Many new initiatives to prevent shoplifting have been put into effect at the state level, and around the world in hopes that police enforcement and retailers work together to fight this crime. The different methods, and the technology they use is up to the people involved, and in some cases the results are pretty optimistic. Fighting crime needs the collaboration of law enforcement and the management of the stores to have some success.
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A Formula for Fighting Organized Retail Theft
A Texas task force successfully challenged a criminal enterprise of shoplifters and fences through teamwork and communication.
What started out as a small meeting in Houston to discuss the problem of infant formula theft led to arguably one of the most significant positive examples of teamwork between private sector loss prevention, law enforcement, and government officials in the fight against organized retail theft. The lessons from these collaborative efforts in the early 2000s are still applicable in today’s loss prevention industry.
In the fall of 2002, several grocery loss prevention representatives met with Joe Williams, then president of the Gulf Coast Retailers Association, to discuss the growing problem. The standard deterrence and apprehension techniques used in the industry were having little effect on slowing the theft of formula. CCTV, electronic article surveillance (EAS), and even undercover shoplift agents proved to be of little value in significantly slowing the losses. In many locations, retailers were locking up formula just to keep it in supply for their customers. While this helped to slow the theft, it also was an inconvenience for legitimate customers and was damaging sales.
The Scope of the Organized Retail Theft Problem
By comparing notes on the apprehensions made in their stores, the loss prevention representatives found that in many of the cases the suspects detained for the formula thefts were primarily from South and Central American countries, specifically El Salvador and Honduras.
USPS Employees Theft: Suspects Include Ex-Postal Union Head
USPS employee theft has led to charges against 33 post office workers in the Los Angeles area, including embezzlement and failure to deliver 50,000 pieces of mail. One of the suspects is the former president of the mail workers union.
According to the U.S. Attorney’s Office, the suspects were connected to 28 cases involving mail theft and/or possession of stolen mail. Other charges included conspiracy, bank fraud, and making false statements.
“Arrest warrants were issued for six of the 33 defendants, who were recently charged as a result of investigations by the USPS’s Office of Inspector General,” said prosecutors. “Most of the defendants were charged in indictments that were returned by federal grand juries …”City News Service said one of those nabbed, Jarol Garcia, 33, is the former president of the local Mail Handlers Union. He was charged with conspiracy and possession of stolen mail. Garcia had worked at the Moreno Valley Delivery Distribution Center as a mail handler.
Forgery May Not Constitute “Theft” Under an Employee Dishonesty Coverage
Ruling in favor of the insurer on a motion for summary judgment, on July 29, 2016 the Fifth Circuit Court of Appeals held that under the terms of a commercial crime policy, proof of a forgery by the insured’s employee in extending $90 million of credit to a customer did not establish an unlawful taking as required by the policy terms. Tesoro Refining and Marketing Co, LLC v. National Union Fire Ins. Co. of Pittsburgh, PA, 2016 U.S. App. Lexis 13838 (5th Cir. 2016).
Tesoro, a refiner and marketer of petroleum products sold fuel on credit to petroleum distributor Enmex. On several occasions the credit director for Tesoro, for unknown reasons, falsified and forged signatures on numerous letters of credit purportedly issued to Enmex. These acts enabled the Enmex debt to Tesoro to grow to $90 million before the forgery was detected. Once the forgery was discovered, Tesoro filed suit against Enmex for breach of contract and fraud, which lawsuit was settled. Tesoro also filed a claim with its insurer National Union under its crime policy. Tesoro claimed the loss fell under the “forgery and alteration” section of the policy (which section did not cover employee forgeries) and then amended its claim to proceed under the “employee theft” portion of the insuring agreement. National Union denied coverage under both provisions. After suit was brought by Tesoro against National Union for breach of contract and bad faith, cross motions for summary judgment were filed. Ruling in favor of National Union, the federal district court in Western Texas reasoned that the employee theft coverage could include theft that was facilitated by a forgery, but that it did not cover forgery losses independent of a theft, which always required an unlawful taking in order to trigger coverage. Tesoro did not demonstrate that any unlawful taking had occurred and, therefore, the district court granted National Union’s motion for summary judgment. On appeal the Fifth Circuit agreed.
“Think globally, act locally” is a saying associated with the Green Movement. It encourages people to be aware of the environmental needs of the whole planet, while taking positive action in their own communities to promote its health. Over the years the idea, and the phrase, has been co-opted to discuss other issues.
The amount of calls reported by Walmart stores to the local police are staggering.
I’m sure you’ve already read how shoplifters cost you money. It’s probably hard to digest the dire financial implications that shoplifters have on all of our businesses. Without adequate controls in place, you are putting your business and your financial well-being at risk, and honestly, you just can’t do that. That’s why we have to have a camera system and why EAS systems are a necessity and not just a “nice to have” technology. That’s exactly why we have to invest in exception reporting tools to help us identify criminal activity and why we preach the value of exceptional customer service in our stores.
You have (or I hope you have) read the last article on preventing check fraud. It’s a great way to protect your business from a different avenue of fraud. Another, much more popular and prevalent scheme is credit card fraud. The United States lags far behind the other major countries in the fight against credit card fraud. We’ve only just begun adopting chip and pin technology and it will be several more years before we see magnetic strips become a relic of the past. So exactly how can you identify and prevent a fraudulent change from happening in your store and how exactly do you lose money on these transactions?
Employee theft is a common and costly problem in retail. Some businesses’ are reporting that, for the first time, internal pilferage has now surpassed external. There are many ways to control and manage internal theft. But, one of the most effective ways is often overlooked. Stop it before it starts.
It’s no big secret that I can’t stand a thief; I did make a career out of catching them. Shoplifters really get under my skin, but employee theft really fires me up. You put people to work, give them opportunity to grow and instead of putting in the long hours, hard work and dedication needed to move forward, they steal from you. They betray your trust, slap you in the face and take money out of your pocket and food off your family’s table. Will you ever stop employee theft completely? Probably not. You can, however, minimize the risk.
Whether you’re a small one store business, or a large chain store, loss prevention awareness training for your teams cannot only protect against criminal acts, but also make a direct and positive impact on your bottom line. There is an inherent value in awareness training that lots of managers just don’t take advantage of. The core of any successful loss prevention program is not how many shoplifters are caught, nor is it how many employees were arrested; it’s training and awareness of your store teams. We are called loss “prevention,” not loss “reaction,” right? So how do you persuade your managers to see the value?