Retail Technology Has Come a Long Way — But So Have Problems

8/1/2013
At the "Evils of Modern Technology" panel at NRF's Loss Prevention conference in San Diego, executives from Belk Stores, CVS Caremark and others weighed in on what to watch out for and how savvy thieves have learned to work the system to their advantage.

"As an LP professional, you have to stay ahead of the curve," warned Kevin M. Plante, director   of loss prevention reporting and analytics with CVS. "How do you activate EAS? How do you sell POS-activated gift cards? How do you deal with chargeback issues? Then there's self-checkout — ask your customers and they'll tell you how they can do it faster than your cashier, they're so quick."

Jokes aside, the LP professionals got down to the nitty-gritty details of harnessing social media and modern technology to allow retailers to keep up with the most recent developments and also to set up safeguards against lawsuits and theft.

The law and social media
A still very gray area when it comes to social media is how and when it should be used to do things such as alert citizens to shoplifting, or serve as grounds for firing an employee.

Referencing an example in which a Missouri police blog published photos of shoplifters that were caught in the act, Plante cautioned against publicizing such images, especially not until the facts have been ascertained, because of potential legal ramifications.

He also cited the case of an employee who fired off a post on Facebook that she hated her job. Her boss, a Facebook "friend," saw the post.

Social media has the disadvantage of leading people to let down barriers that they would not if they were face to face with others, he says.

Unfortunately, the law has yet to catch up with the advances of social media, so it throws open the door for incidents such as these to lead to lawsuits, said attorney Walter M. Stella, with the Miller Law Group in San Francisco.

"Even if the post is not directed to the supervisor, and they're not misbehaving at work, do we do something about it? This is the gray area," Stella says. "Does off-duty conduct impact the workplace? These are judgments supervisors have to make. … In this case, the boss was probably within the law [because she was a "friend"].  But if she was not on the network and someone else had alerted her, and she had insisted on seeing the post, then she is violating the employee's privacy. "

In a more retail-focused scenario, a series of texts exchanged by two store detectives that detailed how a suspect had beat them up, and how they were planning to nab him the next time around, backfired when the texts were leaked to the press — and the suspect got a settlement, says Plante.

In another example of technology working against the retailer — in this case GPS — a loss prevention officer filed a report noting that a suspect entered a store at 2:18 p.m. with a booster bag. The alleged shoplifter, however, presented as evidence of his innocence his car's GPS device, which showed him on the highway at the same time.

How technology aids theft
Here's a doozy. At Belk, the company found that new merchandise was making it to eBay even before it was put on the floor. Alerted to the problem by an associate, the company began investigating. It found the eBay seller had 900 recommendations, sold only new goods  — and turned out to be a Belk store associate!

Belk started to pay attention to the store in question, said Robert Vranek, vice president of loss prevention. Ultimately, it identified an associate who was using a "really neat app" from eBay that allowed her to take pictures of the merchandise on her phone and post on eBay. She would remove it from the floor only if she sold it. "So we were essentially running her store for her. The loss was about $100,000 in this case — and she had an absolutely stellar reputation."

Payroll theft is another byproduct of modern technology, with employees' depositing checks through the ATM while also duplicating them as an image on a mobile app, allowing them to get paid twice — a scenario that Vranek says could conceivably also be accident, if employees believed they had to both scan and deposit a check. When Belk realized this was happening, it was only $5,000 in the hole. Vranek encourages retailers to implement alerts to prevent this from happening and to aid in catching it when it does.

Another trouble area: Some dishonest store associates have figured out how to use coupons for reward dollars to purchase merchandise without paying a penny for it. Belk found that on certain days the number of transactions did not match the number of shipments from fulfillment centers. Ultimately, it tracked more than 100 shipments, of merchandise had been paid for with reward dollars, to an employee address.

The employee, who had used  his mother's rewards card, had zeroed out the value of the items, so the system had stopped tracking the transactions. Because rewards validation was performed via batch processing, these transactions slipped through the cracks. What's more, the employee also avoided paying for shipping, because the original value of the items exceeded the store's free-shipping threshold. He was then selling the merchandise.

"He was running a heck of a business on eBay, with great comments and photos of his merchandise. Can you image someone shipping to their own address? But that's the brave new world we live in," Vranek says.

Advances in technology also enable online sites to offer virtual gift cards that are illegal duplicates of physical gift cards. At Belk, virtual gift cards — which the company does not offer — were successfully used in store, a situation that raises yet another quandary: what do you do when the "real" owner of the physical gift card comes and tries to use it?

Video voyeurs can make unexpected trouble
Back in the day, voyeurs concealed camcorders in boxes, bags and on escalators. They were caught, the cameras were confiscated and the perpetrators were reported to the cops.

But today's smartphones and tablets have the same capability as those more bulky recorders of yesteryear, and there is no way to know when someone is recording, says Vranek. Also, technology makes it more difficult to ascertain whether or not illegal action has occurred, in that smartphones may be password protected, files may be hidden, or videos may be streaming to the cloud.

When dealing with this potential scenario, there are many points to consider. For example, if you take an associate or customer in for questioning, should you apprehend their smartphones in advance of the interview, to keep that from being recorded?

"You have to train your LP folks to always assume they are being recorded and be cautious not to say something stupid," Vranek cautions.

Video can create trouble in other ways, even when recorded by people unrelated to an event at a store. In the past, when a theft was observed and store security apprehended the thief, the store would report it to the police and be done with it. But today, bystanders in the store may be recording the process of apprehending the thief, and may post on social media about it as well. The result is that the report from the store manager, and the witness record or comments, may conflict.

"When you go to call the police, they may already have been called. It will be your evidence, video, statements and witnesses versus the other's video, [possibly] used to refute your evidence and testimony," he points out.

A search on YouTube turns up numerous loss prevention apprehension videos, most posted by observers. Any retailer that believes its LP actions are not on videos only has to do a search, Vranek says. Loss prevention staff should be trained to watch out for and avoid potentially damaging situation. They need to always be aware that someone is observing their actions, he says. He also urged stores to warn LP staff against posting photos and videos of their apprehends, because they could be used against them.

So what can be done to fight all of these underhanded tactics?

One solution is scrubbing services, which Plante says can search and remove a lot of what's out there in social media. Belk, says Vranek, is still working to figure it all out.

Whatever the solution, it should include bringing in "young blood" that is technology- and social-media savvy. Finally, as LP executives, it is crucial to be involved in IT- and omnichannel-related meetings. "If you're not there, you've already lost the game," concludes Vranek.

Padma Nagappan is a free-lance writer based in San Diego.

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