper and surprise, surprise — the perp would have shoplifting arrests up and down the eastern sea board.

Here’s where we could have used identity resolution. ORC members often have multiple or hidden identities. But retailers, thanks to many encounters with the same bad guys, have all the data they need in their existing databases. Unfortunately, the data is spread across different systems and departments. With an identity resolution solution bolted on to your existing architecture, you can gather data from multiple data sources and apply sophisticated similarity search techniques to resolve multiple identities so you can figure out who the guy in handcuffs really is. And just as importantly, identity resolution susses out hidden relationships between individuals so you can also figure out who this guy works with.

Today, the ORC groups have gotten more sophisticated. The larger, more organized groups use their ill-gotten money to support terrorists, money- launderers and drug lords. Fortunately, retailers and law enforcement have also beefed up their tools and resources to combat ORC with dedicated investigative units, various web sites, specialized databases, identity resolution software and RFID tags.

Besides LERPnet, here are two more sites that retailers use today to help track shoplifters and share information.

• A.L.E.R.T. - Area Law Enforcement and Retailers Team

• PostACrime.com

Please leave a comment and share your experiences with investigating/apprehending ORC individuals (past or present).

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Tomorrow, Loss Prevention expert and guest blogger Jeff Stein joins us again with an informative post on Organized Retail Crime (ORC). Retailers lose $30 to $37 billion a year to organized rings that continue to grow larger and more sophisticated every day.

How bad is it? It’s so bad that the FBI launched Law Enforcement Retail Partnership Network (LERPnet), a new database initiative back in April:

“‘The overall price tag is more than burglary, larceny, robbery, and auto theft combined,’ says Supervisory Special Agent Brian J. Nadeau, program manager of the Organized Retail Theft Program at FBI Headquarters. ‘Theses aren’t shoplifters taking a pack of gum. These are professional thieves. This is their day job.’” (From this article found on the FBI web site.)

A long-time foe of the ORCs, Jeff’s career in Loss Prevention began 20 years ago as a store detective for Haynes Department Stores and he’s got a lot of great stories to tell. Now the president of Executive LP Services and MonitorClosely.com, Jeff has been kind enough to give us some of his time and expertise in bi-weekly posts.

For all of Jeff’s Knowledge Center posts to-date, click here.

Come back tomorrow to hear about Jeff’s apprehension of the “Brooklyn Knapsack Gang.”

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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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