Now Hiring: Shoplifters

BOSTON ( MainStreet) -- The crowds and chaos of the holiday shopping season will keep retail security forces on their toes for the next several weeks, and some will be kept busy watching their fellow employees.

Loss prevention teams for large retailers and small businesses alike have already had their hands full in recent months with theft on the rise, a likely side effect of the sluggish economy and high unemployment.
The poster child for high-tech loss prevention is Target, which has a forensics team so sophisticated that it regularly consults with local law enforcement as well as the FBI and other federal agencies.

"Once Pandora's box has been opened, whether by the economy, or any other pretense or justification -- and these new consumer shoplifters confirm that shoplifting is indeed a low-risk, high-reward activity -- then they will not be quick to change their newfound ways," the Retail Industry Leaders Association said in a statement that referred to a study claiming that approximately one-third of shoplifting offenders are at high risk of repeating their offense.

According to the U.K.-based Centre for Retail Research's Global Retail Theft Barometer for 2011 (which tracked retail losses during a 12-month period ending in June), retail crime costs including losses and expenses totaled $47.2 million in the U.S., an increase of $2.5 billion from the previous year.

According to the study, underwritten by Checkpoint Systems ( CKP), U.S. losses consisted of $14.9 billion in customer theft, $1.8 billion in supplier and vendor-related losses (including fraud) of $1.8 billion and loss prevention costs (staff and equipment) of almost $12.2 billion.

The source of the largest hit? Employee theft, estimated at $18.4 billion.

The impact of in-house swindling was even more apparent when arrest records were studied. For the 1.7 million customers charged with shoplifting, the average amount stolen was $374; the 697,128 employee thieves averaged $1,764 in ill-gotten gain.

To prepare retailers further for the busy season ahead, the National Retail Federation last week released Crowd Management Guidelines, a seasonal security blueprint crafted by retail loss prevention executives.

"Crowd management is not taken lightly for retailers, who plan ahead for months in anticipation of large events with practice runs and a thorough analysis of the company and its customers," says Joe LaRocca, NRF's senior asset protection adviser.

The guide singles out a new wrinkle: the recent use of "flash mobs" -- sometimes a harmless bit of street theater organized via social media but also used to create the chaos necessary for successful mass pilfering. On Aug. 29, a rapper known as Machine Gun Kelly spearheaded a flash mob and hundreds descended upon a Cleveland mall for looting. Similar sprees have taken place in other cities.

Nearly one out of 10 retailers report they have been the target of a "multiple-offender crime incident," the NRF found in a survey of retail executives. The term refers to a more coordinated form of thievery that typically goes after consumer products in high demand that are easy to steal, among them infant formula, razor blades, batteries, cosmetics, gift cards and video games. The stolen goods are resold at pawn shops, flea markets, swap meets and online.

According to NRF, 89% of surveyed retailers say they have been victimized by these crimes and 59% say they expect the problem to get worse.

Retailers are setting their sights on leveraging technology to aid the cause.

In response to what was described as "an alarming rise in organized retail crime," various retail organizations partnered with the FBI to create LERPnet , a national database that allows retailers to share information on theft.

Plans were announced this year to enhance that system. With LERPnet 2.0, retailers and law enforcement will be able to share and analyze an expanded array of real-time data related to organized retail crime, counterfeiting and online auction fraud.

In addition to such databases, some detective work right out of CSI is being used.

The poster child for high-tech loss prevention is Target ( TGT). Beyond merely spotting shoplifters, the retailer has a forensics team so sophisticated that it consults regularly with local law enforcement as well as the FBI, Bureau of Alcohol, Tobacco, Firearms and Explosives and other federal agencies.

Although the company declined participation with this story and its focus on loss prevention, information distributed to law enforcement officials detail its capabilities.

Among the tools touted by the company: digital evidence analysis (video, image and audio); fingerprint collection and analysis; online auction buyback services and covert communications with online resellers such as Craigslist and eBay ( EBAY); gift card redemption information; purchase histories and signature data on any credit or debit card used at its stores; a database of every Target credit, debit or check card issued; and the ability to track IP addresses if an application was made online.

Among the cases Target has helped crack was an arson in Houston that killed a mother and her two children. It managed to use the security camera of a nearby gas station to isolate an image of a local college student, who was charged with the crime.

Target also proved an invaluable resource after the 2007 kidnapping, rape and murder of a North Dakota college student. A frame-by-frame review of surveillance video identified her as a shopper and was cross-referenced with a known list of sex offenders to identify a person of interest -- a man subsequent police work was able to convict.

As in-house theft surpasses external shoplifters in quantity and cost, this holiday season's temporary hiring spree of temporary employees will lead many to require background screenings.

An NRF survey of retail executives from 96 of the nation's leading department stores, drugstores, grocery stores and restaurants found that nearly all retailers (97%) use some form of background screening during their hiring process. "Pre-employment screenings are one of the tools retailers use as a first line of defense, especially during the holiday season when companies many have hundreds -- if not thousands -- of applications to sift through," LaRocca says.

The industry is fighting against what it is calling "ban the box" guidelines adopted in many states and under consideration by the federal Equal Employment Opportunity Commission. The phrase refers to the criminal history box on many application forms.

Other background checks typically examine records available from the past five to seven years and often include credit history, criminal records, motor vehicle records and education records.

Among the cities where felony conviction check boxes have been removed are Cleveland; Boston and Cambridge, Mass.; Austin, Texas; Chicago; Hartford, Conn.; Detroit; and Oakland, Calif. Several states are also considering legislation that will prohibit credit checks as a precursor for employment.

-- Written by Joe Mont in Boston.

>To contact the writer of this article, click here: Joe Mont.

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