Background Checks and Employer Liability

shoplifting7Seems like every time I turn on the news, I hear about another person who walks into their office and starts hurting people. Is this happening more and more, or do we just hear about it more? Do you ever think about those companies and wonder what goes on after something like that happens, or even before? Even more perplexing is a recent airliner crash that seemed to be caused by one of the pilots. Every day, employers around the country have the potential risk for a disgruntled, or mentally unstable employee to cause harm to their staff, or customers. Can you prevent this and if not, how can you limit your liability?

My personal opinion on random acts of violence is that you can never prevent every occurrence. You can definitely limit your exposure to the risk by barring firearms in your workplace, having a no tolerance violence policy and running background checks on all of your employees. This however, will not stop someone that is hell bent against causing harm. Again, my opinion here is that if someone wants to “go postal,” nothing on Earth will stop them. That’s a fact of the world we live in. There are ways to limit liability on your end (as a business owner). 

Take for example the other day. I terminated an employee for performance related behavior. Hours later, another employee came to me with a screen shot of the terminated employee’s social media page. There, was a threat of violence towards the store and myself personally. I immediately contacted the local police. Did I really thing this person was capable of what they were posting on social media? No. Did I see it as a way to blow off steam from being terminated from a job? Absolutely. Then why did I contact law enforcement? The idea that a threat was made forces me to take that approach. Had I shrugged the threat off as “blowing off ;steam” and then 3 hours later I had that former employee burst through the front doors with a firearm, I, and my company could be potentially liable for any injuries due to failure to appropriately react to a known threat; sounds completely crazy, but it’s the truth. 

You can relate this to running background checks on your employees. Let’s say you don’t perform a background check on a new hire and with 2 weeks he loses his temper with a fellow employee and severely injures that employee. Worst case scenario is that employee is no longer able to work. You find out after the incident that your new hire has 15 arrests for domestic violence and other crimes against persons. You could be potentially held liable for creating a violent workplace due to a failure to properly screen applicants. Again, it sounds completely crazy but this has happened and will continue to happen. Background checks are standard practice and every single big box retailer across the country and they should be for you as well. 


How Are You Preventing Shoplifting?

shoplifting5There is always so much debate about how to fight shoplifting in the retail industry.  There are loss prevention teams in all the major retail stores, and the management team at any other store is, if not trained at least aware of what to do when facing a shoplifting accident.  Millions of dollars are lost due to shoplifting, and the matter seems to get bigger every day.  New government policies are making sure shoplifting is punishable accordingly, and retail stores are spending millions of dollars in security and personnel to fight this crime, but why is that not enough?  Follow the links to read more about this and other stories. 


Shoplifting & Loss Prevention: Do We Need A Fresh Look?

Traditional Loss Prevention is not working. If it was working, the retail world would not still be suffering $35 million or more a day in losses. If it was working, retail owners and store directors would not be going through security and loss prevention officers or the security companies they represent like the free samples they often hand out to customers. Security experts and loss prevention companies would not be constantly scrambling for new accounts, or be in conflict with the accounts they service.

Shoplifting is one of the least detected and most unreported crimes. Stock control in many stores is so deficient that few retailers know how many goods they are losing to shoplifters or their own staff. Statistically, so long as shrinkage does not exceed 2-3% of goods sold, retailers pay little attention to shoplifting. There are also financial incentives for managers to increase the bottom line profits. The bonuses they receive are often based on profit margins, and paying for security services can be a drag on profits. Managers are under constant pressure to justify expenses in a corporate world driven by profit.


Shoplifting Prevention: Top 5 Tips

Shoplifting is of major concern to vendors, so much so that it’s considered normal to budget 10-15% in losses due to store theft. This means each honest customer is paying 10-15% more due to the sins of his fellow shoppers. This budget figure can be reduced by one of your company’s most important assets: Your employees. Real, live, people. While we recommend security cameras, computerized security tagging, door security guards, and even undercover security personnel, this article will address how your employees – often the most involved people with your customers – can also be involved in shoplifting prevention. Here is a Top 5 list of suspicious behavior often exhibited by shoplifters, all of which are easily spotted by employees.

      1. Baggy or oversized clothing. There’s reason it’s called “baggy” – shoplifters are using their clothes as veritable bags, stuffing their stolen ware on their person as if it’s part of their wardrobe.
      2. Hands in pockets, or hidden otherwise. A regular shopper has nothing to hide. In contrast, a shoplifter has everything to hide.
      3. Teaming Up. Shoplifters might hang together when planning or passing along stolen items. If you see two or more people in a group speaking in low tones, looking over their shoulders, diverting their eyes, or of course, stuffing their or others’ pockets, it’s a sound suspicion of illicit activity. Regular shoppers, on the other hand, will likely happily chat away at full volume, and keep their non-purchased items in full view.

Japanese organization considers shared biometric database to combat shoplifting     

The National Shoplifting Prevention Organization (NSPO), a nonprofit organization of major Japanese retail businesses, is considering developing a biometric database to share facial recognition data in order to combat shoplifting across Japan, according to a report by The Japan News.

The NSPO said it would consider allowing retail stores to share the facial data with other stores in the same industry or other establishments in the region.

The organization proposes to set up a shared biometric database, and store managers can enter the facial data of shoplifting suspects into said database to continually monitor the suspects as he or she visits other stores.

Many retail stores have been using biometric technology in the past five years, however, the majority establishments that use facial recognition do so without publicly notifying any of their customers.


Controlling Retail Shrinkage by the Numbers

theft (11)The margins in a retail business can be slim.  It doesn’t take much shrinkage for a store to go from the black to the red.  One of the primary roles of a successful store manager is to develop, follow and then tweak a comprehensive security plan.  The creation of an effective plan takes a large investment of time, money and effort.

Managers often have gut feelings about where their losses are, and may even have a good idea about how to control them.  However, few of them understand — and therefore can’t effectively address — the full scope of the problems.  A successful plan starts with knowing the numbers, not indistinct feelings or incomplete ideas.  

The yearly National Retail Security Survey (University of Florida) started in 1991and is considered to be the most accurate and comprehensive in the industry.  The 2014 report estimates that the total shrinkage amount for retail businesses is $44.25 billion.  This is broken down into 5 categories.  The numbers have been rounded and don’t add to 100%.

Employee Theft (41%) – Many managers believe shoplifting is their number 1 shrinkage problem and make the mistake of overlooking this statistic, to their detriment.  Employees will steal time, money and merchandise.  This is regardless of how nice or punitive their supervisor is, good guys get stolen from as much as bad ones do.

Shoplifting (33%) – People steal for a variety of reasons.  With the advent of the Internet (which makes it easier to sell stolen items) and the difficult financial times of the last several years it has been steadily on the increase.  But, it remains consistently second to employee theft, which has also been rising.

Administrative (15%) – This category represents common human error involving administrative tasks, not deliberate fraud.  It includes things such as: miscounting or misplacing stock, money/cash register mistakes, lack of follow through on paperwork and poor record/receipt keeping.

Unknown (7%) – Some researchers view this category as a miscellaneous or catch-all one, where odd or seldom seen circumstances, which don’t fit any other classification, are located.

Vendor Fraud (6%) This is another area of shrinkage that many managers overlook.  They trust their supplier or its representative and ignore all the places (i.e. warehouse, delivery driver, invoices, order forms) where their shipment is shorted “just a few things”.

Before developing a loss prevention security plan it’s vital to understand where the loss is happening.  Then valuable resources, time and money, won’t be wasted on ineffectual systems, training and equipment.  Good managers know their employees, customers and suppliers, and have a feeling about where the problems are.  Great managers know all that too, but they back up their subjective feelings with objective numbers.


Nicole Abbott is a writer and psycho-therapist with over 20 years of experience in the fields of mental health and addiction.  She’s an educator, consultant, lecturer, trainer and facilitator, who’s conducted over 200 workshops, trainings, presentations, college classes and seminars.  

The Tricks of the Shoplifter

shoplifting4Managing or owning a retail store is not easy.  Shoplifters and employee theft are in some instances a daily occurrence, and the profits you were thinking you were getting have disappear.  The digital age has brought information to the young mind easily and instantaneously, and although some use it for the benefit of their mind, others use it to cause harm and to commit crimes.  Have you checked the videos on Youtube about how to shoplift?  From how to shoplift and not get caught, to instructions on how to prepare before shoplifting.  Yes, your shoplifting prevention team has to be aware of these tactics to be effective apprehending shoplifters.

Follow the links below for more information.


Video:

How To Shoplift Without Getting Caught Using a “Thief Book”


Female shoplifters caught on camera

Several supermarkets have complained that social customs enable women to steal with impunity.

Muhammad Hamouda, sales manager at an electrical accessories company, said 70 percent of thefts in his shop are made by females, primarily stealing women’s accessories.

Most thefts are monitored on closed-circuit TVs, which have also revealed various tricks of these thieves, particularly women with large handbags into which laptops, devices for hair and body care can be concealed. Only female security staff at supermarkets can deal with women thieves.

Hamouda said: “Mostly shops do not complain to police, but demand a written confession with a copy of her identity card, and then let her go free. But there are also shops that make her pay double the price of the article she shoplifted and she is prohibited against stepping inside the shop in future,” he said, adding that some ladies deny the charges and threaten to call the Haia as a means of defense.

Muhammad Asiri, a salesman in Asir, said there were suspicious disappearances of women’s accessories such perfumes, vanity bags and rings, discovered at the end of the month. Guards do not notice anything because the missing articles were mostly light and can be easily hidden. Occasionally there are gangs of women involved in these thefts, Asiri said.


 Confessions of a teenage shoplifter


The Costs of “Wardrobing”

theft (10)According to the National Retail Federation’s annual survey, it is estimated the industry loses approximately $9.1 billion yearly in return fraud.  This includes refunds on merchandising that has been stolen and a practice like “wardrobing” that is costing retailers this incredible amount. Those incidents are done by employees as well as shoppers and shoplifters.  To read more about this topic follow the links below for more information.


NOT-SO-HAPPY RETURNS: RETAIL FEDERATION HIGHLIGHTS “WARDROBING” COSTS

In a new survey, the National Retail Federation says that holiday-return fraud could end up costing stores billions this year. The worst part? This scam is more organized than ever.

The holidays are over, but stores big and small will be dealing with more than the memories.

That’s according to the National Retail Federation (NRF), which reported late last month that during the holiday season alone, retailers could face as much as $3.8 billion in lost revenue from fraudulent returns, an increase from $3.4 billion in 2013 and a big chunk of the estimated $10.9 billion in return fraud in 2014 as a whole.

The organization’s 2014 Return Fraud Survey [PDF], which gathered responses from loss-prevention executives at 60 retailers, shows that retailers suspect that 5.5 percent of holiday returns are fraudulent. And while technology has helped curb illegitimate returns, NRF said, there’s only so much companies can do about retail fraud, which is often suspected to be the work of crime rings.


Eliminate the Practice of Wardrobing in Your Store

Well here’s a new one to me.  The art of wardrobing.  It’s a term coined for shoppers who buy merchandise with the full intent of using it, then returning it for a full refund.  Take a read of the article as the insight is fascinating.

I was astounded to learn that “nearly two-thirds of merchants had items wardrobed in 2007, up from 56 percent the year before, the first year the National Retail Federation (NRF) started tracking the trend,” according to the article.

The term wardrobing was chosen (I’m guessing) because it stems from clothing that’s been purchased, worn and then returned.  But the article points out that wardrobing has taken on a broader meaning and is now applied to any merchandise that’s been used and then returned.

So how big is wardrobing?  The article points out that “Wardrobers want to rent the things they want or need for free, which amounts to fraud, said Richard Hollinger, a criminology professor at the University of Florida who specializes in retail theft. He said return fraud, which includes wardrobing, fake receipts, and other practices, cost retailers an estimated $10.8 billion last year, up from $9.6 billion in 2006.”


RETURN FRAUD COST 9.1 BILLION IN 2013

Criminals trying to get refunds on stolen merchandise and customers engaged in practices like “wardrobing” cost retailers an estimated $9.1 billion in return fraud last year, according to NRF’s annual survey.

“While coverage of this issue paints return fraud as one of the less severe retail crimes, the fact of the matter is that returning used or stolen merchandise — or even using false tender to purchase items — is fraud, period,” NRF vice president for loss prevention Rich Mellor said in a release accompanying the survey. “Efforts to combat fraudulent activity are slowly starting to work, but criminals are becoming more savvy and technologically advanced in their methods.”

The dollar amount of fraud was up 2.8 percent from 2012, but the proportion of returns believed to be fraudulent (3.4 percent) remained the same. During the just-finished holiday season, fraud totaled an estimated $3.4 billion.

Fraud was experienced by virtually all retailers, with stolen merchandise involved in 95 percent of cases. Employee fraud accounted for 93 percent of incidents; 69 percent were returns of items purchased with fraudulent payment like stolen or counterfeit gift cards. Wardrobing — where customers typically purchase a dress for a party or a big-screen television for the Super Bowl and return the item after it has been used — accounted for 62 percent.


Wardrobing & Returns

Shark Tag DressThere is a new term in the retail dictionary. “Wardrobing” is the process where a customer purchases a piece of your merchandise, uses it one time, then returns it claiming a small flaw or just taking advantage of  your liberal return policy.

We see this especially in clothing such as expensive dresses, prom dresses, shoes and suits. But tools, electronics, beach wear and more can be a target. The problem is hardly new. However, it has always been frustrating. Not only has the retailer experienced a loss  since the merchandise is no longer new but chances are that you or your staff put a considerable amount of time into the initial sales process. Couple that with tight margins and expenses and the problem gets expensive quickly.

Add to this that word will spread. If your store is known as an easy mark for wardrobing, then this kind of shopper will flock to you like metal to a magnet.

The problem is also not just a brick and mortar store problem. In many ways it is worse for online stores. Because it is a faceless transaction, the shopper is more likely to feel comfortable about doing this.

Whether it is right/wrong or illegal, is a side issue. Wardrobing causes Retailers significant losses.

LPSI Shark Tag8  Shark Tag with Return PolicySo how do we fix the wardrobing problem that leads to your returns being higher than they should be? First look at your return policy. Have you dusted it off lately and updated it? Look at the circumstances of accepting returns. Look at the time limits. Is there a restocking fee? Is the customer responsible for shipping on certain items? Look at your competition’s return policies both in store and on-line. Maybe they have solved the problem and the wardrobers are now coming to you. If you would like, I can also be an LP sounding board (at no charge) for your return policy. Just call me, Bill Bregar, at 770-426-7593 x101.

We also offer an excellent fix for wardrobing. The “Shark Tag” by Alpha High Theft solutions basically puts an end to wardrobing. Shark tags are bright tags that mount directly to the merchandise or can be attached via a lanyard. An example could be that the Alpha Shark Tag is placed in a very obvious area such as the bust line (as a guy I would notice it!) of a prom dress. The Shark tag can be removed easily by the customer at home with a pair of ordinary scissors. Once the Shark Tag is removed, your stores policy kicks in. Without the Shark Tag attached, a return is no longer possible.

Also, Shark Tags are VERY inexpensive! If you would like a sample, please contact us.

Remember, you and your staff put a lot of time, effort and expense into your sales efforts. Do not let the thieves or even the wardrobers, rob you of your margins or even your business!


Organized Retail Crime and the Effects on Small Business

shoplifting7Organized Retail Crime, or ORC is something you have probably heard very little about. ORC is, by definition, the organized and planned stealing of merchandise with the expressed intent to resell in order to make a profit. Plainly, it is a group of shoplifters whose full time job is to steal from you in order to make a profit for themselves. If you think that your small business isn’t a target, or hasn’t been targeted by an ORC group, you are wrong. These are not your average shoplifter stealing for personal use. These are well organized, well trained and equipped individuals who can take a single store for thousands of dollars in mere minutes.

I recently worked an ORC case dealing with the theft of a certain product. Over a two month period of time, I had a group of 5 individuals steal this product, then immediately sell them to a pawn shop. This handful of people were able to cause a $20k loss in a very short amount of time. They had a plan, stuck to a routine and committed the theft with near surgical precision. It was well organized, and it took months to uncover. $20k might not be a big deal for a national retailer, but if this were my own store, it very well may have put me out of business. This is the case for small businesses across the country. These groups often target the smaller stores as they feel they are a softer target. 

Smaller stores may not have the security measures larger retailers do. Something as simple as CCTV may not even be installed. The store may not have security devices on commonly shoplifted items. More importantly, those smaller stores most likely do not have a Loss Prevention team, and the owners may be unwillingly to prosecute individuals caught shoplifting.  This all makes the small retailer a prime target for ORC. 

The first step you should take to prevent your store from being a target is to minimize your exposure to the risk of shoplifting. CCTV systems are not big, bulky and expensive pieces of equipment anymore. You can most definitely find a solution for your store under a few hundred bucks. Next, you should be familiar with product security. While you may not have the capital for the newest trends in EAS, a simple checkpoint system will discourage ORC, especially if you are using tags that have your store’s name, or logo on them.

Organized retail crime has gotten the attention of the law enforcement community. In fact, several states now have ORC laws on the books, which carry heavier penalties for individuals convicted of this type of theft. The only way these individuals can be brought to justice is if they are held accountable for their actions. That starts with you and is why it’s always important to prosecute a shoplifter. That guy you just caught stealing all of your razor blades could be the tipping point for a much larger operation. Just because you have a small store, doesn’t mean you can’t lose big from these groups.


Shoplifting Apprehension that Turn Violent

shoplifting5Over the past two years or so, I’ve managed well over 1,000 shoplifting cases. Just like any other job, it starts to become a routine. You watch for selection, intent, pass the points of sale, exit. Approach, process, and on to the next one. It’s strange that in my line of work the daily routine is based solely on someone committing a crime. Well, what happens when the apprehensions is not so routine? What should you, or your team do if a shoplifter becomes confrontational, or even physically violent?

I’ve seen several instances of shoplifters becoming physically violent in the very recent past. Member of my team, including myself, have been physically assaulted and even pepper sprayed by shoplifting suspects. I’ve even see greater acts of violence at surrounding retailers. Is that really worth a $50 item? Absolutely not. We are seeing very often that drug addicts, who are stealing to support their habit are committing these crimes. Their minds are focused on their addiction and they will do whatever is necessary to avoid capture, even if that means harming you or a member of your team. The best defense is always a good offense, and the first step in remaining safe in this climate is to analyze the risk associated with each and every shoplifting detention.

I train my teams to analyze the inherent risk of a stop on two simple factors. 1) What is the item being stolen? Is it on its own a weapon? 2) The perceived state of mind of the suspect. Does your suspect appear to be under the influence of drugs, or alcohol? If you can answer yes to both, then there’s a higher chance of the risk of violence and it may be a better idea to allow law enforcement to intervene. I stress this every single day with my team. They all know that there is nothing in that entire store that is worth jeopardizing their safety. Sometimes, though, violence may come from the most unsuspecting source, and you should know how to react during these instances.

If you find yourself in a situation when confronted at the time of apprehension with violence, you should immediately terminate the apprehension and allow the suspect to leave… with or, without the merchandise. Never should you put yourself, your team or your customer’s safety in jeopardy over store merchandise. If you’re confronted and need to defend yourself, then do so in as safe a manner as possible. Training your LP staff in a basic self-defense course is a great tool that is being more widely adopted at more retailers.

In addition to those common sense steps, your company should also have clearly written and accessible policies regarding shoplifting apprehensions and the use of force. If you are in charge of these policies, you should set a clear expectation of how store personnel should contact a shoplifter, as well as details regarding the use of force. The last thing you want is for an employee to get severely injured while trying to protect assets come back with a lawsuit claiming they were subjected to an unsafe work environment. Without clear, written policies, that could be a reality.

Criminals will continue to steal, and a percentage will no doubt become violent in some way. In the LP filed, it is an occupational hazard. With the proper training and common sense policies, you can ensure the safety of your teams. Several states are also currently looking into passing new legislation that would enhance the charge for shoplifters who assault an LP agent. Some states also have laws on the books that turn a shoplifting into a strong arm robbery under these circumstances. If these were to become a nationwide standard, we may be able to start reversing this very disturbing trend.


Vendor/Contractor Fraud

theft (2)I want you to sit back and think about something for a minute. Other than your employees, how many other peopled have worked in your store last month? Drawing a blank? Think about those lights that needed replacing, or the compactor that needed repair, or even the new display cases that were installed overnight a few weeks back. While you may realize it, you more than likely have a great deal of contactors coming in and out of your store on a fairly frequent basis. These contractors and vendors have access to everything and employee has and sometimes more.

Not only do you have to consider product and equipment theft, what about data or intellectual property theft? Company sales figures, or closely guarded industry secrets? A single thumb drive and a bit of know-how can get a wealth of information into the wrong hands. Thinking about all of that, you probably want to repair your own sinks from now on…

Just as with any LP process, you have to implement a strategy that allows you to identify and react to theft, all while maintain the trust of the 99.9% of your customers that are honest. A few simple policies and best practices can protect your business from vendor/contractor theft.

First, you should establish a check in procedure. Vendors, or outside contractors should have to check in with the manager and then be taken to the area of the store that requires their services. If the area is a sensitive section of the store, or requires an exterior doors to be opened for an long period, a supervisor or key employee should remain in that area. In addition, a simple package inspection policy should be adopted and all employees, and outside vendor should be made to adhere to that policy. Basically, anyone exiting the store that works for you would have any bag, or box inspected by a store manager prior to them leaving the store.

An electronics policy should also be adopted around sensitive areas of the store. Vendors, as well as employees should be barred from using an external hard drive on any store computer system. Recording devices (cellphones) should not be allowed in sales offices, or anywhere that sensitive data is stored. You should also restrict any store Wi-Fi to store management only, and for the sole purpose of conducting company business.

While it may not be an area that you closely associate with shrink and loss, vendor compliance and control can become a major contributor to lost profits in your store. By implementing a few simple steps and practices, you can sure that you are doing all you can to prevent unnecessary loses to your store and company.


Bad Stops are Bad for Business

theft (1)If you’ve been in the LP profession for any length of time, chances are, you know someone who has had their career ended for making a “bad stop”. If you’ve never heard that term, great news for you. This is the term given when an LP agent makes a shoplifting apprehension outside of set guidelines and detains an individual, who in fact, did not partake in any illegal activities. Sounds like something that should NEVER happen, right? Unfortunately, it does and it can spell big legal trouble for your company. If you detain an individual who has not committed a crime, they have the legal right to file a lawsuit against you, your employee and your company. I’ve personally seen more than I would like in my tenure and they usually end with a large settlement and an employee or two in the unemployment line.

How does this happen? If you have an LP program, or policies relating to shoplifting apprehensions, you may ask how does an agent get to the point where they make such a bad decision. Just with any other job, no one is perfect. As a manager, or business owner, you need to have very strict rules and guidelines that are to be followed in regards to shoplifting apprehensions in order to protect not only the safety of your employees, but the very business you are running. Looking back at the incidents that I’ve personally dealt with, one common theme always stands out. An employee who will try to bend the rules as much as possible. When you develop and maintain adequate policies, you have to enforce them. Letting something slip by won’t do you any good. That employee does not have your company’s best interests in mind, and in your position, you have to make sure that your polices are followed to the letter.

One case that stands out happened a few years ago. One of my top performing agents saw a customer place something in her purse and walk out the store. He didn’t see exactly what the item was, but still made the apprehension. Once in the security office, he realized she had placed a shirt in her purse that she entered the store with. The customer had brought the item to compare colors to a new item she wanted to purchase. Understandably so, the customer was highly upset and sought legal action. After all was settled, my company had to pay a substantial settlement to keep the matter out of court and I had to release one of the best agents that ever had worked for me.

During the termination conversation, I asked him why he made the stop without knowing exactly what was concealed. His response was that he had done it several times in the past, and he was normally right. This was the one time he was wrong, and it cost him and my company in a big way. Due to that incident, we implemented more vigorous training programs and did a better job of documenting training with all LP agents in order to prove, it we needed, that all LP agents were trained according to a set policy and that anything done outside of that was the result of poor performance.

I would encourage anyone with a small business, or managers of small companies to adopt and implement a written policy regarding shoplifting apprehensions. If your store doesn’t have an LP department that has agents in store, your policies should state that only a salaried manager may initiate a shoplifting apprehension and only before going through some type of standardized training. This will protect your store not only from shoplifters, but it will go a very long way in keeping innocent customers from being detained by an ill-trained, or poor performing associate.