Loss Prevention

RETAIL/ LOSS PREVENTION

RETAIL SECURITY OFFICERS ( Loss Prevention )

Uniformed or plain-clothes officers can help retail outlets in reducing losses from both internal
(staff) and external (customer) sources. MSI can also assist you in identifying and correcting
areas of vulnerability, including other means of loss such as waste of resources-including bar
and night club spotters and drug use.

Employee Theft from a retail store is a term that is used when an employee steals merchandise,
food, cash, or supplies while on the job. However, in the eyes of the law, employee theft is just
theft…the elements of the crime are identical. To commit theft, the employee must “intend” to
permanently deprive their employer of the value of the item stolen.

Employee theft can occur just like shoplifting by concealing merchandise in a purse, pocket, or
bag and removing it from the store. It can also occur by stealing cash, allowing others to steal
merchandise, eating food, and by refund, credit card, or check fraud. Employee theft can
sometimes be charged as embezzlement due to the trusted fiduciary status of the employee. All
of these methods lead to loss of inventory (shrinkage) and/or profit for the merchant.

Employee theft is an insidious crime because the merchant is paying a wage and benefits to the
thief on top of paying for the cost of their dishonestly. Studies have shown that employees can
do a lot more damage than shoplifters because they are trusted and have an insider’s
knowledge of store security measures.

Employee Theft Profile

There is no real physical profile for a dishonest employee. Dishonest employees come in all
shapes, sizes, ages, sexes, ethic backgrounds, religions, levels of education, and economic
status. You simply cannot accurately determine who is likely to steal based on their
demographic status alone. However, an employer can make reasonable assessments based on
their conduct, integrity, and judgment. A person’s past conduct, integrity, and judgment often
provides the best indication of their future behavior.

Retail store employees have a constant opportunity to steal cash or merchandise…all they
need is the desire and sufficient motivation to do so. What keeps most employees honest is
moral character, loyalty, respect for the law and their employer, and the desire to be viewed as
trustworthy. Studies support this by proving that shrinkage is significantly less in stores with
reduced employee turnover and fewer part-time workers.

For others, the only barrier to dishonesty is the fear of getting caught. The employee thief risks
getting fired, being arrested, jailed, and paying restitution. The criminal record and bad job
reference will have a compounding effect that will follow them for years. Merchants must not
be sending a clear message to their employees because most employee thieves that I have
encountered never thought they would be caught.

Cost of Employee Theft

According to the University of Florida 2002 National Retail Security Survey, employee theft was
estimated to be responsible for 48% of store inventory shrinkage. That represents an estimated
employee theft price tag of about 15-billion dollars per year. This astounding figure makes
employee dishonesty the greatest single threat to profitability at the store level.

The study found the average dollar loss per employee theft case to be $1,341.02 compared to
$207.18 for the average shoplifting incident. Despite these facts, many retailers focus their loss
prevention efforts on shoplifting.

Loss Prevention

Preventing employee theft is a constant challenge for retailers. The industry knows that it must
put systems in place to prevent or deter internal theft. To be effective, loss prevention systems
must be designed to reduce the opportunity, desire, and motivation for employee theft.

Basic loss prevention steps involve good procedures for hiring, training, and supervision of
employees and managers. Procedures that are clearly defined, articulated, and fully
implemented will reduce the opportunity, desire, and motivation for employees to steal. I will
talk about each of these concepts in future articles.

Retail Shoplifting

Shoplifting is a crime and occurs when someone steals merchandise offered for sale in a retail
store. To commit shoplifting one must "intend" to permanently deprive the merchant of the
value of the merchandise. Shoplifting most often occurs by concealing merchandise in a purse,
pocket, or bag, but can occur by a variety of methods.

Most shoplifters are amateurs. However, there are growing numbers of people who make their
living by stealing from retail stores. Amateur shoplifters can be highly skilled, and some steal
almost every day, but don't do it to make a living. Most amateurs are opportunistic, crude in
their methods, and are detected more often than others. Professional shoplifters run the gamut
from being highly skilled to thug-like. Some professionals work in teams or use elaborate
distraction scenarios. The crude professionals sometimes use force and fear much like gang
intimidation and often commit grab-and-run thefts. Being a professional means that they steal
merchandise for a living, and like other trades, practice makes perfect. Thoughtful
professionals are very difficult to stop in a society where retail stores openly display their
merchandise.

Shoplifter Profile

Shoplifters come in all shapes and sizes, ages and sexes, and vary in ethnic background,
education, and economic status. Some shoplifters steal for the excitement, some steal out of
desire, some steal for need, some steal out of peer pressure, and some steal because it is
simply a business transaction to them. Some shoplifters are compulsive, some opportunistic,
and some are mentally ill and don't know any better. Some shoplifters are desperate from drug
addiction, alcoholism, or from living on the street. Children and elderly persons sometime steal
without realizing they are committing a crime. Most shoplifters try to rationalize their crime by
thinking the large retailer can afford the loss.

In urban cities, it is not unusual to find a network of fences that send out teams of shoplifters
into specific retail stores to shoplift specific items, much like filling an order for a customer.
These fences only pay 10-20 cents on the dollar to the thieves, but sometimes pay their room,
board, and provide training on how to steal and defeat the anti-theft technology. Some fences
have been known to bail their workers out of jail when caught or provide for their legal
defense. This creates a kind of strange street loyalty much like the tale of Oliver Twist.

Cost of Shoplifting

Theft from stores, including employee and vendor theft, cost retailers many billions of dollars
per year. Independent retail studies* have estimated theft from retail stores costs the American
public 33.21 billion dollars per year. Depending on the type of retail store, retail inventory loss
ranges from .7%-2.2% of gross sales with the average falling around 1.70%. Whole retail store
chains have gone out of business due to their inability to control retail theft losses. And worse
yet, the cost of these losses are passed on to us...the consumer.

Shoplifting losses vary by store type, but can account for about one-third of the total inventory
shrinkage. It is estimated that shoplifting occurs 330 - 440 million times per year at a loss of
$10-$13 billion dollars. Nationwide, that equates to 1.0-1.2 million shoplift incidents everyday at
a loss rate of $19,000-$25,300 dollars stolen per minute. When you factor in employee and
vendor theft, this sum skyrockets to an estimate of over $33 billion dollars stolen per year.

Shoplifting Prevention

To combat these losses, merchants have had to take sometimes extreme measures to control
shoplifting. Most large retailers employ plain-clothes floor detectives to observe customers as
they shop. Many shoplifters are detained and arrested for their indiscretions. See our webpage
on Shoplifting Detention and Arrest. Plain-clothes floor detectives alone are not enough of a
deterrent because they are seemingly invisible. Many stores use video surveillance cameras
and electronic article surveillance (EAS) devices attached to their products that cause alarms
to go off if not deactivated by the cashier. Others secure expensive and high theft items like
small leather items, perfume, cosmetics, tools, liquor, or cigarettes in locked enclosures. Other
retailers use cables or hanger locks that require the assistance of a sales associate to unlock
the expensive item of clothing before you can inspect it.

It is important for us to know these facts and be patient with stores that try to control their
losses due to theft. It can be annoying when a store sales associate has to first count your
items before you enter and after you exit the dressing room. It can be annoying when the item
you wish to try on has an electronic security device attached to it and sometimes spoils the
look of the item. It can be annoying when a sales associate appears to be "dogging" you within
the department, seeming to watch your every move. If any or all of these tactics make you feel
uncomfortable, imagine how the shoplifter feels. Shoplifters want product accessibility, privacy,
and prefer stores with few anti-theft methods in place. It is unfortunate, but anti-theft
procedures sometimes affect the shopping experience for all of us, especially if applied
thoughtlessly.

Shoplifter Detention

The practice of physically detaining and arresting shoplifters is not without risk. Besides the
physical contact that is sometimes necessary to stop an aggressive shoplifter, a merchant has
the legal risk of being sued for doing so incorrectly. In America, customers get outraged when
they feel they are being watched or if they are questioned about a suspicious transaction. Many
merchants have been sued by their former customers for allegations of false arrest, false
imprisonment, malicious prosecution, excessive use of force, and assault.

In an effort to prevent thieves from walking out the door without paying for merchandise,
sometimes it becomes necessary to detain and arrest those suspected of shoplifting. Retailers
sometimes employ plain-clothes loss prevention agents specially trained to detect, apprehend,
and arrest shoplifters. Some retailers believe that arresting shoplifters is the greatest
deterrent as the word is spread by store employees and gets out on the street. If a detention
and arrest policy is desirable, it is critical for the merchant to understand the local laws of
arrest before confronting anyone. Remember that the laws of the state have a different legal
impact than store policy. What follows are some good "rule of thumb" guidelines to follow in
most situations:

Before detaining anyone, you must establish Shoplifting Probable Cause. To establish a solid base
for probable cause and prevent false arrest claims, there are six universally accepted steps that a
merchant should follow before deciding to stop someone suspected of shoplifting:

1.        You must see the shoplifter approach your merchandise
2.        You must see the shoplifter select your merchandise
3.        You must see the shoplifter conceal or carry away or convert your merchandise
4.        You must maintain continuous observation the shoplifter
5.        You must see the shoplifter fail to pay for the merchandise
6.        You must approach the shoplifter outside of the store

The Decision

The decision to approach and confront someone suspected of committing theft should not be
taken lightly. It's critical to provide special training to anyone charged with the responsibility of
apprehending shoplifters. Some states have "Merchant Statutes" that give the store operator
some limited liability protection if they approach a suspected shoplifter in good faith and the
stop is based on a reasonable belief that shoplifting had occurred. A merchant statute gives
the store operator the right to "detain" someone temporarily either for the purpose of
recovering their merchandise and/or for summoning the police. To detain someone, under the
statute, means that they are not technically under arrest, but merely being temporarily
investigated.

The detention process can evolve into an arrest if the suspected shoplifter is taken into
custody for the purpose of arrest. The definition of custody means not being free to leave (i.e.
while handcuffed). In jurisdictions that do not have the protection of a merchant's statute, a
store operator must make a citizens arrest without any liability protection. In most states, to
make a citizens arrest, you must see the crime (misdemeanor) committed in your presence or in
the case of a felony committed outside of your presence, you must be certain that the crime
actually occurred .

The Approach

To approach a person suspected of shoplifting will necessarily involve a confrontation. This
confrontation can go smooth and professional or become hostile and aggressive. It is a good
policy to have extra personnel involved for back-up and for witness purposes. A good rule is to
outnumber the suspected shoplifter by a least one. The extra personnel usually prevent the
suspect from fighting or attempting to flee. A female back-up is best if a female suspect is
being detained.

The approach should always occur from the front, if possible. The store representative should
immediately and clearly identify themselves and it is helpful to have some form of identification
such as a uniform, or name tag to avoid confusion over who you are or what authority you
possess. Plain-clothes loss prevention agents should have an authentic-looking ID card or
badge in a wallet to present during the confrontation so not to be confused with a mugger. The
presentation of credentials should occur simultaneously with the words "I'm with ACME Stores,
and I would like to talk with you about the 'two bottles of ACME wine' in your bag."

You should listen for spontaneous utterances like, "Oh, I forgot to pay for it" to help prove
culpability while still outside of the store. The shoplifter should also be asked to return the
items while still outside the store, if possible, to further validate the suspicion of theft before
return to the store interior.

The Detention

The detention process starts when the customer is initially confronted. However, an
unproductive stop can and should be terminated while still outside, along with a sincere
apology for the confusion. If the suspected shoplifter has unpaid merchandise at the time of
the detention, ask them to, "please return to the store so we can clear up this matter." If you
act professional and with back-up, ninety-eight percent of the time the shoplifter will comply
and go anywhere you direct, without fanfare.

When escorting a shoplifter back inside the store, care must be taken to see that the thief does
not try to run. Customers and store employees could be at risk if a scared shoplifter decides to
escape by running through the aisles of the store towards another exit. To prevent this from
occurring, at least two loss prevention agents should walk very close to the suspect while
speaking in a calm manner. If the risk flight appears high, the loss prevention agents should
consider using holding force to guide the shoplifter or simply hang on to a belt loop. Chasing a
shoplifter is not a good policy, especially if you already retrieved your merchandise. Chasing a
shoplifter off the property or in a car is never a good idea and can be dangerous

Excessive force

Excessive force should never be used when apprehending a shoplifter. Initially, holding force
should be all that is required to retrieve your merchandise and direct the suspected shoplifter
back to a private office. If the customer is cooperative and is either very young or very old or
very frail, no force should be necessary. Professional loss prevention agents may use
handcuffs to restrain violent or aggressive shoplifters when employee or customer safety is a
REAL possibility. Handcuffs should be used with discretion, because all shoplifters do not need
to be cuffed. Loss prevention agents must be properly trained to carry handcuffs and know
when and how to apply handcuffs. Handcuffs should always be "double-locked" when it is safe
to do so.

Excessive force is unnecessary and unlawful and can create exposure to civil liability for
negligence. This negligence would include choking, punching, kicking, improper handcuffing,
hog-ties, and the intentional application of pain compliance techniques. Extreme foul language,
ethnic slurs, and verbal threats of harm will all be considered excessive when a shoplifter is in
custody. When handcuffs are applied, the loss prevention agent is responsible for the
shoplifter's safety from trips and falls, adequate blood circulation to the hands, and the ability
to breathe.

Shoplifter Processing

Once you make it to a private office the shoplifter must be processed within a reasonable time
period and in a reasonable manner. Sometimes the timing is delayed by slow response time of
local law enforcement. There should always be at least two store representatives present at all
times and one should be the same sex as the shoplifter for obvious reasons. One of the first
steps is to make sure the setting is safe and the shoplifter is not carrying accessible weapons.
This is accomplished by a simple external "pat down" or by separating handbags, packages,
and other containers from the immediate grasp of the shoplifter. A pat down is not a license for
a search and should be conducted by a person of the same sex. Searching pockets and
handbags might be illegal in your state, so leave that job for the police upon arrest.

After the safety issues are resolved, you should ask the shoplifter to voluntarily retrieve and
return all the stolen merchandise. Depending on your jurisdiction, you may be allowed to
question the shoplifter in others you might be required to call the police before questioning. In
most States, you are allowed to ask the shoplifter for identification, and complete a written
report to help you determine if you will prosecute or not.

Most shoplifters will cooperate and hope to be released. In the case of young children, the
elderly, or those with diminished mentally capacity, you may wish to release the shoplifter to
relatives instead of the police. Check with your company policy and legal department for
precise instructions in this area.

Simple requests should be honored for those held in custody, if safe to do so. Handicapped
persons should be accommodated because of stairs or footpath issues. If safe, shoplifters can
be offered water, prescription medication or restroom access if your merchandise has been
recovered. Smoking is not a valid or safe request. Shoplifters can call their attorneys on their
own time or from jail. Emergencies of all types should take priority and handled immediately by
calling 911. With the exception of very young juveniles, elderly, or obviously ill persons,
telephone requests should be delayed until processing has been completed or after the police
have been called to eliminate disruption by irate parents, spouses, or friends. If a shoplifter
was violent call the police immediately. The shoplifter can make any necessary calls from jail.
You may wish to call the parents for juvenile shoplifters. Never release juveniles without being
picked up by a capable guardian or the police.

Written Reports

If the store policy is to make detentions and arrests, then written reports are required to record
the shoplifting event. These reports will be vital for use later on in both criminal and civil
courts. Reports usually include an in-house loss prevention report that captures all the
important identification data like name address, date of birth, social security number of the
shoplifter. The report will provide a narrative of the facts that establishes the probable cause
elements, itemizes all stolen merchandise, lists all witnesses, and includes any
contemporaneous statements made by the shoplifter. All reports including the police report or
case number, if any, should be kept in a secure file cabinet for a least two years or until the
local statute of limitations runs for both criminal and civil filings.

All evidence should be photographed and itemized and either stored in a secure cabinet or
returned to stock, if local courts allow for it. If an arrest is warranted, the shoplifter should also
be photographed for identification later on and in court. All evidence should be entered into a
separate log book and assigned a case number for tracking purposes. You will need these
stored items for court. Be sure to bring them along for each court appearance.