Identity Resolution Daily

By the Infoglide Team

Hays Daily News: Making the move to electronic records a natural fit for clinic

“Beginning in 2015, providers who have not successfully demonstrated meaningful use will face cuts in the amount of Medicare reimbursement they receive. It will begin with 99-percent payment in 2015, and drop to 97 percent by 2017, according to information from the Centers for Medicare and Medicaid Services. ‘So if your practice has not implemented an EHR and have meaningful use, you’re going to get reimbursed less dollars for the same service as someone who does,’ Brull said.”

GIGaom: Jeff Jonas Video on How Data Makes Corporations Dumb

“‘Information is being created faster than organizations can make sense of it,’ he says. The gap between the growth of information and understanding is widening because the tools for understanding are not scaling as fast as the growth in data and information.  ‘As computers are getting faster and the world is getting more sensors, the organizations have been getting dumber,’ he said. ‘The percentage of what is knowable is on a decline.’”

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By Kevin Moore, Infoglide Software Director of Fraud Solution Sales

Several years ago, the Department of Homeland Security (DHS) published guidelines for creating fusion centers at the state, local, and federal levels. Since then, fusion centers have become a hot trend in the law enforcement community.  At last count, there were 72 designated centers around the country that are recognized by DHS (and that number is probably low by now). If governmental agencies with common concerns can band together to create fusion centers, it seems possible that private companies with common goals could use technologies such as identity resolution to achieve them.

Do businesses share common problems that could be better addressed by creation of “private fusion centers”? I thought of a few in a short time, so there are likely many more. It turns out that one called LERPnet already exists within the retail community:

The Law Enforcement Retail Partnership Network (LERPnet) is a secure national database for the reporting of retail theft and serious incidents, which allows retailers to share information with each other and law enforcement. In response to an alarming rise in organized retail crime, the retail industry and the FBI have teamed up to launch LERPnet. With LERPnet, retailers and law enforcement will be able to fight back against illegal activity including organized retail crime, burglaries, robberies, counterfeiting, and online auction fraud.

The details are on the LERPnet web site. Clearly, it took a lot of effort to resolve some key issues before it was launched. Companies are understandably concerned about complying with privacy laws and want some assurance that they won’t assume liability should a breach occur. They also consider their customer information to be proprietary, so solutions need to share only data about suspected fraud cases while leaving good customer data unshared. In many cases, scores instead of data can be shared. The general principle is to leave data in place as much as possible and don’t share proprietary data with others.

The LERPnet example could be classified as a “quasi-private” system since the participants include law enforcement agencies. What about your industry? Are there ways that well-protected information sharing could enable your company to avoid “doing business with people that, if they had a full view of that person, they would never even let them in the door”?

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On 9/11/2001, the day terrorists destroyed the World Trade Center, a state trooper in Texas pulled over a Middle Eastern man driving a rental van. The officer noted that the van was full of baby formula. Later, the police realized the driver was a known terrorist linked to an organized retail crime (ORC) ring that traveled the nation stealing baby formula. And the money made from reselling this particular truck load was wired to the Middle East and never seen again.

This story comes from a 2005 story in the Christian Science Monitor that reported retailers suffered through $30 billion in theft that year and stolen baby formula made up approximately $7 billion of that total.

Seven billion dollars in stolen baby formula?

Where is all that money going? Has the problem grown worse since 2005? And where’s the mainstream media on this story? You’d think the juxtaposition between terrorists and baby formula would draw Dateline and 60 Minutes — or at least Geraldo Rivera.

In that 2005 story, the Monitor noted that there were more than 1,000 offers of Enfamil baby formula available on eBay. Two years later, and despite the fact that many states now require buyers to purchase baby formula from licensed wholesalers, you can find 2,634 offers for Enfamil on eBay.

Mark Clayton of the Monitor wrote

“Operation Blackbird, as Texas investigators dubbed their multistate baby-formula investigation, has since led to felony charges against more than 40 suspects, about half illegal immigrants. Authorities have seized some $2.7 million in stolen assets, including $1 million worth of formula.

“Blackbird was just the beginning. In the nearly four years since 9/11, police have uncovered and dismantled a growing number of regional and national theft rings specializing in shoplifted infant formula, over-the-counter medicines, and personal-care products. At least eight of the major baby-formula cases have involved ‘fences’ who are of Middle Eastern descent or who have ties to that region, according to a Monitor review of congressional testimony, news accounts, and a study by the National Retail Federation released Tuesday.

“The Federal Bureau of Investigation has traced money from these infant-formula traffickers back to nations where terrorist groups, such as Hamas and Hizbullah, are active, investigators say. Then, the trail usually goes cold. Once funds enter such countries, there’s often no way to track them.”

Is this a growing trend?

Here’s a 2003 story about a trafficker in baby formula who stood to may make a profit of $4 million but was caught by the Canadian Mounties. Mohamad S. Mostafa had been in reselling baby formula since 1994, but he wasn’t caught till a month after 9/11.

Recently, there’s been lots of baby formula thefts in the news:

Two held in formula thefts
Grocer reaches plea deal in theft ring case (for laundering $70 million)

And just this week, a federal judge agreed to let Ali Kareem Aladimi withdraw his guilty plea and go to trial over the “63 original charges of conspiracy to distribute dangerous drugs, money laundering, bank fraud and dealing in stolen goods,” according to the Middletown Journal. Federal prosecutors alledge that Mr. Aladimi sold stolen baby from 1993-2002 and in a raid in 1999 they found $54,000 worth of stolen Gerber baby formula and $760,000 in cash packed in shrink-wrapped Clairol hair-coloring kits.

Finally, there’s this scary news in FrontPage Magazine’s story, Terror Criminal Links Growing

“The former International Monetary Fund (IMF) managing director, Michel Camdessus, estimated that money laundered worldwide 1999, totaled between 2% and 5% of combined gross domestic product (GDP)—or approximately $1.8 trillion. By April 2006, the IMF’s World Economic Outlook estimate of the world economy was $65.174 trillion. Considering the rise of radical Muslim terrorist groups, and the dramatic increase in ‘ordinary’ crime, as well as major technological advances, it is now estimated that at least $5 trillions are being laundered annually, 70% are thought to be generated from the illegal drug trade.”

In the very last line of of “Terror Criminal Links Growing” authors Dr. Rachel Ehrenfeld and Alyssa A. Lappen suggest, “it would seem prudent for law enforcement to take a closer look at the identities and profiles of each and every ‘ordinary’ criminal seized, be it drug dealers, car thieves, or ‘white collar’ criminals.”

Sounds like a recommendation for widespread adoption of identity resolution solutions to us and we’d have to agree. Back on August 13th, our post Baby Formula: Out of the Mouths of Babes and into the Coffers of Terrorists recommended that retailers should assist the FBI’s LERPnet program to track down organized retail crime rings “by organizing and analyzing in-house retail data with the implementation of an identity resolution solution.”

With terror funding rising nearly $3 trillion dollars since 1999, and as we’ve seen up above, possibly $7 billion comes from organized retail crime gangs in the U.S. stealing baby formula, where’s the outrage? Where’s Congress on this issue? Where’s the press?

This is a serious issue and action needs to be taken immediately.

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There’s a very interesting study out last week from the Loss Prevention Research Council (LPRC) that Progressive Grocer featured in Retailers Misperceive Extent of Their Own Shrink. In the article there were two factoids that we’d like to call to your attention.

First, the report found that

“86 percent of respondents said they spend the most or second-most time working on loss problems related to internal product theft. Some 62 percent said they spend the most or second-most time working on loss problems related to internal cash theft. And 32 percent said that they spend the most or second-most time working on external theft, including organized retail crime.”

Clearly, internal theft from employees is the largest problem that retail loss prevention professionals face. “Entire retail chains have gone out of business,” writes Ronald Bond for Entrepreneur.com, “due to their inability to control losses from theft. The biggest threat facing storeowners is employee theft, which accounts for nearly half of inventory shrinkage–more than shoplifters, more than administrative error and more than vendor fraud.” [Emphasis added.]

In Employee Screening: An Ounce of Prevention is Worth a Pound of Lobsters, we pointed out that 75 percent of all employee thefts go unnoticed, according to U.S. Department of Commerce.

So if internal theft takes up most of an LP pros’ day, what’s the solution? According to the LPRC survey, here’s a second finding of interest:

“Almost two-thirds (65.5%) of respondents think implementing new technology is very important for their companies’ loss prevention endeavors.”

Hardware-wise, Closed Circuit Television (CCTV) can be a good deterrent. But if 75 percent of internal thieves are never caught, wouldn’t it be easier to not hire high risk employees in first place than to catch them in the act?

With software — specifically identity resolution software — retailers can get a clear comprehensive, composite depiction of current employees and potential new hires. Identity resolution solutions aggregate information from existing negative databases, uncovering convictions, bad debt, driving histories, lawsuits and more.

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