User:JamesForLPF/LossPreventionSandBox

Retail Loss Prevention Wiki-Article Sandbox
Sandbox Rules we would prefer our contributors adhere to:

The Loss Prevention Foundation is interested in contributing a current, comprehensive and educational article on the subject of Retail Loss Prevention. We created this sandbox, so our LP community as a whole, and not just the LPF, can help up and coming business leaders have a more accurate comprehensive understanding of our profession.

Therefore we decided to create this wiki-sandbox for experts from all corners of our industry to perfect the Retail Loss Prevention article and over-write the current article on this subject. Our intent is not to diminish the efforts of the dedicated people who put this subject up on Wikipedia in the first place, but rather to take all that hard work up to the next level.

We would like a nice, well rounded, informative article that covers retail loss prevention for a wide range of readers. 1) The business person who wants to begin to understand LP. 2) A hiring manager thinking of his first LP addition to the staff. 3) A student doing a research project. 4) A job seeker. 5) The curious. 6) The researcher who has a project and needs a good list of issues pertaining to the subject. 7) Anyone looking to find subject matter experts or deeper informational sources on the topic.

Thank you for considering a contribution and we hope to hear from you if you have any questions.

Suggested Outline

 * 1) Introduction
 * 2) History
 * 3) Retail Loss Prevention Today
 * 4) Aproaches to Safety
 * 5) Aproaches to Theft
 * 6) External
 * 7) Internal
 * 8) Aproaches to Business Continuity
 * 9) Aproaches to Physical Security
 * 10) Disciplines within Retail Loss Prevention
 * 11) Organizational Structures
 * 12) Relationships to Business
 * 13) Relationships to Law Enforcement
 * 14) Education Paths
 * 15) Career Paths
 * 16) The Future of Our Industry

Introduction
Retail loss prevention refers to all measures taken by a retail company to protect its profitability. Some retailers refer to this practice as asset protection, and while subtle differences exist between the two terms, they are often used interchangeably throughout the industry. Each retail company employs their loss prevention resources uniquely; however, most retail loss prevention strategies revolve around two main categories of expense management: shrinkage reduction and safety performance. Often, retail loss prevention departments are recognized as the compliance monitors of their organization's policies and procedures as well as the team responsible for protecting their organization's assets--whether those assets be inventory, cash, employees, customer records, facilities, or the company's brand. Additional responsibilities revolve around compliance auditing, training & awareness programs, internal & external investigations, business continuity & disaster recovery planning, inventory management, creating a safe working and shopping environment, physical security standards, and security system design & integration.

Editing Note: It would be nice to be able to cite textbooks and/or publicly available resources on how the NRF, RILA, educational institutions, the LPF, etc. define Loss Prevention & Asset Protection. The above lists are meant to give a flavor for the types of activities loss prevention personnel engage in rather than a finite or all-encompassing list that excludes all other responsibilities and tasks.

History
When retailers first began hiring security people, investigating theft and apprehending criminals were primarily how management expected store security to contribute to store operations. The focus of these early security people generally included preventing shoplifting and employee theft. The advent of the term "Loss prevention" or "LP" was a designation related to a more holistic approach to reduce the amount of all losses related to the retail trade. Editing Note: For now, I am going to table the editing of the History section. Again, I would like to be able to cite textbooks or other historical references. It would be nice to give a birth to the security programs within the retail environment. What companies pioneered security? The transition to LP? Old school attitude vs. modern practices? Would interviews be appropriate with "older" generations of LP professionals? Where would we find this? Are there LP historians out there?

The Challenges
National Retail Security Survey (preliminary numbers for 2010 have been published) NRF Organized Retail Crime Survey Other Resources

==Loss Prevention Today Today's retail loss prevention departments focus on programs which add value to their company's bottom line. While the public's perception may tend to think of loss prevention specialists as a retailer's attempt to catch shoplifters, this definition barely scratches the surface of what today's loss prevention departments are capable of in terms of preserving a company's assets and/or profits.

Editing Note:

3A. Safety 3B. Investigations 3B-1. External threats 3B-2. Internal threats 3C. Business Continuity 3D. Physical Security

Shrink Reduction
The principle objective of loss prevention is to preserve profit by reducing losses to the company. A major component of profit preservation is reducing shrink. Shrink can best be described as intentional and unintentional but preventable losses to a company. According to the 2006 National Retail Security Survey, retail operations suffered an average annual inventory shrinkage percentage of 1.57% in 2006. According to the survey, shrink is divided into 5 categories:


 * 70% from employee theft, -fact
 * 31.6% from shoplifting -estimate
 * 14.4% from administrative error -estimate
 * 3.75% from vendor error -estimate
 * 2.86% from unknown error. -estimate

Although most retailers experience a shrink percentage of less than 2%, some smaller retailers often experience monthly and annual average shrinkage percentages as high as 20%.

Embezzlement
Cheque Fraud

Credit card theft
Stolen credit cards find their way into retail stores as much as or more than online retail websites. This is usually for several reasons. Retailers have generally relaxed their procedures for checking credit cards, to shorten customers' time spent at the cash register. Also, purchasing merchandise first-hand affords a credit card thief some anonymity, as opposed to providing a mailing address for an online sale.

Most retailers are not liable for the use of stolen cards, unless they have chosen to override the chip and PIN and accept a customer's signature when they could have accepted a PIN.

Check fraud
Check fraud is generally accomplished in one of two ways. The first is by writing a fraudulent check that is manufactured to look like a real document, which in fact has no real value or no real bank account to back it up. Due to the complexity of the process and the high-levels of knowledge and skill required to successfully do this, it is typically done only by people who are experienced in forgery and making counterfeit cash. The second method is check kiting, in which the suspect writes a check for a high dollar purchase, then withdraws the funds from the account before the check clears. Check kiting is usually done when suspects establish a fraudulent bank account under a false name.

Margin loss and sweethearting
Retail loss prevention departments are becoming increasingly more involved in investigating losses which affect the margin of products and services. Typical areas of investigation include the overriding of PLU prices, price matching from competitors, and reduction of service fees such as delivery or protection agreements. While unintentional margin loss is reduced by educating employees and managers, the term for intentional margin loss is sweethearting. Sweethearting generally occurs when an employee promises a deal to a customer in order to close a sale, or otherwise reduces the price of merchandise for dishonest reasons. Sweethearting investigations involve research into employees' finding competitor price matches to give to customers; overriding prices for their customers, friends, and themselves; and markdown of fees such as delivery and protection agreements.

Exception-based reporting (XBR)
In the past 10 years, exception-based reporting (XBR) has become a widespread tool for loss prevention in retail organizations. XBR has allowed retailers to easily identify instances of potentially fraudulent activity by using data from the ERP, point-of-sale systems, and more. They no longer have to search through cumbersome sales records to spot patterns of dishonesty.

These are an automated profit increase solutions, providing pin-pointed analysis and guidance for improved merchandise control, compliance assurance, loss prevention and fraud detection. These solutions are covering all operational areas of the retail enterprise – the POS, store operation, supply chain and purchasing.

Camera systems
CCTV

CCTV is an abbreviation for Closed Circuit Television. CCTV camera systems are common to almost all loss prevention departments. The obvious benefits of CCTV camera is that the investigator can gain a better view of a suspect, record incidents, and not reveal themselves to shoplifting suspects. Some retailers use two-man teams in which one person uses the CCTV camera system to detect shoplifters and a floor man follows the suspect and apprehends them.

CCTV camera systems have been drastically modernized in the last decade. Most systems now record digitally as opposed to using videotapes. Many systems now include a computer server that stores recorded video for months at a time. Digital cameras overlooking registers have greatly increased the number of internal cash thefts being resolved, and in some major cities such as Houston, Texas, an ordinance now requires convenience stores, pawn shops and similar outlets to have at least one camera trained on the entrance door(s) and one on the register.

Electronic article surveillance


Electronic article surveillance (EAS) is a deterrence system used by retailers to deter shoplifting. EAS involves the use of electronic security towers and electronic security tags. Hard tags or Sticker tags are placed on items throughout the store manually or are applied when merchandise is made and are disabled at check-out by either removing the hard tag using a detacher or by scanning label tags over a magnetic label deactivator. If the tag is not disabled it will activate the alarm pedestals, which are generally located at the exit of a retail store. EAS tags & labels are extremely effective in deterring amateur shoplifting, but most professionals require a combination of hard tags, labels, and ink tags to keep them in check. Even with the most elaborate anti-shoplifting systems some goods will be lost; this is possible with booster bags or simply a "grab and run".

Dual Resonator EAS stickers are usually placed on small items such as shaving razors and cold medicines. These items are popular items to sell at flea markets and swap meets. Dual Resonator EAS stickers are printed on thin paper and are difficult to remove. The high speed packaging application of these stickers was perfected by Craig Patterson (Knoxville, TN) and is a process called Source Tagging. Usually the sticker includes a retailer's company logo and serves as an indication to would-be buyers that the merchandise has been stolen.

Retail entrance protection
Most retailers have little to no protection at their main and side entrances. Lack of knowledge and equipment leads owners vulnerable to theft on a large scale. Examples are placing high value items such as leather jackets and brand name items near the entrances. Retail managers and associates dedicated to making the store look visually appealing to the customer do not always factor in these problems. Equipment is available to retail to protect this sensitive area and deter theft. Many companies provide this service, and many fail to provide any real protection beyond visible barriers. Investing in the proper technology is the most important decision you can make as a store owner. Look for systems that provide fire route access, public view monitors (a television hanging from the ceiling that shows the customer the entrances are being recorded), large heavy glass walls that allow view of merchandise but deter running out the door with the merchandise.

New Door-mounted protection
An innovative newcomer is Door-Cam, a CCTV-armed unit that offers a new concept in protection at entrance doors of establishments such as convenience stores, banks and pawn shops. Constructed of aluminum, the rectangular device spans the full width of the glass door of an establishment at head height and is anchored with only a few screws to each side of the door frame. Units are defaulted within with 2 CCTV cameras. One camera points inside the establishment and the other views the outside through the glass door. Extreme closeups result of all who enter and leave. As the door swings open and closed door hinges afford smooth panning up to 270-degrees inside and outside, simultaneously. The result is the capture of bonus footage that can be provided to investigators, such as the direction of a criminal's flight, a lookout, "getaway" car, license plates and even shoppers in parking lots who might otherwise have been reluctant to come forward voluntarily with their eye-witness accounts. Because of the full-frame closeups investigators are able to exonerate the innocent as well as positively identify the guilty.

Two-way radio sets
Almost all loss prevention departments have some form of two-way radio communication. This technology is used by LP investigators to help teams follow shoplifting suspect(s) in conjunction with the CCTV camera system operators, summon assistance when apprehending a shoplifter(s), contact mall security when available and request police assistance. Most LP associates,agents,officers etc, when actively "working the floor" conceal their radios and keep the volume at a low setting as not to "blow their cover".

Point of sale
Point of sale is a form of electronic journal that allows the loss prevention investigator to see a transaction as it is occurring live. This system is either displayed on a computer screen or on a monitor linked to the CCTV camera system. This system has assisted investigators in closing employee embezzlement cases pertaining to merchandise passing, merchandise voiding, and discount fraud.

Audits and reporting
Exception reports

Exception reports are compiled on an annual basis into a report. Usually the reports are received monthly or bi-weekly. They include information on cash audit overs and shorts, no-sales, flagged returns, employees ringing themselves up, fake employee numbers used to avoid commission docking, excessive markdowns and/or discounts, and merchandise voids. Exception reports have dramatically reduced the amount of time an investigator needs to detect a possible sign of employee embezzlement.

Electronic journals

Almost every large retail institution has some form of electronic journal which records all its transactions. Information such as credit card numbers, gift card numbers, refunds, and merchandise voids is gathered at the point-of-sale. These journals can then be used to view and print facsimiles of receipts or checks.

Cash office audits

A cash office audit is usually counts up the cash from transactions at the retailer's registers. A shortage occurs when the amount contained in the register does not match what the cash audit says it should have. Shortages are used to begin and close cash embezzlement cases that are investigated by loss prevention departments. Cash office audits used a particular register during the day. This information is used by loss prevention investigators to narrow the field of suspected employees.

Ink tags
Ink tags have been around for several decades and are most commonly used by clothing retailers. Special equipment is required to remove the tags from the clothing. When the tags are forcibly removed, one or two glass vials containing permanent ink will break, causing it to spill over the clothing, effectively destroying it. Ink tags fall into the loss prevention category called benefit denial. As the name suggests, an ink tag denies the shoplifter any benefit for his or her efforts. Despite this, shoplifters have found ways around them, such as duct-taping the holes through which the ink comes out and then removing the tag with pliers, resulting in little to no damage of the merchandise. This however isn't possible with all ink tags as the holes may not be visible. Another technique used is to freeze the clothing and tag prior to removing it; the frozen ink is unable to spill onto the clothing. This was also made more difficult as several ink tag companies began installing an antifreeze solution to the ink. Ink tags are most effective if used together with another anti-shoplifting system so that the shoplifter can not use the product or remove the ink tag.

Ceiling mirrors
Ceiling mirrors were once a staple of the loss prevention industry. Now, for the most part, they have been relegated to convenience stores. Mirrors allow loss prevention investigators to watch activity in a high-theft area without being seen. Some loss prevention departments have been known to use mirrors to increase the range of their camera systems.

Retailers also mirror the stores structure columns. This not only benefits the customer by allowing them to view themselves it also assists LP camera operators who use the mirrors to reflect their cameras view in another direction.

Bottom of basket
Bottom of basket loss (BOB) occurs when an item is placed on the lower tray of a shopping cart. The cashier may forget to check the lower tray for items, resulting in the item not being paid for. What makes this form of shrink unique is that it may happen intentionally or unintentionally. Estimates for the dollar amount lost in this manner are over US$2 billion per year in North America alone, or $7 per checkout lane per day. There are a few products on the market to help prevent this loss. The most common are mirrors mounted across the checkout lane. Some stores have camera systems pointed at the lower tray with monitors for each cashier. Neither of these systems are completely effective as the problem is not visibility alone but also the inattentive cashier and/or forgetful customer.

A newer type of system actively monitors the checkout lane and alerts the cashier when an item is detected on the lower tray of the shopping cart. The alarm will trigger when any object is detected on the lower tray but the systems' technology is able to distinguish between a shopping cart and a person or bag passing through the lane. Unfortunately, none of these types of "alarm" systems have made any significant impact on BOB loss rates, as the cashier tends to ignore them within 3 months of installation. There is no way to ascertain whether the cashier simply ignored the alarm.

Consent searches
Consent searches are widely used in law enforcement as well as loss prevention. When a customer consents to a search of their belongings, it is very difficult to later challenge the legality of the search in court, should an offence be detected in this manner. Consent searches in some instances can be used to build on previously existing evidence to establish the probable cause necessary to detain a shoplifter. The extreme end of establishing probable cause through a consent search has been eliminated except with a few smaller companies who still utilize it.

In modern retail loss prevention, consent searches are most often utilized by warehouse retailers such as Costco and Sam's Club. The warehouse retailers have made consent searches of their customers' purchases a part of the membership agreement. Although a customer may refuse to consent to a search from a legal standpoint, the warehouse retailer does retain the right as a private business entity to strip the customer of their membership or issue a verbal trespass. Warehouse retailers have been able to utilize consent searches to lower their prices on goods and reduce external shrinkage at the same time.

Certain states such as New Jersey allow loss prevention personnel to apprehend a shoplifter as soon as they conceal merchandise, rather than being required to wait until the customer attempts to leave the store. LP staff do not often make use of this permission, however, as a better court case is constructed when the shoplifter with the concealed merchandise attempts to walk out the door.

Viewing towers
Although the necessity of viewing towers or "perches" has been largely eliminated by CCTV camera systems, they still exist today. A tower providing a wide view of the selling area is usually situated along the wall areas of a store, accessed by stock room ladders. Some perches were also walls that were floor level and centrally located. Two way glass is used to hide the LP associate from the customer. Some appear to be mere display walls or customer mirrors. Others are equipped with phones that will blink a light so not to alarm a shoplifter by ringing. An investigator can spend time in the tower while searching for shoplifters or investigating employees, much in the same manner as with CCTV. Most towers are now obsolete and being eliminated from many retail establishments. Some do remain even in major retail stores but their obsolescence due to CCTV systems has resulted in many being turned into small stock rooms.

Integrity shops
The information gained from an integrity shop can be used to initiate investigations or conduct interviews that could possibly reveal dishonest and/or criminal employee behavior. Integrity shoppers are at times LP associates from other stores or an outside company. The integrity shopper purchases items at a register and the LP associate monitors the sales person.

Integrity surveillance also is used to monitor cleaning crews, contractors working in the store and on some occasions by management or corporate officials to monitor LP associates themselves. LP monitoring of cleaning crews and contractors is often conducted outside of trading hours when the store is closed. It is common for LP crews to remain in the store after closing and monitor via CCTV.

Facial recognition
Facial recognition systems mounted at the point of entry to a store are capable of comparing the faces of people entering the store against a blacklist of known shoplifters. This allows a suitable system to notify store security when a person of interest enters the store, thereby allowing the person to either be ejected from the store (removing the opportunity for the loss to occur in the first place), or alternative allow more detailed surveillance in order to detect a theft occurrence with one of the above systems.

A new CCTV unit recently introduced, Door-Cam, is especially accommodating to facial recognition software solutions by its door mounted feature at head height. This results in the head-on capture of footage that renders great detail of all who enter and leave, such as scars, wrinkle pattern of brow, ear piercings, clothing and etc.

Facial recognition systems mounted at the point of entry to a store are able to compare the faces of people entering the store against a blacklist of known shoplifters. This technology provides a suitable system whereby store security can be notified when a person of interest enters the store. With this information, security staff may decide to eject the person from the store or conduct more detailed surveillance in order to detect theft using one of the aforementioned systems.