Interesting retail report on fraud.

http://risk.lexisnexis.com/Article.aspx?id=58

This is from the Bureau of National Affairs, and outlines their thoughts from yesterdays congressional hearing on ORC.  I was pleased that the issues of resources and productive partnerships were highlighted.

Agents Say Resources, Not New Rules Key to Combating Fencing on Websites

Federal law enforcement agents told the House Judiciary Subcommittee on Crime, Terrorism, and Homeland Security Nov. 5 that online services are cooperating with their efforts to combat online sales of stolen property by organized crime groups, and that they do not need new procedural authority to ensure compliance with requests for information in connection with their investigations.

The National Retail Federation has estimated that organized retail crime and the sale of stolen products online, otherwise known as “e-fencing,” costs companies billions annually and also deprives states of considerable tax revenues.

Three bills introduced in early 2009 as part of an effort to target the offense (S. 470, H.R. 1173, and H.R. 1166) would create record-keeping and fraud investigation rules for online services that enable users to sell products. Companies like eBay have complained they unfairly single out online businesses and invade legitimate online sellers’ privacy rights.

Rep. Lamar Smith (R-Texas) and Rep. Robert Goodlatte (R-Va.) introduced a fourth bill targeting organized retail crime Nov. 3 (H.R. 4011). The proposal would target transferors, sellers, and other participants in online sales of stolen products, but would not codify new requirements for online services.

“We need to make sure that legitimate online businesses like eBay and craigslist and a whole host of other online businesses are accommodated in the sense that we need to find ways that they can cooperate with law enforcement without having legislative requirements that are too intrusive in terms of their business model,” Goodlatte said.

Law Enforcement Praises Service Cooperation

“Organized retail crime is a huge and growing problem,” Goodlatte said. Not only are companies incurring substantial losses from stolen products, but in many cases the proceeds are being used to fund other criminal and terrorist activities, he said.

Agents from the Federal Bureau of Investigation, U.S. Immigration and Customs Enforcement, the U.S. Secret Service, and U.S. Postal Inspection Service told the subcommittee that online services are cooperating with law enforcement efforts, and that federal agencies do not need additional procedural authority to obtain information from them.

“Do you have enough authority under present criminal law procedure to open an investigation and proceed?” Rep. Robert Scott (D-Va.) chairman of the subcommittee, asked. “Do you need any new laws on the books from a procedural perspective to investigate?”

David J. Johnson, section chief of the FBI’s violent crime section of its criminal investigation division, answering on behalf of himself and not the FBI, said “the existing laws on the books, whether it’s Title 18 U.S.C. §§ 2314, 2315, or the conspiracy statutes or the money laundering statutes or even the RICO statute provide adequate criminal remedies.”

“Based on my limited interaction with auction sites, they have been cooperative with the FBI and have given us the assistance we have requested,” Johnson said. “The level of cooperation between state and federal law enforcement and the private sector has been outstanding.”

Janice Ayala, deputy assistant director of ICE’s office of investigations, said that online services like eBay have systems in place to monitor their services for sales of stolen products, and are working closely with federal and state law enforcement to address the issue.

John R. Large, special agent in charge of the Secret Service’s criminal investigations division, said that online services have also worked with his agency to successfully investigate and prosecute several organized cybercrime groups.

“So it seems like criminal laws are enough, the procedures are enough, the problem seems to be resources. So if we want to do something, we need to get you the resources,” Scott responded.

Four Pending E-Fencing Bills

As part of an effort to address e-fencing, lawmakers introduced three bills in early 2009.

Sen. Richard Durbin’s (D-Ill.) S. 470 would require online services to investigate reports of stolen product sales, suspend sellers who are engaged in suspicious activities, and keep records of all complaints and reports for three years.

Online services would also be required to collect and retain information about “high volume sellers,” The bill would expose services to civil penalties for failure to comply with those requirements, and criminal penalties for knowing violations.

Scott’s H.R. 1166 would require online services to disclose contact information for high-volume sellers to parties who have reported stolen products to law enforcement. It would also place a duty on services to determine whether their users’ sales are lawful, and impose criminal penalties for services that knowingly participate in the sale of stolen products by providing an internet marketplace.

H.R. 1173, introduced by Rep. Brad Ellsworth (D-Ind.), would prohibit “facilitation of organized retail crime,” and require online services to remove sales of suspected stolen products when presented with credible evidence.

Services would also be required to maintain a record of those investigations and information about high-volume sellers for three years. The bill provides that any property used, in any manner or part, to facilitate organized retail crime would be subject to civil forfeiture, and would create a civil cause of action against any operator of a Web marketplace for damages and injunctive relief.

The fourth bill does not have requirements for online services. H.R. 4011, would establish criminal penalties for the transport, transmission, or transfer in interstate or foreign commerce any goods, wares, or merchandise worth more than $1,000, for sale online, knowing they were stolen. It would also criminalize the bartering or selling of stolen merchandise worth at least $1,000, knowing the products are stolen, converted, or taken by fraud; and establish a multi-jurisdictional task force to initiate investigations of organized retail theft

This is my personal blog and does not represent the views of my current, past or future employers..

A friend sent this article to me this week, which highlights some lessons main stream businesses can learn from WWE the wrestling franchise. 

From Fast Company Magazine

http://www.fastcompany.com/blog/sam-ford/conversation-convergence/10-things-corporations-can-learn-pro-wrestling

Much work has been done over the last year on stolen goods in retail.  In my new role at eBay I lead a team of professionals who are pioneering new ground and are working collaboratively with their retail partners.

Here is a small example highlighted by my colleagues at Rila.

Top Stories:
Police Make Arrest in Diabetic Test Strips Thefts
Arizona – A joint sting operation known as “Operation Interceptor” has nabbed a suspect involved in selling stolen diabetic test strips.  During the operation, the suspect bought 30 boxes of test strips with a value of $2,254 for only $215 on five different occasions.

I came across this story today and thought it was just absurd how the writer jumps from one or two anecdotes from unhappy people and then makes broad statements of facts.  This was particularly concerning to me because it referenced a program I was involved with the implementation, measurement and evolution of and the broad statement made is far from the truth.

Here is the story:

Driver’s License Scanning Reduces Fraud, but May Alienate Shoppers
Returns fraud and abuse is a $15.5 billion dollar-a-year problem in the United States alone, according to research by The Retail Equation, a technology company that makes a sophisticated tool to help retailers fight the abuse. But the problem is, that tool appears to be alienating many shoppers. RetailCustomerExperience.com

The Facts-  The companies (multiple) I was involved with that implemented this program the results were the following:

1) Huge cost savings +100m

2) Huge Shrink savings

3) Faster speed at the check out (a former customer pain point)

4) Less people being denied without facts

5) A safer process of denying returns for our associates

These facts seem to be missing from this writers story.  Also missing is that you can very easily identify your good customers and ensure they have the best treatment. 

This approach is no different from utilizing a service “fact based” to approve credit cards and checks.  In fact because the data you are making the decisions on is your data, I would suggest it is a step up from the common check verification systems in place today.

Retailers that will survive this down economy will need to leverage their data, technology and controls to win. 

Oh the last piece that was never mentioned is The Retail equation actually invented bounce back coupons to help retailers recapture sales and turn the refund into a sale..  I’m told the success of this campaign rivals some of the best customer marketing campaigns on the market.

Report the facts please, somewhere our dollars are counting on it!!!!!

These are my personal opinions and do not represent the opinions of any past or present company.

Here is an interesting article that I received from LP Magazine  regarding employee theft.  I often wonder why this topic is not spoken about enough? 

Curbing Employee Theft
According to a report by i4cp Inc., more than one-quarter (27 percent) of respondents in large companies — those with 10,000 or more employees — said theft in the workplace has risen during the current economic crisis, while 15 percent, regardless of company size, reported that it stayed the same. Human Resource Executive Online

Joint police operation nabs suspect in stolen property case

“Operation Interceptor” was a stolen diabetic test strip sting

Suspect

Samuel Camerano, Jr.  49 years old

Phoenix resident

e-Crime case solved- Great cooperation 

The Property Crimes Unit of the Peoria Police Department, in partnership with Target Corporation, CVS Pharmacy, EBay and the Maricopa County Attorney’s Office began “Operation Interceptor” in September 2009 after Target contacted Peoria Police regarding a sharp increase in the theft of diabetic test strips.  Undercover officers from Peoria and Buckeye Police Departments made sales of “stolen” test strips to Samuel Camerano, who believed they were stolen property. Camerano in turn sold them for profit on web sites like EBay and to other distributors who would then resell them in bulk back to pharmacies. The test strips for this sting operation were provided by Target and CVS and the suspect was identified with the assistance of EBay and from ads he placed in local news papers advertising that he was purchasing diabetic test strips.

During the operation Camerano bought 30 boxes of test strips with a value of $2,254.00 for only $215.00 on five different occasions believing them to be stolen property. The final sale of test strips to Camerano was on October 8, 2009 and he was arrested for trafficking stolen property immediately following the transaction.  In Camerano’s vehicle was a box containing 25 boxes of test strips ready for mailing to an out of state distributor.  A search warrant was served on Camerano’s residence in Phoenix where an estimated $15,000 of test strips was recovered. Additional evidence obtained at his house included cash, computers and a vehicle. While officers were at Camerano’s residence four calls came in on his answering machine from persons with test strips to sell.  One in particular had 13 boxes that the caller provided make, number and expiration date for and they were determined to have been stolen from a Target Store the night before.

Camerano was charged with 8 counts of attempted trafficking stolen property in the first degree, a class three felony and 1 count of fraud schemes, a class two felony. Since his arrest there have been no reports of stolen test strips from Target however prior to his arrest they were reporting about $2,000.00 loss in test strips each weekend.

This investigation was an example of what can be accomplished when law enforcement, prosecutors and the business community partner together to catch a suspect who was causing significant financial loss to the businesses in our communities.

Mike Tellef

Media Relations Office

Peoria Police and Fire Departments

8351 W. Cinnabar Avenue

Peoria, AZ 85345

Joint police operation nabs suspect in stolen property case

“Operation Interceptor” was a stolen diabetic test strip sting

Suspect

Samuel Camerano, Jr.  49 years old

Phoenix resident

The Property Crimes Unit of the Peoria Police Department, in partnership with Target Corporation, CVS Pharmacy, EBay and the Maricopa County Attorney’s Office began “Operation Interceptor” in September 2009 after Target contacted Peoria Police regarding a sharp increase in the theft of diabetic test strips.  Undercover officers from Peoria and Buckeye Police Departments made sales of “stolen” test strips to Samuel Camerano, who believed they were stolen property. Camerano in turn sold them for profit on web sites like EBay and to other distributors who would then resell them in bulk back to pharmacies. The test strips for this sting operation were provided by Target and CVS and the suspect was identified with the assistance of EBay and from ads he placed in local news papers advertising that he was purchasing diabetic test strips.

During the operation Camerano bought 30 boxes of test strips with a value of $2,254.00 for only $215.00 on five different occasions believing them to be stolen property. The final sale of test strips to Camerano was on October 8, 2009 and he was arrested for trafficking stolen property immediately following the transaction.  In Camerano’s vehicle was a box containing 25 boxes of test strips ready for mailing to an out of state distributor.  A search warrant was served on Camerano’s residence in Phoenix where an estimated $15,000 of test strips was recovered. Additional evidence obtained at his house included cash, computers and a vehicle. While officers were at Camerano’s residence four calls came in on his answering machine from persons with test strips to sell.  One in particular had 13 boxes that the caller provided make, number and expiration date for and they were determined to have been stolen from a Target Store the night before.

Camerano was charged with 8 counts of attempted trafficking stolen property in the first degree, a class three felony and 1 count of fraud schemes, a class two felony. Since his arrest there have been no reports of stolen test strips from Target however prior to his arrest they were reporting about $2,000.00 loss in test strips each weekend.

This investigation was an example of what can be accomplished when law enforcement, prosecutors and the business community partner together to catch a suspect who was causing significant financial loss to the businesses in our communities.

Mike Tellef

Media Relations Office

Peoria Police and Fire Departments

8351 W. Cinnabar Avenue

Peoria, AZ 85345

While I subscribe that ORC is an issue in retail, I often wonder why all invested parties do not speak loudly about the fact that the dramatic loss of sales associates, incredible Loss Prevention budget cuts, is a significant part of the issue as it exists today. 

I believe people in the C suite would be better served if they listened to the LP leaders within their companies before problems occur.

I also sit back and wonder why we have little to no dialogue around internal theft which continues to lead as the most significant cause of shrink.

Here is a new ORC article with some different views-

http://www.csoonline.com/article/503306/Organized_Crime_and_Retail_Theft_Facts_and_Myths?page=1

For anyone interested in the data sharing I mention in this article, get a hold of Kevin Bitters of Abercrombie & Fitch who leads this effort for them.  It is quite beneficial for those companies involved.

This blog represents my personal views and not the views of my present company or any of my past companies.

Over the last  4 months we have had a significant transformation regarding our (eBay’s)  partnership with retailers.  Proact our program designed to help retailers deal with their ORC issues was relaunched, repositioned, and significantly changed.  The results of the program are very positives and the momentum of the partnerships being built is legendary.

We have experienced a 200% increase in companies proactively working with us to address their ORC issues and the partnership and shared learnings is a great testament of what we can do together when we eliminate rhetoric and the blame game.

This is just a small example of working together and many more to celebrate…..

http://www.courant.com/news/connecticut/hc-west-hartford-cvs-0925.artsep25,0,4232525.story 

Join our Linked in group eBay Partners with Loss Prevention Professionals.  If you would like to have your company join Proact, send me an email pajones@ebay.com – It is free and effective..

Have a great weekend.