March - April 2015 by Loss Prevention Magazine

LPPORTAL.COM | V14.2 MARCH – APRIL 2015

LOSS PREVENTION

MAGAZINE THE VOICE OF LOSS PREVENTION

E-COMMERCE FRAUD THE RAPIDLY GROWING CHALLENGE FOR RETAIL INVESTIGATIONS

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CONTENTS 6 PUBLISHER’S LETTER Tiffany’s Peer-to-Peer Recognition Program By Jack Trlica

10 RETAIL SPONSORS

e-Commerce Fraud

12 INTERVIEWING Words… By David E. Zulawski, CFI, CFE and Shane G. Sturman, CFI, CPP

The rapidly growing challenge for retail investigations

By Chris Trlica, Contributing Writer

26 ACADEMIC VIEWPOINT Coworker Competition By Richard C. Hollinger, PhD

From Leading Her Team in Technical Fouls to Leading RILA’s AP Efforts

P ARTNERING WITH RETAILERS Connect and Collaborate By Dave DiSilva

40 EVIDENCE-BASED LP State of the Profession By Read Hayes, PhD, CPP 52 DIGITAL DIALOGUE Something Given, Something Earned, Something Lost By Jacque Brittain, LPC

The intriguing career of Lisa LaBruno

By James Lee, LPC, Executive Editor

62 STRATEGIES How to Get More Money for Technology Acquisitions By Gerald Becker 64 MY TURN Time for Some Hard Work on Soft Sentencing By Frank Muscato

Aria Resort & Casino, Las Vegas

66 CERTIFICATION Separating Yourself from the Pack With Troy Young, LPC, AutoZone

Interview with Ted Whiting, Aria’s director of surveillance

69 SOLUTIONS SHOWCASE - Cambridge Security - InstaKey

By John Wilson, Executive Editor, LP Magazine EU

Precious Cargo

I NDUSTRY NEWS - Cyber Threat Predictions for 2015 - Physcial Security Executives Gather to Demystify IT Techno-Babble By Robert L. DiLonardo

PEOPLE ON THE MOVE

CALENDAR

ADVERTISER DIRECTORY

VENDOR SPONSORS

78 PARTING WORDS Change—You Reap What You Sow By Jim Lee, LPC

A closer look at Tiffany’s supply-chain network

By Steven Palumbo, LPC, CFI, Tiffany & Co.

ON THE WEB

MARCH - APRIL 2015

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PUBLISHER’S LETTER

Tiffany’s Peer-to-Peer Recognition Program

iffany is one of the world’s best-known brands. Although based in New York City, the company’s jewelry and luxury merchandise is sourced, manufactured, and sold around the world. I had the privilege of spending the day recently with David McGowan, vice president of global protection, touring the Tiffany corporate headquarters in the Flatiron District of the city and the iconic Tiffany flagship store on Fifth Avenue. I didn’t do breakfast at Tiffany’s, but did share lunch with McGowan and his three group directors—Charles Olschanski, CFE, CFI; Steve Palumbo, LPC, CFI; and Hank Siemers, CFI. The reason for my visit was to moderate a panel discussion at Tiffany’s security organization’s annual recognition event. My participation was a small part of what is a very impressive internal recognition program that I think is a valuable story to tell. Like many corporations, Tiffany conducts a bi-annual employee satisfaction survey seeking feedback on various aspects of the company presumably in order to better the working conditions and foster happier associates. I say “presumably” because I’ve been privy to companies where nothing concrete comes from such surveys, at least visibly to the rank-and-file. About five years ago McGowan and his team created a committee to address feedback from the survey, improve their survey results, and ensure improvements were communicated throughout the department. One of the first areas of focus was how to recognize the efforts of individuals who may often feel unappreciated. As you might imagine, security officers who stand posts or man video terminals hours on end may sometimes wonder if anyone understands their contributions to the company. Their survey response committee is made up of mid-level managers and supervisors representing a broad selection of the security operation. McGowan and an HR executive are non-voting members. This is not a top-down committee. The committee developed a peer-to-peer recognition program where individuals at all

MAGAZINE

levels of the organization can nominate someone for outstanding teamwork, customer service, or security/protection. Examples could be someone who aided a customer who had a medical emergency in their store; someone who suggested a process that improved productivity in their DC; or someone who simply volunteered to take a double shift to allow a teammate to attend their child’s sports event. The nominations are evaluated on a quarterly basis, and one or more individuals are recognized both with a gift card as well as communication from McGowan of their action throughout the organization. A second program, called the Sterling Award, is recognition from executive management for those who show outstanding efforts throughout the year, not just a single deed. Sterling Award winners are given a very nice crystal keepsake and generous Tiffany merchandise award selections. Their annual event that I attended was held at the flagship store with attendance from all levels of the organization from the greater New York area. Unfortunately, with a global organization it is prohibitive to bring everyone into one place. The event began with wonderful food and drink, and featured the panel discussion with Special Agent Dan McCaffrey of the FBI; Scott Guginsky from the Jewelers Security Alliance; and Tiffany’s SVP of operations and global customer service, John Petterson. It concluded with the presentations to the fourth quarter peer-to-peer winners and the 2014 Sterling Award winners. In my experience adequate and proper recognition of employees outside of payroll and bonuses is an area that most companies can and should do better. Tiffany is an example of how one asset protection organization found a successful way to show its appreciation and improve associate satisfaction. A pat on the back can go a long way.

Jack Trlica Editor and Publisher

LossPrevention, LP Magazine, and LP Magazine EU are service marks owned by the publishers and their use is restricted. All editorial content is copyrighted. No article may be reproduced by any means without expressed, written permission from the publisher. Reprints or PDF versions of articles are available by contacting the publisher. Statements of fact or opinion are the responsibility of the authors and do not necessarily represent the opinion of the publishers. Advertising in the publication does not imply endorsement by the publishers. The editor reserves the right to accept or reject any article or advertisement.

MARCH - APRIL 2015

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700 Matthews Mint Hill Rd, Ste C Matthews, NC 28105 704-365-5226 office, 704-365-1026 fax EDITOR AND PUBLISHER Jack Trlica JackT@LPportal.com EXECUTIVE EDITOR James Lee, LPC JimL@LPportal.com EDITORIAL DIRECTOR, DIGITAL Jacque Brittain, LPC JacB@LPportal.com CONTRIBUTORS Robert L. DiLonardo Dave DiSilva Read Hayes, Ph.D., CPP Richard C. Hollinger, Ph.D. Walter Palmer, CFI, CPP, CFE Gene Smith, LPC Shane G. Sturman, CFI, CPP David E. Zulawski, CFI, CFE CHIEF OPERATING OFFICER Kevin McMenimen, LPC KevinM@LPportal.com DIRECTOR OF MARKETING Merek Bigelow MerekB@LPportal.com DIRECTOR OF DIGITAL OPERATIONS John Selevitch JohnS@LPportal.com SPECIAL PROJECTS MANAGERS Kat Houston, LPQ Justin Kemp, LPQ Karen Rondeau DESIGN & PRODUCTION SPARK Publications info@SPARKpublications.com 704-844-6080 CREATIVE DIRECTOR Larry Preslar ADVERTISING

ADVERTISING MANAGER Ben Skidmore 972-587-9064 office 972-692-8138 fax BenS@LPportal.com EAST COAST REP Kristie Thymes 972-782-9841 office 972-692-8138 fax KristieT@LPportal.com SUBSCRIPTION SERVICES

NEW OR CHANGE OF ADDRESS myLPmag.com POSTMASTER Send change of address forms to Loss Prevention Magazine P.O. Box 92558 Long Beach, CA 90809-2558 LossPrevention aka LP Magazine (USPS 000-710) is published bimonthly by Loss Prevention Magazine, Inc., 700 Matthews Mint Hill Rd, Ste C, Matthews, NC 28105. Print subscriptions are available free to qualified loss prevention and associated professionals in the U.S. and Canada at www.myLPmag.com. The publisher reserves the right to determine qualification standards. International print subscriptions are available for $99 per year payable in U.S. funds at www.LPportal.com. For questions about subscriptions, contact circulation@LPportal. com or call 888-881-5861. Periodicals postage paid at Matthews, NC, and additional mailing offices.

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ON THE WEB

EDITORIAL BOARD

There is a lot going on in the magazine’s digital space. Everything from original articles from LP practitioners to videos to archived webinars. Visit LPportal.com often to see the latest. LP101—New Series Focused on Basic LP Fundamentals

In partnership with the Loss Prevention Foundation, we are publishing a series of articles focused on baseline skills and information important to every LP professional. Visit the Columns page at LPportal.com. Establishing an Environment of Accountability Commitment to Training and Development Employee Counseling Leadership Principles The Succession Planning Process Evaluating and Retaining Talent

Leo Anguiano, LPC Senior Director, Asset Protection, Rite Aid

Karl Langhorst, CPP, CFI Corporate Director, Loss Prevention, The Kroger Co.

Jim Carr, CFI Senior Director, Global Loss Prevention, Rent-A-Center

Bob MacLea Senior Vice President, Loss Prevention, TJX

Francis D’Addario Emeritus Faculty Member, Strategic Influence and Innovation, Security Executive Council

John Matas Vice President, Asset Protection, Investigations, & ORC, Macy’s

Charles Delgado, LPC Vice President, Asset Protection, Meijer

Monitoring Social Networks for Brand Protection

Patti Felz Corporate Vice President, Internal Audit and Asset Protection, Polo Ralph Lauren

Online investigations expert Cynthia Hetherington discusses the importance of monitoring social networks for both brand protection and internal investigations. Check out her recommendations on EyeOnLP.com.

Scott Glenn Chief Security Officer, Sears Holdings Tim Gorman Divisional Vice President, Loss Prevention, Asset Protection and Business Continuity, Walgreens

EYEONLP Powered by LP Magazine

Barry Grant Chief Operating Officer, Canadian Images Bill Heine Senior Director, Global Security, Brinker International

Download Version 2.0 of the Magazine App The newest version of the LP Magazine app includes in-app videos, podcasts, bookmarking, more news categories, and links to the latest association conferences and events across the industry. It’s our way to get more relevant LP news to you—when you want it. The new version is available on both iPhone and Android devices. If you already have the app, it’s a quick update. If you don’t have the app, well then, what are you waiting for? Catch up! Scan the QR code here to find links to the version you need.

Frank Johns, LPC Chairman, The Loss Prevention Foundation Gary Johnson Vice President, Loss Prevention, The Vitamin Shoppe

2015 Product Showcase and Resource Guide Online 2015 Product Showcase and Resource Guide

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Our latest guide to loss prevention products and services is available throughout the year online at digital.lpportal.com/i/427973 or via the link on our homepage. Solutions providers offering everything from alarm monitoring to civil recovery to video surveillance are featured in this 16-page catalog.

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Mike Lamb, LPC Vice President, Asset Protection & Safety, Walmart Stores U.S.

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Chris McDonald Senior Vice President, Loss Prevention, Compass Group NA Randy Meadows Senior Vice President, Loss Prevention, Kohl’s Melissa Mitchell Director of Loss Prevention, LifeWay Christian Stores Dan Provost, LPC Vice President, Global Loss Prevention, Staples Tina Sellers Director of Loss Prevention, Delhaize America Mark Stinde Vice President, Asset Protection, 7-Eleven Paul Stone, LPC Vice President, Loss Prevention and Risk Management, Best Buy Claude Verville, LPC Vice President, Loss Prevention, Safety & Hazmat, Lowe's Stanley Welch, LPC Vice President, Director of Loss Prevention, JCPenney Keith White, LPC Senior Vice President, Loss Prevention and Corporate Administration, Gap Inc.

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INTERVIEWING by David E. Zulawski, CFI, CFE and Shane G. Sturman, CFI, CPP

Words…

Word (noun): a unit of language, consisting of one or more spoken sounds or their written representation that functions as a principal carrier of meaning.

hen you read the definition of “word,” you get a sterile marginal concept of what a word in language actually is. When one starts to consider words, their meanings and intent, language takes on an entirely deeper and more fulfilling role in our lives. Words have started wars and ended them. Words have created relationships and marriage or caused a breakup. Words can make us laugh or make us cry. Sometimes it’s merely the context in which the words are spoken that can cause an emotion or an opposing one. The words that make up the language ultimately convey a meaning that may be behind what was intended by the speaker. There is a Budweiser beer commercial where the only word spoken is the word “dude.” Depending on the emphasis and the context, the meaning changes from scene to scene. If you haven’t had a chance to watch this commercial (youtu.be/dyMSSe7cOvA), it’s amazing how many different situations can result in a varying understanding of the word “dude.”

Once an interviewer is able to understand a person’s opinion and bias, he is better able to sort out what are facts and what are opinions being used to persuade during the story. Then there is word usage that puts a particular word as a noun, verb, adverb, or adjective. Plus, we have to deal with some words that when put together convey a meaning totally different than the words used individually. This is commonly called a figure of speech. For example, “Jake is getting a little long in the tooth” usually means Jake is getting old, and “you can set your watch by him” means he consistently does the same thing at the same time. Words

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Zulawski and Sturman are executives in the investigative and training firm of Wicklander-Zulawski & Associates (w-z.com). Zulawski is a senior partner, and Sturman is president. Sturman is also a member of ASIS International’s Retail Loss Prevention Council. They can be reached at 800-222-7789 or via email at dzulawski@w-z.com and ssturman@w-z.com. © 2015 Wicklander-Zulawski & Associates, Inc.

may also offer a larger meaning like the words Hollywood or Wall Street. These are much more than mere geographic locations; they convey much about the film or financial industry, money, power, or glamour, which may or may not be true.

Discerning Facts

When conducting an interview with a subject, the interviewer must consider the bias that individual may have to evaluate the truthfulness of his statements. This is also useful when examining articles and advertisements to discern what the speaker is trying to persuade the listener to believe. In this column we are going to examine bias and opinions to assist in determining the person’s position on a particular topic. Once an interviewer is able to understand a person’s opinion and bias, he is better able to sort out what are facts and what are opinions being used to persuade during the story. We should examine the definitions of fact, bias, and opinion before we proceed. Fact: a piece of information having objective reality or information based on real occurrences. Opinion: a belief or judgment that rests on grounds insufficient to produce complete certainty. Bias: an inclination of temperament or outlook, often personal and unreasoned. The interviewer’s problem lies in the fact that speakers often mix facts, with bias and opinions in their narratives. Let’s consider how we can identify facts in a story. “Armored is scheduled to pick up the deposit between 10:00 and 10:30 a.m. during the week. They are amazingly prompt and extremely easy to work with.” When we look at the previous two sentences, we want to isolate the facts then examine other statements for bias and opinion. When we look for facts it is useful to ask two questions: ■ Can the statement be verified independently by contracts, documents, or independent witnesses? In this case, there are likely internal documents, logs, and witness statements that document the armored pickups. If there is conflicting information about the pickups we must now question the truthfulness of our witness. continued on page 14 |

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continued from page 12

Can the statement be observed to prove the fact? Here an investigator could watch the armored pickups to substantiate the fact offered. If there can be no independent corroboration, we are likely dealing with a bias or opinion. In the second sentence we could evaluate the word “prompt” as a fact verifying the carrier picks up at the specified time; however, the word “amazingly” indicates a bias for the armored carrier’s on-time performance. The second part of the second sentence—“and extremely easy to work with”—is an opinion presented by the speaker. Others may not find the carrier or its employees cooperative at all. ■

Words are wonderful things. They help us to persuade, to compare, and to communicate our thoughts, opinions, bias, and facts. As listeners we must discover what the speaker is offering us with his words. Let’s look at the way US presidents are portrayed by the media. Gerald Ford was a bumbling fool who was always falling. Jimmy Carter was a peanut farmer. George W. Bush was stupid and always misspeaking. JFK was a Pulitzer Prize-winning author. Bill Clinton was a Rhodes scholar. And Obama is a constitutional law professor. Focusing on these aspects taints the picture of who these people really are and can bias a listener for or against a president. Looking to determine if a statement is a fact, bias, or opinion can help us root out bias in a story. When we examine a story, we need to look for statements and words that indicate a personal position or an unreasoned judgment: Vice President Dan Quayle could not correctly spell potato, so he must be stupid.

The Whole Story

Sometimes the headlines bias and give the wrong impression about the real story. Read the following headline and then the story. Headline: “Israeli police shoot man in east Jerusalem.” What is your impression about the story and its contents? Was it a riot, unprovoked shooting of an unarmed man, accident, or a criminal act? If you don’t know the story behind the headline, we have to assume what happened since we only have the fact a man was shot by police.

MARCH - APRIL 2015

Story: “Jerusalem (AP)—Israeli police say they have shot a man whose car slammed into a crowded train stop in east Jerusalem, in what they suspect was an intentional attack. On Wednesday evening, Oct. 22, a Palestinian deliberately drove his car into a crowd of people disembarking Jerusalem’s Light Rail, killing a three-month old baby and injuring several more, in what was clearly a terror attack.” Reading the entire story makes an interesting difference. It’s the same way when listening to an individual’s narrative—when you get down into the detailed facts and the words used, your impression may change. A story reported that the president “suggested he feels American consumers’ pain.” The key word here is “suggested.” The term “suggested” is one that seems not to have a strong feeling or commitment to a position associated with its use. For example, “I kind of suggested to her that I understood.” Look at the difference the following words make in the meaning of the sentence: ■ Said he feels American consumers’ pain. ■ Argued he feels American consumers’ pain. ■ Expressed that he feels American consumers’ pain. When people use the terms “attacked,” “under assault,” or “cripple our rights,” they are conveying an implication that they are victims. For example, one might say, “Finance is always attacking our departmental spending.” Translation: “Finance is picking on my department. We are being victimized.” Effectively, the department is the victim of “unreasonable demands” by the finance department. “Unreasonable demands” is an opinion, and “always” is a bias unsupported by reason. Here are some words to look for that indicate bias or opinion: ■ Amazing ■ Handsome ■ Awful ■ Must ■ May ■ Horrible ■ Bad ■ Brighten ■ Beautiful ■ Miserable ■ Best ■ More ■ Better ■ Most ■ Disgusting ■ Empowering ■ Exciting ■ Thrill ■ Appropriate ■ Smart ■ Favorite ■ Enlightening ■ Frightful ■ Powerful ■ Inequities ■ Stupid ■ Middle class ■ Unbelievable ■ Liberal ■ Very ■ Conservative ■ Tragically ■ Fun ■ Always, never ■ Attack, assault, cripple ■ Boring ■ Good ■ Don’t contribute ■ Great ■ Should ■ Greatest ■ Could Words are wonderful things. They help us to persuade, to compare, and to communicate our thoughts, opinions, bias, and facts. As listeners we must discover what the speaker is offering us with his words. |

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COVER FEATURE

E-COMMERCE

FRAUD THE RAPIDLY GROWING CHALLENGE FOR RETAIL INVESTIGATIONS By Chris Trlica, Contributing Writer

E-COMMERCE FRAUD

ust as the word “e-commerce” has come to refer to a menagerie of different specialized markets, so e-commerce fraud comes in many different guises. And as the great pace of retail evolution dictates that retailers’ transaction processes are constantly changing, so the frauds change with them. In a bid to stand on the top of the heap competitively, retailers are offering as many options to consumers as possible when it comes to ways to buy. You can place an online order at an in-store kiosk to be shipped to your house. You can place an order from your mobile device to be picked up at a local store. You don’t like the color of the new curtains you ordered through the online customer rewards program? You can return them to the nearest brick-and-mortar store to save on shipping. There are multitudes of different ways for customers to shop in the modern omni-channel retailing world. But this proliferation of transaction processes can leave behind more and more holes that malicious actors can exploit. “You have this almost complete melding of digital and physical worlds now, and the primary challenge is keeping pace with that evolution,” said Jerett Sauer, director of loss prevention at Gap Inc. “Awareness of risk has always been a core part of any great LP program, and historically, digital space was outside that sphere of awareness; the focus was on people touching a POS or physical merchandise. Now, awareness of the digital space and its crossovers into physical space is

years immediately after the UK adopted EMV (Europay, MasterCard, and Visa) in 2005–2006. EMV, known in the UK as “chip-and-PIN,” is a global standard that strengthens card authentication using a computer chip physically built in to the card. Instead of reading card data off the card’s magnetic strip, every time a customer inserts their chip card into an EMV-equipped POS card reader, the chip generates a new, unique transaction code. Since the magnetic strip data remains the same with every use, copying that data by card skimming or stealing it in a hack allows the account to be imprinted on counterfeit cards or reused illegally online. But chip-generated codes are one-time use only—stealing one becomes useless. For the UK, chip-card deployment was largely successful in reducing domestic face-to-face card fraud, but there was a dramatic rise in foreign fraud using UK-issued cards, as well as card-not-present card fraud. “When the UK went to chip-and-PIN, there was a spike in online fraud,” said Scott Sanford, director of investigations for Barnes & Noble. “The brick-and-mortar Scott Sanford card fraud migrated to the online world.”

There are multitudes of different ways for customers to shop in the modern omni-channel retailing world. But this proliferation of transaction processes can leave behind more and more holes that malicious actors can exploit. equally if not more important.” The view of a decade past, in which the digital side of retail was a minor extension of the physical backbone of the stores, is poised to flip-flop, and soon the physical brick-and-mortar storefront may be seen as an important, but subsidiary arm of a retailer’s digital foundation. The age-old, back-and-forth, Jerett Sauer cat-and-mouse game of criminals finding a new scheme, defenders patching the security hole, and criminals responding by finding a new way to steal is being continually reflected in the retail battleground. One notable exchange in recent history played out in the

MARCH - APRIL 2015

On October 1, 2015, the US payment card market will make a similar move. On that date, the liability for card-present counterfeit card losses will shift from issuer to merchant unless the merchant implements EMV. In effect what this liability shift means is that by the end of this year most consumers’ cards will have a chip in them and most brick-and-mortar merchants will be processing cards by reading these chips instead of the conventional magnetic strips, making in-store card counterfeit fraud much more difficult. While in-store card fraud may fall significantly, many expect online card fraud to jump in response, as it did in the UK. “If brick-and-mortar credit card fraud is my game, and I have EMV potentially blocking my lifestyle, I’m going to go try to do it online,” said Sanford. “I think online fraud is going to jump dramatically in the US.” Even were it not for the EMV adoption, some experts expect online fraud would continue to increase |

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E-COMMERCE FRAUD over the next one to two years. So although major strides have been made over the past decade, e-commerce fraud is still a significant challenge to the LP industry today and will remain so into the near future.

What Does e-Commerce Fraud Look Like?

“Compared to the professional shoplifter teams of years past who come to stores and shoplift in groups or do basic grab-and-runs, the types of ORC actors you see today are very sophisticated,” said John Matas, vice president of asset protection at Macy’s. “These groups have the traditional organized crime hierarchy, and the higher the level within the group, the more insulated John Matas an individual is from arrest. These groups are well-organized and highly technical, taking full advantage of all sorts of retail processes designed to enhance our customers’ shopping experience, but in a criminal way.” For example, the realm of gift cards has its own subgenres of gift-card fraud. Legitimate websites intended to store gift cards on your phone have been used by criminals to launder stolen cards. One group broke the mathematical algorithm used to generate gift-card number/PIN combinations, then manufactured actual counterfeit plastic cards to use them with.

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“Friendly fraud” is another problematic category of fraud. Friendly fraud is when the actual cardholder (or somebody known to the cardholder) makes a legitimate purchase, but then tries to dispute the charge by claiming they never made a purchase or never received the merchandise. These are difficult cases for a merchant to challenge. But rather than giving a brief overview of every type of fraud out there (there are many), we are going to explore one variety in-depth—the triangulation scheme. The triangulation scheme was ranked the ninth most impactful type of fraud in 2012 based on frequency of attack and revenue loss; by 2013 triangulation had jumped to the number one perceived threat, according to a survey conducted jointly between the Merchant Risk Council and CyberSource. Like many online frauds, the triangulation scheme starts with obtaining stolen credit card account information. For that, the best place to visit is the Deep Web, the name for those realms of the Internet you can’t get to from a Google search. Some parts of the Deep Web are still a Wild West, free from regulation, and may only be reachable using specialized software that masks users in anonymity.

Anonymity

One consequence of the basic structure of the Internet is the ability to easily maintain anonymity against any but the most dedicated investigator. This quality is responsible for much of the value of the Internet as a communications tool, enabling free

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LP MAGAZINE | MARCH - APRIL 2015

E-COMMERCE FRAUD

Triangulation Fraud Scheme

ALICE Orders Phantom Product Advertises Phantom Product

FRAUDSTER Buys Stolen Credit Cards

Orders Product With Stolen Credit Card

TARGET Drop Ships Merchandise

BOB Credit Card Info Stolen expression and promoting unfettered exchange of ideas and information. But anonymity is also one of the most attractive reasons to steal over the Internet rather than in person. The simplest and most common tool to use for Internet anonymity is a proxy server. When a user connects to a proxy server, all of their Internet traffic will flow through that server, effectively masking that user’s IP address—their digital identity. Imagine you want to exchange a package with someone using snail mail. Using a proxy would be like hiring an agent to rewrap your package and put their return address on it instead of yours. Then when they receive anything in the mail for you, they forward it to you. Since one proxy may handle thousands of users’ requests, it becomes difficult to trace any one data stream back to any one of the proxy’s users. There are many legitimate uses and users of proxies, though generally if a merchant finds multiple fraudulent transactions flowing through a particular proxy server, they will blacklist that server. But this is like throwing down a single sandbag to hold back a river. “There are thousands of proxy sites that open every day,” said Sanford. “So the smart criminals are constantly switching around which ones they use.” But proxies don’t provide perfect anonymity. There are ways to unmask someone behind a proxy. Subpoenas

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can order a proxy to reveal the user’s IP address, or users may inadvertently let information through the proxy that could be used to localize them. For the ultimate in Internet anonymity, TOR (The Onion Routing) is the answer. TOR is a software package based on onion-routing software developed in the mid-1990s by the United States Naval Research Laboratory and the Defense Advanced Research Projects Agency (DARPA). The onion analogy refers to the fact that a data exchange made through TOR is wrapped in several layers of encryption and bounced between several nodes. TOR rewraps the data packet like the proxy server did, but then sends the relabeled packet to another proxy, who wraps it in another layer, encrypts it, relabels it, and sends it to a third proxy, who wraps it up, encrypts it, relabels it, and sends it to a fourth party…until after being bounced around several more times, the contents are highly secure and nearly perfectly anonymous. This makes TOR a desirable medium for journalists, law enforcement, militaries, dissidents in countries with draconian communications laws, and, of course, criminals. The first step in many cybercrimes—acquiring stolen credit card information—usually uses TOR. |

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E-COMMERCE FRAUD

The age-old, back-and-forth, cat-and-mouse game of criminals finding a new scheme, defenders patching the security hole, and criminals responding by finding a new way to steal is being continually reflected in the retail battleground. Triangulation Fraud Schemes

So our fraudster—we’ll call him Chuck—has gone to the Deep Web and bought a few thousand complete credit card account records, including cardholder name, billing address, credit card number, CVV security code, and possibly corresponding email addresses, phone numbers, and other personal information. The next step in the fraud is listing an item for sale on an online marketplace, such as Amazon, Craigslist, eBay, or any of the thousands of other online auction houses and marketplaces. Nearly any category of merchandise will do—books, clothing, or electronics—as long as the product is in relatively high demand. Chuck decides to list a brand-name

laptop for sale. In order to quickly find a buyer, he has to list that laptop at a price point below that of the legitimate sellers out there—if he didn’t, customers wouldn’t have any reason to buy from him over any big-name retailer. The laptop retails at $150, so Chuck (connected through a proxy) posts a listing on eBay for a brand-new laptop for $125 plus free shipping. Alice is shopping for a laptop. She’s a crafty consumer. She wants to save money. So instead of buying at full retail price, she shops around. She searches eBay, sorts the results by lowest price, and there is Chuck’s listing right at the top. “Wow, what a deal,” she thinks. Alice buys the laptop, and money is transferred from her credit card to Chuck’s PayPal account. Chuck has never been in possession of the laptop. But he can’t

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E-COMMERCE FRAUD just ship nothing to Alice because she would leave negative feedback, file a complaint, and Chuck would find his eBay and PayPal accounts banned. So he has to send her the item she bought. In fact, he wants to appear not only as legitimate, but also as a high-quality, customer-satisfaction-focused seller. So he goes to his list of stolen credit card accounts and pulls the first one on the list, which belongs to Bob, the legitimate account holder. Using a proxy server, Chuck visits Target’s online storefront to buy the laptop. He uses Bob’s credit card number and billing address, but enters Alice’s shipping address. And then he submits the fraudulent order. Target processes the order and ships Alice the laptop. Bob is the first victim—he had a fraudulent purchase made on his card. Target is the second victim—it will be hit with a chargeback. And Alice is the third victim—her name and address are on the fraudulent shipment. Thus the triangulation scheme came to be named for these three victims. Chuck will use Bob’s account only once or twice, and then he’ll drop it and move on to one of the other thousand he has on hand. Target is looking at a $150 loss, so it doesn’t make sense for its team to investigate it. Law enforcement, on top of looking at such a small loss, can’t figure out who Chuck is since he’s been using a proxy server. Both Target and law enforcement might dismiss the whole affair as a minor crime, but Chuck is doing this ten times a day with ten different retailers, on each of four different eBay accounts. In reality, there is large-scale fraud going on, but the online medium obscures the fact.

Then there are more subtle checks: is the transaction placed from a browser configured for a language from a high-fraud country? If so, add 100 points. Does the order originate from a proxy’s IP address? If so, add 400 points. Is the proxy’s IP address out-of-country? If so, add 200 more points. Another fraud test is called “device fingerprinting.” When you visit any website, various bits of information about your computer are shared, such as time zone and type and version of browser and operating system. This information can be analyzed to “fingerprint” an individual device. So if a fraudster is placing multiple fraudulent orders from behind multiple proxies to avoid detection, device fingerprinting can

What Can You Do? The Experts Weigh In From Jerett Sauer: “What can store-level LP professionals or even sales associates do? That’s the biggest question in our industry right now because of the marriage or collision between the digital and physical. For store-level LP it’s thinking through what kinds of transactions a customer can do in-store to manipulate the digital platform. Are there ways they can manipulate prices, ship things to themselves, or make it appear that they purchased things when they walked out of the store? “Each company has so many unique policies and procedures that there are whole new worlds opened up to a store LP agent. But the most important thing is collaboration. Most companies have a team dedicated to the digital channel. Do they know who to call? Do they have continuous dialogue with that LP team to understand where risks will be present? “In the near future, to advance your career, you’re going to need to have a combination of experience in brick-and-mortar and in the digital e-commerce systemic view. That collaboration will help you perform on the job today as well as build skills for the career you aspire to tomorrow.”

Combating the Triangulation Scheme

Of course, retailers have sophisticated ways to detect fraudulent orders. There are many red flags that could hint that an order is fraudulent, but these are almost never definitive—they merely add some probability that the transaction in question is suspect. One way that many merchants and third-party fraud prevention vendors combat fraud is by putting every online order through a screening algorithm to look for these red flags and determine how likely it is that an order is fraudulent. These algorithms will frequently have hundreds of very specific criteria they check for. If the order fails one of the checks, the order is flagged with a certain number of fraud alert points commensurate with the likelihood of that criterion being associated with fraud. If the order passes a certain point threshold—say 1,000 points—it is sent to an analyst for manual review. There are the obvious checks: is the shipping address different from the billing address? If so, add 200 points. Is this the first time this card has been used on the site? If so, add 50 points. Then there are less obvious checks: are the first and last names capitalized? If not, add 200 points. (Apparently many criminals habitually enter names in all lowercase.) Did the transaction occur late at night? If so, add 50 points.

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From John Matas: “Participate in every network type forum available. By participating in a regional ORCA, IAFCI, RILA, and NRF investigator meetings, you will quickly find that there is significant commonalty in the groups that hit retailers. Retail theft and fraud is a retail issue, not an individual company issue. Retail and financial crimes investigators cannot operate in a vacuum and expect success.”

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E-COMMERCE FRAUD tie together several suspicious orders to reveal that they all came from the same machine. “Order velocity” is a metric that can be used in a similar way—velocity measures how often the same card is used to place orders on a site. Depending on the item and the merchant’s customers’ normal buying habits, multiple purchases in a short time frame can also point toward fraud. If an order passes the 1,000-point alert mark, or fails any of the other tests, it gets marked as “suspect” and kicked to a human fraud analyst for review. Analysts have a number of tools at their disposal to help determine whether they should cancel the order or let it go through. They may pay for a public records search to validate order data. They may check social media sites or Google Maps. But they’ll often just call or email the contact information given when the order was placed.

Balancing the Customer Experience

But fraud prevention is a careful balancing act. Weighting too heavily on the side of fraud prevention can negatively impact the customer experience. Asking customers to provide extra information at checkout for validation purposes will at best slow down the transaction, and if done improperly could make customers uncomfortable. And while contacting a customer to verify a purchase might be a positive to some (“this merchant cares1about my 8:31 security”), it could LossPrevention.qxp_Layout 11/9/14 PM Page 1

be a negative to others (“this call reduces the convenience of shopping online”). The last thing a retailer wants to do is drive away legitimate customers who were trying to make a purchase. “There are a lot of merchants out there,” said Tim Guastaferro, director of e-commerce for Sears, “so if you take steps that make it anything Tim Guastaferro but a seamless transaction, you run the risk of driving that customer to other sites where they don’t have to jump through hoops. It’s not all about fraud losses. We have to balance fraud losses with our customer experience, our operational expense, the ability to take on more payments, to offer more fulfillment types. We want to beat everyone to the scene on implementing these things because they are about enhancing the customer experience.” “There are tools out there that you can layer on your existing e-commerce platform to drastically reduce the chance of fraud. We could nearly eliminate it,” said Sauer from Gap Inc. “That’s not the issue. The issue is that you would highly impact your customer experience. The balance in how you are trying to structure your program becomes key. You want to make it seamless to 99.9 percent of legitimate customers, but

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E-COMMERCE FRAUD make it just hard enough for fraudsters that they decide to go elsewhere.” Looking forward, a middle ground might be found in an access control concept called two-factor authentication. ATM withdrawals use two-factor authentication. They require something that a user physically possesses—the debit card—as well as something that a user knows—the PIN. For card-not-present transactions, the first factor—what they have—would be entered as it is now, manually typing card account information. The second factor—what they know—could be integrated by sending a text message to the mobile device number on file at the card-issuing bank. Since most people keep their phones on them most of the time, confirming a legitimate purchase using a phone could become an accepted non-intrusive step in making an online purchase that could dramatically reduce online fraud. Retailers, or retailer associations, cannot implement two-factor authentication unilaterally. It requires buy-in on the part of card companies and card issuers. But some in the industry expect this option to be regarded highly by the payment card industry in the near future.

Inside Jobs

Anyone with experience in the LP industry, when hearing about a new technology or a new way of doing retail, can’t help but think, “How could this affect my internal shrink risk?” Internal theft has been so dominant for so long that it’s natural to assume that it will continue to be. What new opportunities do e-commerce channels open up for internal fraud? The trite scenario involving an employee taking product into the backroom to steal is a thing of the past for many retailers—not that such theft has vanished but that modern threats are far more perilous. “When online theft does happen, it can happen very quickly,” said Tim Guastaferro from Sears. “Whereas in the past you may have seen $1 or $2 million loss in a brick-and-mortar store over ten years, that can happen in two hours in front of a screen. When you really talk about the scope of this, in brick-and-mortar for every shoplifter there are X number of internal thefts that occur. Online, we don’t quite see that.” Some of the new online fraud schemes require an “inside man” to pull off. Whether that person is doing recon for the ORC group, mapping out a retailer’s processes to look for exploits, or whether an employee got the job they did specifically so that they could pull off a fraud they already had planned, internal avenues of attack must always be in the back of the mind for the adroit contingency planner. Some of these frauds are relatively straightforward. Suppose there’s collusion between an online buyer and the employee packing that box. What’s to stop the employee from packing in extra product? As usual, the answer is data analysis—in this case, weight data. If you know the weight of all your SKUs, you know what to expect the package to weigh. So if the shipping company reports back an unexpected weight, you can easily check the reported weight against the expected weight. But such schemes can get more complex given the fluidity of distribution systems that modern omni-channel retailers rely on to compete on the customer experience side. A retailer might have shipping personnel working not only at distribution centers but at conventional brick-and-mortar stores too. When each store can be a fulfillment center shipping to customers’ homes or other stores, there may be many opportunities for employee theft. The upshot is that upon recognizing an instance of process exploitation on the part of an employee, a data-driven LP team can build safeguards that can protect against the type of fraud that was just uncovered. And such tools can often be developed in a matter of hours or days, rather than months or years.

Investigation

The role of the fraud analyst is inherently defensive. Analysts manually review orders that a merchant’s automated fraud prevention system deems suspect. “Analysts can stop an order in its tracks, recall it, or allow it to go through,” said Sanford. “But stopping the order doesn’t dissuade the bad actor. They simply move on to the next retailer or the next card number, modifying their approach to fly under the radar the next time. One thing is certain—unless they’re caught, the online fraudster will continue their efforts one transaction at a time, one credit card number at a time.” But it is possible to track down these people, and that’s where the investigator comes in. “It starts with the will to find them,” said Sanford, “And it requires a collaborative effort on the part of many players, including online resale venues, banks, ISPs, law enforcement, and sometimes others.” eBay has set the gold standard for this collaborative effort, according to Sanford. “Every major player engaged in peer-to-peer selling could learn something from eBay. They clearly want nothing to do with criminals engaging others on their site,” he said. One way for a retailer to track down fraudulent sellers is to search online marketplaces for products listed as new but offered at a price below what the retailer is paying for the product. One instance could be a fluke, but if a seller’s sales history shows a pattern of similar offerings, the investigator has most likely found a fraudster. How they proceed from there depends on which marketplace the item is listed under. Law enforcement won’t look at a case unless it’s a proven fraud event. Investigators can collect a great deal of evidence, but in order to get the final proof and identity continued on page 24

MARCH - APRIL 2015

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Retailers have sophisticated ways to detect fraudulent orders. There are many red flags that could hint that an order is fraudulent, but these are almost never definitive—they merely add some probability that the transaction in question is suspect. continued from page 22

information, they need information from the online marketplace. “My team and I have successfully conducted hundreds of investigations over the years,” said Sanford. “Many of these investigations were concluded in partnership with eBay’s PROACT team. Though we’ve also closed numerous investigations involving nefarious Amazon sellers, we’ve taken that trip solo, not by choice either. On the contrary, at least eBay has the decency to respond and show concern for society as a whole. They recognize that we all lose out when the criminal wins.”

Working Together

Taking down cyber criminals is more difficult than just piercing the veil of anonymity to track down who the perpetrator is and where they can be found. “Prosecuting has always been a challenge,” said Sauer. “Early in my career it was almost impossible since you were usually looking at different parts of the crime being committed in different jurisdictions.” Where a package was shipped from, where it was shipped to, the address of the merchant, the address of the stolen credit card’s legitimate owner—these locations may be in entirely different states, or even different countries. And that’s not even considering the location details of the criminal (or criminals). When considering a fraud scheme that has moved hundreds or thousands of items, each one with multiple different location components, the number of jurisdictions involved can multiply to a staggering number. And the magnitude of loss is often concealed by using multiple accounts and targeting multiple merchants. “If I’m looking at $100 or $1,000 loss from one particular incident,” said Sauer, “even if I know exactly who the perpetrator is, it’s not worth my time or the authorities’ time to prosecute, even if I’ve been hit multiple times. Most cases don’t go above low double-digit thousands as far as loss.” But if a criminal has hit a dozen other merchants in a similar way and has committed the same frauds using several other accounts to minimize his risk, one merchant’s perspective may be just one piece of a much, much larger puzzle.

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“If I get hit one night,” said Sears’ Guastaferro, “there’s a good chance that another retailer has been too. So if I communicate with another retailer and they say, ‘We know those people; we know that MO,’ it does make it easier since we can put together a larger case.” The value of collaboration with other retailers has led to the formation of organizations for that very purpose. “We depend heavily on these organizations for networking and sharing of common ORC offenders,” said Matas. “The most effective are the regional ORCA organizations. There are over twenty-two of these regional coalitions nationwide. Since the ORC and e-commerce fraud phenomenon has spread far beyond the local criminal groups—there are national and international linkages—the next logical step is tying these regional ORCA coalitions into one master national association and creating a unified national ORC database. Together, our ongoing ORC investigations and prosecution dollar value could be significantly larger when it comes to federal prosecution.” As our modern digital lifestyles become further intertwined with the physical world, it becomes increasingly important for us to remain continually aware of the benefits this marriage brings and vigilant of its risks. The complexity of modern digital systems is staggering and continually increasing, making it more and more difficult for any one individual to be able to truly understand how all the pieces fit together. Since increasing system complexity is associated with an increase in the number of possible failure points in the system, total risk exposure increases unless we remain proactive. Fraud affects individuals just as it does companies and the greater industry, and just as the industry and the company are collaborating and evolving to combat these modern threats, so must we as individuals.

CHRIS TRLICA is a business and technology analyst based in North Carolina. He is a contributing writer to LP Magazine focusing on emerging technologies. Trlica can be reached at chris.trlica@gmail.com.

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ACADEMIC VIEWPOINT

Coworker Competition

by Richard C. Hollinger, PhD Dr. Hollinger is professor and chair of the Department of Sociology and Criminology & Law at the University of Florida, Gainesville. He is also director of the Security Research Project, which annually conducts the National Retail Security Survey. Dr. Hollinger can be reached at rhollin@ufl.edu or 352-294-7175. © 2015 Richard C. Hollinger

A Motivator for Your Loss Prevention Staff?

his column is devoted to featuring and summarizing the academic viewpoint utilizing research that should be of interest to the readers of this magazine, namely, loss prevention executives, managers, and field personnel. Often I find scholarly articles that are published in both academic and practitioner journals to review. This month I did not have to go very far, since this column will feature the recently completed University of Florida doctoral dissertation research of one of my top graduate students, Ron Floridia. He successfully defended his dissertation research to his committee and will be awarded his doctorate in criminology at the end of the spring 2015 semester. Floridia’s findings were part of a larger study that examined the influence of loss prevention officers’ peers on their training. As part of his doctoral dissertation research, Floridia interviewed thirty proprietary hourly loss prevention officers employed by two national retailers. The confidential interviews were conducted in northern and central Florida, but the officers’ store locations ranged from South Carolina to central Florida. While Floridia interviewed the respondents about the various techniques companies use to incentivize loss prevention officers, he stumbled upon something very interesting in the course of his research. Specifically, he discovered a very influential, informal culture that existed between the officers that was built on peer competition. The overall trend that emerged from the interviews was that strong camaraderie existed between a loss prevention officer and his or her peers. Roughly 95 percent of officers in the study responded that their peers provided them with an important source of positive encouragement when the officer performed his or her job well. This encouragement was displayed through verbal channels, such as phone calls, as well as written channels, including emails and text messages. When Floridia asked the officers about peer encouragement, one officer remarked that there is always feedback, there are always congratulations, and the feedback was uniformly positive. The verbal recognition was displayed in various forms, such as an officer telling his or her peers, “Good catch,” “Hey man, I heard about that stop and the way you

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handled it—I wanted to do it myself,” or “Way to pull those dollars up.” Floridia found that the officers identified characterized well-performing peers by saying they have “good eyes” or they made a “good spot” regarding how they are able to identify shoplifters. This praise was part of a much larger informal culture of competition created by the officers. This informal competition motivated the officers more than any monetary incentives, promotional inducements, or verbal praise given by a supervisor. This competition became a game of statistics based mainly on who could obtain the greater number of apprehensions. One officer described the atmosphere as “very competitive,

Supervisors should consider incentives that ignite the natural competitive spirit between their LP staff, but are cautioned to do so in a way that does not inadvertently promote unethical behavior. always going over numbers, but it’s more of a friendly competition.” The officers compared themselves to other LP peer groups as well as other individual officers. For example, one officer asks his peers, “How many did you get?” Other officers send messages to their peers saying, “I caught you,” or “I’m five up on you.” In one case, officers made unofficial bets with one another, and whoever lost bought lunch for the winner. Officers disseminated their apprehensions to other officers through verbal and written channels. Officers

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placed phone calls or sent emails to one another. As one officer mentioned, “You will hear it verbally from peers. With any high-dollar amount, people will hear about it and call you.” The most common form of communication was through text messaging. Officers were placed on group-feed texts, and whenever an officer made an apprehension, they would communicate it to the other officers in the retail chain on their group feed, such as “just got one for 200” to inform the others of their good work. When loss prevention officers performed their jobs well, they were met with praise from their peers. However, officers who underperformed were often subjected to goading or teasing by their fellow officers. One officer recounted missing an opportunity to apprehend a known shoplifter. This officer’s peers informally heckled him for not completing the apprehension. Another officer discussed that officers who underperformed were subjected to questions such as “what’s going on?” (as in why are you not making apprehensions) or “when are you going to clock in?” All of the officers stated that this teasing was good natured, and none was performed with malicious intent. As one officer mentioned, “We are all tight, and bust on each other.” Although the ribbing was good natured, most officers took measures to avoid it. As one officer explained, “There is tight camaraderie among the LPs. You don’t want to be that guy with nothing,” (as in nothing to show for your work). The result of this informal competition usually ignited an officer’s motivation to work harder. As one officer put it, “It’s very competitive. You want to be at the same level as them, or you get ribbed.” Officers competed with their peers largely to make themselves better known to their supervisors. Since the competition was largely statistics based, making apprehensions improved their productivity and subsequently gained positive recognition from their supervisors. One officer commented that good apprehension statistics were the best reflection of the officer’s abilities. Officers who made a lot of apprehensions were always recognized positively by their supervisors. As one officer commented, the “one who gets the most apprehensions shines.” The results of this study provide an innovative outlook for incentivizing officers to increase their on-the-job performance. Supervisors should consider incentives that ignite the natural competitive spirit between their LP staff, but are cautioned to do so in a way that does not inadvertently promote unethical behavior. Supervisors also should not conclude from this research that peer competition is the sole source of staff motivation. The findings from the study, albeit very interesting, are merely a piece of the larger puzzle of how to most effectively enhance loss prevention officer productivity. LP MAGAZINE | MARCH - APRIL 2015

PARTNERING WITH RETAILERS By Dave DiSilva

Connect and Collaborate

DiSilva is senior manager of global asset protection for eBay where he oversees eBay’s tools and PROACT teams. Prior to joining eBay in 2010, he held retail leadership roles in analytics, investigations, corporate LP, shortage control, e-commerce, and supply chain. DiSilva is an active member of the Loss Prevention Research Council, serving as co-chair of the predictive analytics group. Since 2011 he has been an LP Magazine contributor. DiSilva can be reached at 408-332-8666 or dadislva@ebay.com.

othing is more important than trust at eBay. Without trust our marketplace could not function. As such we take trust very seriously and work diligently to maintain trust in our systems and among the parties that rely on our platform. Since 2008 eBay’s Global Asset Protection (GAP) team has sought more effective ways to detect, investigate, and combat organized retail crime (ORC). “Connect and Collaborate” is a defining principal of eBay’s team. Our team works with retail and law enforcement partners to combat ORC daily. The shared experience of collaborative investigation improves our knowledge base of criminal activity and is a force multiplier. The collaboration builds trust and ensures a safe and competitive market place for our users. On February 26, 2015, eBay hosted the second Connect and Collaborate conference at eBay’s Draper, Utah, office. The event provides a forum for retailers and law enforcement to connect to share success stories and techniques to combat ORC. This year’s successful meeting was attended by more than 120 retailers and law enforcement representatives. During the one-day meeting, law enforcement and retailers provided overviews of cases and investigations that they conducted in collaboration with eBay. Launching an ORCA. Mark Faulkner of the Salt Lake City Police Department presented on the topic of combating ORC through effective partnerships between law enforcement, retailers, and eBay. He reviewed how to launch an ORCA and offered assistance to the attendees. Triangulation Fraud. Scott Sanford, director of ORC investigations for Barnes & Noble, provided an overview of the growing trend of triangulation fraud. He reviewed the steps necessary for the fraud to take place and outlined the issues that retailers and law enforcement should address to help curb the activity. Gift Card Program. Outerwall’s Greg Bromley provided a business overview of their Coinstar gift card purchasing kiosks, including the camera and fingerprint technology built into each machine to minimize risk. He emphasized how his team works with participating retailers to minimize and resolve criminal merchandise card fraud. Operation Holiday Steals. Sergeant Richard Rossman of the Broward Sheriff’s Office and recent recipient of the Homeland Security Public Safety Award, described the successful ways they manage and leverage public-private partnerships to combat ORC. He reviewed the November 2014 joint action called Operation Holiday Steals that resulted in dozens of arrests and identified millions in stolen property. Other Topics. Following are some of the other topics and speakers:

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■ “Online

Investigations Collaboration: All About Avi” by Amy Wallace, JCPenney ■ “Creating Buy-in for Your ORCA” by Curt Crum, Boise Police Department ■ “Leveraging Existing Tools” by Hawken Averett, eBay ■ “Building Win-Win Solutions” by Jamie Bourne, Home Depot ■ “Collaborating to Conquer Chronic Criminals” by Glenn Justus, Barnes & Noble

Det. III Joe Hopkins, community business coordinator for the Los Angeles Police Department, Commercial Crimes Division, presented on the LAAORCA and CAL-ORCA collaborative partnerships. To see other photos from the conference, go to LPportal.com.

Distinguished Service Award. eBay’s Global Asset Protection team received a distinguished service award from retailers and law enforcement during the meeting. Thank you to all of the speakers and attendees for your participation in the 2015 Connect and Collaborate conference. Special thanks are extended to Stoney Burke, Hawken Averett, and Christian Hardman for their extraordinary efforts in coordinating the event. To learn more about eBay’s Global Asset Protection programs, contact PROACT@ebay.com. |

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INTERVIEW

FROM LEADING HER TEAM IN TECHNICAL FOULS TO

LEADING RILA’S AP EFFORTS THE INTRIGUING CAREER OF LISA LABRUNO By James Lee, LPC, Executive Editor

INTERVIEW

EDITOR: Let’s start with your current job. As senior vice president of retail operations at RILA, what are your responsibilities? LABRUNO: I am currently responsible

for asset protection, supply chain, and as of late January, omni-channel. EDITOR: Which of those occupies the most time? LABRUNO: I would say it’s a close race

between AP and supply chain for two distinctly different reasons. With supply chain I’m still learning and building new relationships. I’m doing a lot of outreach, trying to earn credibility in that part of the industry, doing a lot of reading, understanding, and expanding the offering. Whereas with AP, it’s more developing substantive content and maintaining relationships that I’ve had for a number of years.

I started as an in-house counsel at Home Depot supporting the asset protection group enterprise wide. When they made a bad stop or otherwise exposed the company to legal action, I figured all that out from a legal perspective. Then it expanded to legal advice on all the ORC investigations. Then they added the corporate security group who was doing all the C-suite, high-level executive protection. Then it expanded to supporting retail operations.

EDITOR: Where did you get your law degree? LABRUNO: Seton Hall Law School. EDITOR: Where did you start your law career? LABRUNO: The summer of my second

year in law school I was offered an internship at a very large and prestigious, at the time, law firm in New Jersey. They had a monster internship program with probably twenty or so budding lawyers. They paid us good money for the summer and wined and dined us. Then at the end of the summer, you either get an offer, or you don’t. I got the offer and went to work for the law firm after graduation. EDITOR: How long did you stay there? LABRUNO: Not long frankly. It’s a bit of

a story, but with an interesting twist.

EDITOR: Most of the people in our industry know you because of your position at RILA. They may not, however, know your back story that brought you here, which I think is fascinating. Let’s talk about where you are from and your early career. LABRUNO: I’m from the beautiful part

EDITOR: Tell us. LABRUNO: Working in a big, prestigious

worker—good grades didn’t come naturally to me. And I was never satisfied with my athletic performance.

law firm pays great money, but it is basically a sweat shop. You sit in the library for fourteen or more hours a day. For someone who was the youngest of six kids, there wasn’t a whole lot of money from Mom and Dad to pay for college. So I had undergraduate loans to pay, and the money was good. I had every intention to stay even though I had developed a love of criminal law in law school and wanted to be a prosecutor. I had a brother who was an assistant district attorney at the time. I knew that they didn’t make a lot of money compared to what the big law firm paid. Then came the twist.

EDITOR: You played basketball. LABRUNO: Yes, and softball and soccer.

EDITOR: What was that? LABRUNO: About two years into my time

of New Jersey, Morris County, which is about forty minutes directly west of New York City. EDITOR: I understand you were a good student and good athlete in high school. LABRUNO: I would say I was a hard

But basketball was my love, and still is. LABRUNO: I had no idea. No direction. EDITOR: Did you play in college? LABRUNO: I thought about it. I did some

college visits at some smaller schools, but decided to go to Penn State instead. EDITOR: Had you at that point decided that law was what you were going to study?

the same career?” So it had nothing to do with a love of the law.

I majored in psychology, but wasn’t sure where to go with it until the fall of my senior year. I had two older brothers who were practicing law at the time. They were good guys, seemed to have good heads on their shoulders. So I figured, “Eh, if it’s good enough for them and it makes mom and dad proud, why not just pursue MARCH - APRIL 2015

LPPORTAL.COM

with the law firm, I had an accident. In 1993 I was hit by a car as a pedestrian. I spent the next six months in and out of the hospital undergoing seventeen surgeries on my legs. Throughout that year the firm was awesome to me. When I went back to work a year later, I went back to working the same fourteen-hour days. My accident had put life in perspective for me, and the big law firm

INTERVIEW

wasn’t working for me anymore. So—I remember this like it was yesterday—I walked into the managing partner’s office, who by the way was just a wonderful guy. He would have given me as many years as I needed to rehab and kept my job open. I went in and said, “I quit.” He asked, “Where you going?” “I don’t know. I don’t have a job.” He said, “Lisa, you can quit, but you need to have a job first.” I said, “No, I’m quitting.” Not too much later I ended up at the Hudson County prosecutor’s office working as an assistant prosecutor in my dream job.

of my accident. I quickly realized I wasn’t going to change the world in Hudson County. A job opened up at the Archdiocese of Newark as an in-house attorney. I figured, “A good Catholic girl. Go work for the Archdiocese.” And so I did that. But not long after I got there, the church sex scandal broke. I still had the prosecutor inside me, so I quickly became disenchanted. About that same time 9/11 happened, and I just wanted out.

EDITOR: How long did you work as a prosecutor? LABRUNO: Not very long; maybe three

Depot headquarters in Atlanta. They were looking for a former prosecutor to work in-house. It was criminal law, good money, and away from the New York area. So I relocated to Atlanta.

years. The problem was it was a very different county from Morris County where I was from. Hudson County is Jersey City, Hoboken, Bayonne. It’s a city. I thought going there I could prosecute drunk drivers and hit and runs, that sort of thing. Little did I know I’d be conflicted out of all that stuff because

EDITOR: What happened next? LABRUNO: A job opened up at Home

EDITOR: What were your responsibilities at Home Depot? LABRUNO: Initially, it was to support

the asset protection group enterprise wide. I was doing all their policy

drafting and legal training. When they made a bad stop or otherwise exposed the company to legal action, I figured all that out from a legal perspective. Then it expanded to legal advice on all the ORC investigations. Then they added the corporate security group who was doing all the C-suite, high-level executive protection. Then it expanded to supporting retail operations. EDITOR: Was this your first exposure to retail loss prevention? LABRUNO: First exposure. EDITOR: And at some point you moved back to New Jersey while still working for Home Depot? LABRUNO: I did. I got engaged to

my husband. He was a police chief in New Jersey at the time, so he couldn’t relocate. I went to my general counsel and said, “I either quit or you let me move back to Jersey.” He let me move, and I stayed with Home Depot for another seven years or so.

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INTERVIEW

EDITOR: What happened at that point? LABRUNO: A new general counsel came

in and closed the legal field offices. They offered me a wonderful package to go back to Atlanta, and I really wanted to do it. But at that point, our daughter was five, my parents were getting older, and my husband had retired and was in a new job. So I thought, “Between my parents and my daughter and my husband, I’m going to have to turn this down.” And I did. EDITOR: How did you end up at RILA? LABRUNO: While at Home Depot, I

developed a strong working relationship with their vice president of government relations. I think he figured if I wasn’t going to work for Home Depot, he wanted me to work on behalf of Home Depot. He knew Sandy Kennedy at RILA and opened the door for me by getting my name in front of her. But initially, Sandy wanted the person to be in DC, which I understood. And for the same reasons I wouldn’t relocate to Atlanta, I wasn’t interested in relocating to DC. So RILA pursued other options, and I assumed it wasn’t going to happen. A couple months later they called me back and said, “If you still want the job, we’ll let you stay in Jersey.” So that’s the story of my career.

I was surprised to find that many of the AP executives were a lot like Mike Lamb. I was pleasantly surprised to find that most AP executives are exceptional. I’m continuously impressed by their professionalism, their thoughtfulness, their thought leadership. It took some time for them to understand what I brought to the table, but I think being able to attach myself to Mike did me a world of good and made the transition a little bit easier.

EDITOR: Shortly after you arrived at RILA to take the asset protection role, you had your first LP conference. At that point how much exposure had you had to the LP industry? LABRUNO: I had Mike Lamb in my

corner. That’s about it. But that was huge. But exposure to the larger AP industry, little to none. I remember hiding in the bathroom stall at that first conference because I was so overwhelmed. It was pretty stressful. EDITOR: When was that? LABRUNO: Spring of 2010. EDITOR: But you quickly got your feet on the ground and established yourself in the industry. How has your perception of asset protection professionals changed since you’ve been in this position?

but I think being able to attach myself to Mike did me a world of good and made the transition a little bit easier. I also sought out like-minded people. Monica Mullins was a huge supporter of mine. And Libby Rabun. With theirs and others support, I was able to start the Asset Protection Leaders Council (APLC) with a small group of really solid people, like Mike, Monica, Claude Verville, Stan Welch, Jason Coren, Jason Jones, Ken Amos, and Paul Stone. EDITOR: Before that there was only the LP steering committee. Why did you feel that it was important to create the leaders council? LABRUNO: I thought it was important

because there was an untapped resource. The conference committee has the job of developing the conference program, which obviously is very important. They got together just once a year in person, didn’t do a lot of benchmarking, and didn’t drive substantive initiatives that could have a significant impact on their business and the industry. Some of us wanted to figure out how to get the pyramid heads more involved; how to focus on global strategic issues like operational shrink, leadership, and emerging technology, and perhaps tap into academia as a resource. It was that untapped resource that I saw and wanted a way to leverage it. EDITOR: How many people are in that group today, and what are the criteria for being a member? LABRUNO: There are about forty

executives on the APLC. You have to be a RILA member, and you have to be an AP pyramid head for the most part. [See list of APLC members, box page 36.] LABRUNO: I was surprised to find that

many of the AP executives were a lot like Mike. I was pleasantly surprised to find that most AP executives are exceptional. I’m continuously impressed by their professionalism, their thoughtfulness, their thought leadership. And they were mostly receptive to me being in the position. It took some time for them to understand what I brought to the table, MARCH - APRIL 2015

LPPORTAL.COM

EDITOR: And how often do you get together? LABRUNO: Three to four times a year we

have regular meetings that revolve around really smart agendas. We also get together on an ad hoc basis when significant things happen like the civil unrest in and around Ferguson, Missouri, racial profiling in New York City, or the Ebola continued on page 34

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INTERVIEW

continued from page 32

situation. We’ll have conference calls to talk through what everybody’s doing and share experiences. That’s one of the great things about this group. They’re very willing to share leading practices, what they’re doing—even when Mike was at Home Depot and Claude at Lowe’s. That’s pretty special. I hope one day the Supply Chain Leaders Council and Omni-channel Leaders Council will be like that, but it takes time. I think that you need to build trust; you need to build a mutual respect for each other. EDITOR: Let’s talk a little about the upcoming asset protection conference May 3 – 6 in Orlando. Give us some of the highlights and how you view this conference. LABRUNO: At this point [in early

February] we haven’t fully finalized the program, but I’m pretty excited with what is in the works. I like to look not just at the conference’s content, but at

LPM 0315-A.indd 34

the speakers. From a speaker perspective, we’ve always leaned toward top-level executives speaking, not because we’re title snobs, but because they have both the subject-matter expertise as well as the experience of public speaking. With that said, we already have on the program pyramid heads like Dennis Klein from Stage Stores, Joan Manson from The Container Store, Paul Stone of Best Buy, Mike Lamb from Walmart, Keith White from The Gap, David Lund from DICK’S Sporting Goods, Kevin Colman at Macy’s, Charles Delgado at Meijer, Nate Frazier at Helzberg Diamonds, Ken Warfield at Regis, Scott Roubic at Jo-Ann Stores, Bob Oberosler at Rite Aid, Libby Rabun at AutoZone, and Claude Verville from Lowe’s. From a content perspective, we’re putting together a session that builds on last year’s active-shooter session led by Jeremiah Hart. That was pretty compelling stuff. One thing that stood out to me was that seasoned executives left

MARCH - APRIL 2015

that session really uncomfortable, asking themselves whether they were doing enough to plan for this kind of event. So our steering committee decided to do another session that will provide more practical guidance for mitigating the risk of and damage from an active shooter. We’re also going to have a cybersecurity general session. From a content perspective, our steering committee wanted us to take a balanced approach given that most of them are not leading their companies’ cybersecurity efforts, but recognizing that they should be part of the conversation. So this session will feature Keith White, who does have an important role with Gap’s cybersecurity efforts. He’ll talk about AP’s role in Gap’s risk mitigation strategies and why AP needs to have a seat at the table. And David McLeod, VF Corp’s chief information security officer will share the current threat landscape, how VF Corp. is responding to those threats, and how the continued on page 36

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INTERVIEW continued from page 34

RILA’s Asset Protection Leaders Council

industry can work together to mitigate the risk of cyber threats. So it should be really useful, actionable content. [See page 39 for more details about the conference.]

Adam Alford, Senior Director, Asset Protection, GameStop

EDITOR: I think most people would agree that you’ve made great strides in expanding the educational content of the conference over the past few years. What things are still challenges for you, or what would you like to do better? LABRUNO: The exhibit hall at the

conference presents a unique challenge. Our solution provider partners are critically important to our overall success, not just from a financial perspective, but from a thought-leadership perspective as well. I always challenge myself and the rest of the RILA team to come up with ideas to keep the solution providers engaged. It’s not about keeping them happy. It’s about keeping them engaged, finding ways for them to contribute thought leadership, for them to make an impact. Figuring out a way to get the attending retailers to really connect with the exhibitors in the hall, to make a conscious effort to talk with every exhibitor, to understand their product or service, to give them the time really owed them by virtue of their financial contribution. Solution providers are in a tough spot. Many of them feel compelled to attend all of the industry conferences. I don’t want them to come to our conference because they have to; I want them to come to our conference because they want to, because they get something out of it, because they feel good about being there. I really like that some retailers bring teams and divide and conquer both with the sessions and the exhibit hall. Then they come back and download with each other. “What’d you see that was really innovative, fresh, emerging? What new technologies did you see?” I wish more retailers would do that. Now, that requires them to bring teams, which not everyone can do because of budget. But I wish that we, RILA, could find a way to make retailers want to go into that exhibit hall for something other than cocktails

Shane Berry, Vice President, Asset Protection, Abercrombie & Fitch Tommie Caudle, Vice President, Asset Protection, Safety & Compliance, SAM’S Club Michael Cavaliere, Director, Risk Management USA, IKEA North America Steven Dean, Director of Security, Costco Steve Deckard, Vice President, Financial Planning & Shrink, Dollar General Tim Fisher, Director, Loss Prevention, T-Mobile, USA Julie Giblin, Vice President, Loss Prevention, Family Dollar Scott Glenn, Vice President & Chief Security Officer, Sears Holdings Timothy Gorman, Divisional Vice President, Asset Protection, Walgreens Boots Alliance Jeremy Gottlieb, Senior Director, Audit and Compliance, 24 Hour Fitness Worldwide Joe Hardman, Senior Director, Loss Prevention, Cracker Barrel Old Country Store Gary Hilt, Vice President, Loss Prevention & Risk Management, Blain’s Farm & Fleet Cindy Hudson, Vice President, Stores Assets Protection, Target Steven Knott, Vice President, Asset Protection, The Home Depot Michael Lamb, LPC, Vice President, Asset Protection & Safety, Walmart Stores Bruce Levitin, Vice President, Orchard Supply Hardware David Lund, LPC, Vice President, Loss Prevention, DICK’S Sporting Goods Scott McBride, Vice President, Global Loss Prevention, Safety & Security, American Eagle Outfitters Steve McClain, Vice President, Asset Protection, Big Lots Stores Robert Oberosler, Group Vice President, Asset Protection, Rite Aid Dan Provost, LPC, Vice President, Global Loss Prevention, Staples Libby Rabun, LPC, Vice President, Loss Prevention & Safety, AutoZone Perry Resnick, Director, Asset Protection, REI Marie Reyes, Senior Director, Loss Prevention, The Michaels Companies Michelle Rice, Senior Vice President, Store Operations, Christopher & Banks Margot Roth, Global Director, Risk Management, Whole Foods Market Scott Roubic, Vice President, Internal Audit & Asset Protection, Jo-Ann Stores Stephen Scott, Vice President, Loss Prevention, Tractor Supply Tina Sellers, Director, Loss Prevention, Delhaize America Mike Silveira, Vice President, Loss Prevention, CVS Health Kathleen Smith, Vice President, Loss Prevention, Safeway Mark Stinde, Vice President, Asset Protection, 7-Eleven Paul Stone, LPC, Vice President, Enterprise Fraud, Best Buy Darrell Taylor, Vice President, Loss Prevention & Security, H-E-B Claude Verville, LPC, Vice President, Loss Prevention, Safety & Hazmat, Lowe’s Robert Vranek, Vice President, Loss Prevention, Belk Dennis Wamsley, Director, Loss Prevention & Safety, Publix Super Markets Ken Warfield, Senior Vice President, Premium Division NA & Asset Protection, Regis Corporation Stan Welch, LPC, Vice President, Loss Prevention, JCPenney Keith White, LPC, Senior Vice President, Loss Prevention & Corporate Administration, Gap Inc. Todd Young, Director, Loss Prevention, Outerwall

continued on page 38

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INTERVIEW continued from page 36

and to not just walk by a vendor and grab a card, but to really appreciate the contribution that the solution providers make to the conference. EDITOR: RILA is not restrictive at all to the vendors as far as participating in presentations and sitting in all the sessions. LABRUNO: They are welcome and, in

fact, encouraged to attend everything. As far as presenting, we only have two restrictions. First, they have to be exhibiting or sponsoring at the conference, and second, they have to co-present with a retailer. What that does is helps ensure that other retailers will attend the session because they want to hear what success another retailer has had because of the vendor instead of thinking it might be just a sales pitch if there was no retailer presenting. From the vendor’s perspective, it increases the chance that someone will walk out of the session and say, “I need to talk to that vendor.”

My biggest challenge is continuously finding people to engage in volunteerism. All of our meetings and committees are essentially volunteer work. It’s time away from their day job. So how do we persuade them that it’s worth the investment of their time? How do we convince these very, very busy executives that they will have good takeaways to bring back to their organizations, but at the same time contributing to the industry?

EDITOR: Apart from the conferences, what are some challenges that you still have on your plate that you want to improve? LABRUNO: I think my biggest challenge

is continuously finding people to engage in volunteerism. All of our meetings and committees are essentially volunteer work. It’s time away from their day job. So how do we persuade them that it’s worth the investment of their time? How do we convince these very, very busy executives that they will have good takeaways to bring back to their organizations, but at the same time contributing to the industry? I’m not sure I always get that message across very well and need to find better ways to do that. I also continue to be disappointed by the lack of diversity in the industry, particularly at the executive level. Seems like we’ve been talking about it a long time. I bring it up often. It’s not just at my meetings. It’s at other industry events. I don’t have all the right answers on how to resolve it, but I do think it’s something that we need to continue to address.

a kind soul. I was just telling somebody that the other day I found her shoveling our next door neighbor’s driveway. Nobody prompted her to do it. She did it because they’re elderly. And when we were at the grocery store the other day, she saw an old man walking with a cane, and said, “Mom. We should help him into the grocery store,” and we did. She makes me a better person. EDITOR: She’s how old? LABRUNO: Ten. Of course, the fact

that she loves playing basketball really excites me. It’s hysterical to watch her play because she’s as competitive on one hand as she is compassionate on the other. I was a decent basketball player, but the only record I broke was the most technicals in a season. She’s the only person who stands a chance of breaking that record. I coach her, and I’ve told refs before games, “Watch out for number twenty-four,” which was my number in high school. “And if she needs a technical, give her a technical.” As soon as the foul is called, the hands go up, the jaw goes down, and the eyes get big at the ref. EDITOR: Do you sense you have a basketball player or another lawyer? LABRUNO: Both. [Laughter.] EDITOR: Last question. What legacy do you want to leave in your life? LABRUNO: Two things come to mind.

EDITOR: Let me go full circle back to your personal life and ask you about your daughter. I know that your daughter seems to be modeling herself after her mom in her drive to be a basketball player. How has that affected your life? LABRUNO: I could talk forever about

First, I want to be a great mom. I want to raise my child to have a strong moral fiber, a strong faith, and just be a good soul. If I can be the kind of mom that my mom is to me, that’s the biggest accomplishment I can achieve. Second, I want to have an impact not on an industry. I want to have an impact on people. I want people to think highly of me and respect me. I don’t worry too much about my legacy in terms of what work product I leave behind in the industry. I want to leave behind something significant with the people I live and work with.

Livy and the joy she brings to my life. But candidly, I’m more proud of what a compassionate kid she is. She is such

EDITOR: Well, I think you are succeeding in that.

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EVIDENCE-BASED LP by Read Hayes, PhD, CPP Dr. Hayes is director of the Loss Prevention Research Council and coordinator of the Loss Prevention Research Team at the University of Florida. He can be reached at 321-303-6193 or via email at rhayes@lpresearch.org. © 2015 Loss Prevention Research Council

State of the Profession A

Precision Process

fter participating in the Food Marketing Institute’s conferences, the RILA Asset Protection Conference, NRF Protect, the Retail Council of Canada’s Loss Prevention Conference, the Mexican ANTAD, the British loss prevention conferences, ASIS conferences, the Loss Prevention Research Council (LPRC) Impact Conference, and several retailers’ annual meetings over the years, I am so proud of the energy, ideas, and results the loss prevention and asset protection industry is achieving. And the talent and dedication of the people is amazing. But I also have to report that—after twenty-five years of the National Retail Security Survey (NRSS) and other retail loss study findings—overall shrink levels have not really improved much. And anecdotal reports from over forty retail chains indicate theft and violence levels may be rising. So we all have a great challenge ahead of us. Retail companies rely on effective crime and loss control. Desired merchandise needs to get to the right place at the right time and be available for busy customers. Hard-earned sales receipts need to stay in the point-of-sale terminal and be deposited. Loyal shoppers and employees need to be and feel safe in retail environments.

So precision LP means using a logical process to more cost-effectively prevent or control a problem. Precision LP has a few primary assumptions: targeting the mechanisms that create loss more effectively improves location performance; these mechanisms are in part unique to each location; LP decision-makers must have research and individual location data to identify critical mechanisms for specific targeting; and problems leave signatures, such as clusters of particular SKUs, incidents, locations, times, people, and crime methods of operation. But more datasets are needed to help retailers more precisely control problems.

Precision loss prevention, like precision medicine, is an emerging approach for prevention that takes into account individual variability in people, environment, and patterns for each location.

More Precision

Industry Level. We don’t need just big data; we need little data, and most importantly, we need to have all the data flow into a central, secure repository. We need practitioners and scientists alike to feed into and have access to the data. Retailers and researchers would feed in their test results on what things work best on specific problems in specific places via a web-based form that provides the research method and results without revealing the submitting retailer’s name. We would also need to bring together data from broader studies and datasets like the University of Florida’s NRSS, the Centre for Retail Research’s Global Theft Barometer, the evolving National Shrink Database, LERPnet, and others. We would need scientists to evaluate the data and provide simple descriptions of what they found and what that means for a practitioner. We would then build a global best-methods database. The LPRC Research Fusion Center is helping work toward that goal as part of this scenario. We then can work toward a comparative effectiveness matrix for common problems. For example, a practitioner might address a truck-hijacking problem by looking at several anti-hijack methods that have all been rigorously evaluated. Company Level. On the retailer and solution partner level, greater precision means consistently using the problem-solving techniques discussed here and elsewhere, like SARA (scan, analyze, respond, assess), to really identify specific problem causes and then focus solutions on those mechanisms. And in-house assessments

Precision loss prevention, like precision medicine, is an emerging approach for prevention that takes into account individual variability in people, environment, and patterns for each location. Precision LP is part of evidence-based practice—using science to more deeply and broadly understand what combination of the above factors is creating a location’s crime and loss, so more precise countermeasures can be applied. Precision LP should boost positive outcomes—such as lower levels of poor process design and execution, negligence, crime attempts, and loss, and greater profitability—because it is targeted at a location’s specific problems and dynamics. Each location is different along with the causes and extent of its problems. So solutions targeted and dosed for a specific location tend to work better than broad-brush approaches. Stores and distribution centers vary on what and how much merchandise or other attractors they have. Each location operates in varying demographic and transportation conditions meaning more or less numbers of potential offenders, as well as ease of ingress and egress levels. Store designs, in terms of in-store sightlines and visibility, vary widely. Store and other place managers fluctuate on how skilled and committed they are on protective actions. And finally, preventive resources and their relevance vary by site as well.

MARCH - APRIL 2015

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should ideally be fairly rigorous, including using control locations to rule out many other causes of observed outcomes. And then as mentioned, retailers and their solution partners should submit their findings to the data warehouse.

Science as Practice

Science is not perfect, and science does not move quickly. But the scientific method is so far the best way man has devised to more fully understand offender decision-making, and how and how well deterrent countermeasures really work. Stanford University researchers are working with managers in retailing and other businesses to move to a more fact-based approach. They recommend several practices for executives: ■ Commit to fact-based decision making, which means getting the best evidence and using it to guide actions. ■ Avoid solely basing decisions on untested but strongly held beliefs, what you have done in the past, simplistic or small-test case studies, tests in just “bad” locations, simple period-to-period or year-on-year comparisons, or uncritical benchmarking of what “winners” do. The core activities of evidence-based practice will include: ■ A questioning approach to practice, leading to scientific experimentation, ■ Meticulous observation, enumeration, and analysis that greatly enhances anecdotal case descriptions, ■ Recording and cataloguing the evidence for systematic retrieval, and ■ Ongoing discourse or critical discussion of problems and methods.

Multi-Method Research Highly Recommended

Evidence-based practice works best when it is in real-world situations and when more than one project is used to inform and

validate what you or others find or claim. We suggest working to triangulate data using more than one research effort, and then you have more and better data to go with. Statistical models identify concurrent relationships. They help prioritize relationships in order of strength. But many or even most correlations turn out to be spurious or unhelpful, maybe suggestive, but not necessarily causal, which is what we need to take action. But modeling is still good practice and part of the process. Field experiments test identified or suspected relationships and should always include good sampling, randomization, manipulation, and control. Statistical significance testing helps sort out random findings from systematic results. Good field evaluations also provide usable ROI data. Systematic offender interviews provide insight and can help make sense of predictive models and experiments. These people are the “target audience” of our deterrent cues, so we must have their feedback. This process is tough to do correctly, but well worth the effort. Most data sets are riddled with error, so do your best to reduce bad information and then “clean” and adjust the data according to statistical science before using it. Raw data is seldom usable.

Wrap Up

Evidence-based LP is tough and requires expertise, resources, patience, and time. But most of us have learned the right way to do things is usually the toughest way. A commitment by LP and industry leaders to moving our discipline from anecdote to fact-based practice will pay off. LP effectiveness, efficiency, and financial impact increases. The respect and ability to communicate and “sell” LP programs is enhanced. And we have evidence to back this claim up.

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FEATURE

ARIA RESORT & CASINO, LAS VEGAS

HOLDING ALLTHE CARDS WHENTHE CHIPS ARE DOWN By John Wilson, Executive Editor, LP Magazine EU

ARIA RESORT & CASINO, LAS VEGAS

“

hat happens in Vegas, stays in Vegas,” or so the saying goes. But does it? Behaviors along the famous Strip in Las Vegas are not unlike any major Main Street where you have browsers, serial shoppers, or gamblers; and then you add to the mix those seasoned shoplifters or fraudsters who want or have to steal or those who feel compelled to take on the casino and play it at its own game, as they see it. These individuals represent 15 percent of the population on the honest versus dishonest continuum, with a further 15 percent who never steal, while the remaining 70 percent would like their chances if the odds were better, or there was no chance of them getting caught. For this 15 percent of hardened chancers, it could be argued, that they are the real gamblers who want to beat the system, whatever the odds.

But to achieve this they will have to get past Ted Whiting, the director of surveillance at Aria Resort & Casino, one of Las Vegas’s biggest casino-led entertainment venues. He is the man with all of the cards. But with more than 150,000 square feet of gaming space in a 500,000-square-foot triple-A resort that includes ten properties, 145 table games, 1,940 slot machines, and a 24-table poker room, Whiting knows the odds and recognises that he cannot do it alone. In an exclusive interview with LP Magazine EU, Whiting shows his hand and talks candidly about his technology, Google Glass, why walking quickly and scuffed footwear are always a give-away,

Ted Whiting, director of surveillance, in the camera room at the Aria Resort & Casino, Las Vegas.

TED WHITING has been employed in the gaming industry since 1989. Early in his career he held various casino positions, including dealer, cage cashier, and poker room brush. From 1995 until 2009, Whiting worked in the Mirage Resort & Casino surveillance room and was promoted to director of surveillance in 2001. Since 2006, he has worked on creating the casino surveillance system at the multi-billion dollar resort and casino project known as City Center. Whiting officially became the director of surveillance for City Center’s Aria Resort & Casino in 2009. Whiting created and implemented the MGM Resorts International Advantage Player Identification training program and casino loss prevention training for table games and casino surveillance. In addition, he is the chairman of the MGM Resorts security and surveillance technology steering committee and administrator for iTrak, the corporate surveillance report and suspect database. As chair for the technology steering committee, Whiting has brought in new CCTV technologies, such as 360degree cameras, data mining and alarming, and license-plate recognition systems. During his career, Whiting has written different computer programs that are in use in several surveillance rooms on the Las Vegas Strip. One of his programs, called baccarat player analysis, is used to evaluate high-action baccarat play. His next foray into surveillance software was his surveillance database, a report-writing program that includes a card counting and basic strategy tutorial. Whiting has been a speaker at UNLV, University of Denver, Cornell University Alumni conference, and Johns Hopkins Educator Conference, as well as participating on panels and as a speaker at casino industry conventions, such as G2E and the World Game Protection Conference.

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LPPORTAL.COM

and not to mention why he can’t watch the Oceans Eleven franchise of films.

A Veteran of the Gaming Industry

Having been employed in the gaming industry since 1989, Ted Whiting has seen every trick going and is ever-watchful of new scams, which is why you will never see a pair of Google Glass worn at any table on his watch. It may be a new technology, but card watching and recording is one of the oldest tricks in the book. “In the history of cheating, the behavior is always the same. It is the technology and speed that is updated, which is why we don’t allow Google Glass, smartphones, or any of the new generation of wearable computers at our tables,” said Whiting, whose own forensic eye and data-driven, the-devil-is-in-the-detail approach enables him to read people the way that criminals and chancers may read cards. “I have held every job in the casino, including dealer, cage cashier, and poker room brush,” said Whiting, who previously worked in the Mirage Resort & Casino surveillance room from 1995 until 2009 before being promoted to director of surveillance in 2001. His résumé reads like an instruction manual of how to identify the bad guys. Whiting helped create and implement the

ARIA RESORT & CASINO, LAS VEGAS MGM Resorts International Advantage Player Identification training program and casino loss prevention training for table games and casino surveillance. In addition, he is the administrator for iTrak, the corporate surveillance report and suspect database, and the chairman of the MGM Resorts security and surveillance technology steering committee, where he has been among the first to introduce new technologies to the Nevada casino industry. In Ted Whiting’s world, compliance is king—play by the rules whether you are a gamer or an employee—and you are very welcome at the Aria. Introduce your own rules or not follow those of the house, then you can play or work somewhere else—you are not welcome on Ted Whiting’s watch. Whiting is a numbers man, and his primary skill is data analysis. Combine this with his forte for psychology and people behavior in its various strange forms, and you witness something quite formidable. “I love data and crunching through spreadsheets, but the reality is that we do not bust many people because we are on

“In the history of cheating, purposefully are on our radar because most the behaviour is always the people simply meander around,” he said. same. It is the technology If the Shoe Fits and speed that is updated, Whiting will walk the floor of the gaming which is why we don’t allow area and talk to people, but he gathers most Google Glass, smartphones, of his intelligence from his office in the or any of the new generation bowels of the building where he is studying of wearable computers at numbers, behavior, and video footage to together evidence that is not explicit our tables,” said Ted Whiting, stitch to the naked or untrained eye. Indeed, it is whose own forensic eye not what is said, but what is not said. and data-driven, the-devilTo this extent, Whiting is a devotee of former FBI guru Joe Navarro whose is-in-the-detail approach non-verbal communication approach enables him to read people is the bread-and-butter of investigators the way that criminals and the US in much the same way that chancers may read cards. across Wicklander-Zulawski has helped change the top of our game and our employees are following the right procedures. “People who are up to something always touch a part of their body. It is part of their body language that we look for when we are investigating certain tell-tale behavior. Similarly, people who walk too fast or very

landscape of suspect interview techniques. Confrontation is no longer necessary in these cases as the suspect usually signs their own arrest warrant by their involuntary or unconscious actions. Navarro specializes in the physiological versus psychological and where our body language betrays our true intent. In essence, although language is considered the basic

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ARIA RESORT & CASINO, LAS VEGAS

form of human communication by most people, we communicate with much more than words. Indeed, according to Navarro and his latter disciples, non-verbal behavior represents the majority of our communication and reveals more reliable and honest information than words. Research shows that those who can effectively observe and interpret non-verbal communication will have greater success in life than individuals who lack this skill. Joe Navarro’s best-selling book, What Every Body Is Saying: An Ex-FBI Agent’s Guide to Speed-Reading People, divides humans’ non-verbal behaviors into two categories on the basis of human-consciousness—those controlled by the conscious and subconscious—and most of Navarro’s illustrations are based on the limbic part of the brain. Navarro started this book by explaining why humans have certain behavior to express their emotions and how the limbic brain controls our bodies to express emotions non-verbally. Putting the text book to the test, Whiting cites the example of the non-verbal communication of clothing, which he sees as a roadmap of where the suspect is going in terms of his or her criminal intent. Media trainers the world over will tell their clients who want to look good on TV to “let the message come out of your mouth, not through what you are wearing.” A loud shirt or tie speaks far louder than even the most baritone voice. A national example of this is the daily television weather. Most people watching would not be able to tell you immediately afterward what conditions

will be like the following day because they have been side-tracked by what the weather presenter is wearing or his or her body language in front of the climate map. In fact, a scientific test proved that verbal communication—the message you are trying to put across—only accounted for 7 percent of what people take in. A massive 70 percent is body language, but you cannot train your body to align with what is coming out of your mouth, which will always be the fraudsters’ nemesis.

Walking in Whiting’s Shoes

In this respect, no one would literally want to be in the shoes of any fraudster that tries their luck at the Aria. This is because shoes—worn ones to be more specific—are also a dead giveaway, according to Whiting. “You can always tell by someone’s footwear what they are up to. You can look smart with a nice stolen jacket, but you can’t steal a good pair of shoes. So we always look out for scuffed or wrecked footwear.” “We are dealing with human beings and spotting when they are comfortable or uncomfortable. Our job is to observe when they are not comfortable, and that means looking at the data in conjunction with the video footage.” Looking down is not all Whiting and his team concentrates upon. In fact taking a broader strategic helicopter view of operations has made a major contribution to crime fighting. Since 2006, he has worked on creating the casino surveillance system at the multi-billion dollar resort and casino project

known as City Center, and he became the director of surveillance for City Center’s Aria Resort & Casino in 2009. These innovations include 360-degree cameras, infrared cameras in bars, data mining and alarming, and license plate recognition systems. In the lawless world of the criminal, there are no regulations other than the imagination of the law-breaker. Conversely, casinos are among the most regulated environments in the world, so unlike the image portrayed in films like Oceans Eleven, it would appear that the odds are stacked against the gaming industry when it comes to protecting itself from often very clever criminal minds. The regulations, including strict data-protection controls, are there for a reason—to maintain the integrity of gaming operations, which is why large, busy casinos must maintain continuous surveillance of multiple tables, machines, sports pools, cages, vaults, count rooms, records, and even the security room itself. Casino operators have tried to solve the problem of being everywhere at once by installing more and more cameras, which means large banks of monitors, large storage space for recorded video, and a team of security professionals to monitor systems.

Camera Technology

Whiting, on the other hand, was looking for something less cumbersome and a little more flexible. One of his strategic investments has been with the award-winning, patented, 360-degree IP camera technology from Oncam Grandeye, continued on page 48

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ARIA RESORT & CASINO, LAS VEGAS continued from page 46

technology as his “chase cameras,” but for him it is the ability to chase someone in the past. The 360-degree cameras literally record the history of a room or scene and aid forensic investigation. If confirmed, Whiting’s team has the technological justification in terms of enough information

which is able to monitor a larger area with fewer cameras, sometimes replacing as many as a dozen traditional cameras. Integrated views through Oncam’s customizable layouts have the ability to reduce the number of Whiting is a devotee of former monitors and security FBI guru Joe Navarro whose personnel required. non-verbal communication Whiting’s knowledge and influence has resulted in Oncam approach is the bread-andgetting to better understand the butter of investigators across behavior of a casino adversary and the US in much the same way how it differs from that of a legitimate guest. that Wicklander-Zulawski has The end result is that only the threatening or fraudulent behavior is challenged, leaving helped change the landscape of suspect interview others guests free to simply enjoy their visits. The technology can monitor for card techniques. Confrontation counters who exhibit specific behavior is no longer necessary in patterns, and once alerted to those variances these cases as the suspect and nuances, the cameras can probe further usually signs their own arrest to track, interrogate, and verify, which means delving into previous behavior in early shots warrant by their involuntary or unconscious actions. to confirm or challenge the hypotheses. Whiting often refers to the Oncam

to challenge a wrong-doer. Getting this wrong is not an option as it can be brand damaging if a legitimate customer is called into question based upon video footage. So-called integrated appropriate technologies help to reduce security costs, minimize disruption of operations due to false alarms, and maintain the integrity of gaming operations. “I have fifty cameras, and I can see everything. It is technology-driven surveillance. It’s a game changer in terms of people and vehicle number plate reading. I see a guy at the table who has left $130. I simply follow him backward through the footage and see that he is staying at our hotel. So the technology really works.” This technology, tried on the gaming floors of Vegas, is also now used widely in retail and health and safety where malicious slips and trips are more easily sifted from the legitimate claims. Whiting recognizes that technology is an enabler for both the criminals and law enforcement, and his business believes in the power of early adoption to stay one step

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ARIA RESORT & CASINO, LAS VEGAS continued from page 48

Pitt taking on the security of the casino and ultimately triumphing is the stuff of fiction—it simply would not happen on Whiting’s watch. He sees no sense of the romance in the movie, plus the portrayal of the security team is less than flattering. Whiting shares a more direct critique, “I can’t watch that movie.” The facts remain that Whiting and his team will never rest on their laurels, even though Vegas is the home of Caesar’s Palace upon whose head laurels were the crowning glory of an emperor who conquered much of the known world. There will always be people willing to gamble, and there will always be scammers and chancers who want to take the ultimate risk, whether it is by trick of the light or sleight of the hand. The origins of the phrase “it happened in Vegas” are simple. It happened. It only happened there. And it happened far enough away not to have any negative effect on “the here and now.” In Whiting’s world, it simply won’t be allowed to happen. That is not to say that people won’t try, but few would take the gamble when they know their body language is likely to betray them at the first hurdle, and they see the odds stacked against them.

ahead. “The Internet is a boon, as is social media, because people always put stuff up on Facebook.” As well as being technologically savvy, Whiting has a strong belief in real-life networking. His opinion is sought regularly on the media and lecture circuit where he has spoken as an industry expert at UNLV, University of Denver, Cornell University Alumni conference, and Johns Hopkins Educator Conference as well as participating on panels and as a speaker at casino industry conventions, such as Global Gaming Expo (G2E) and the World Game Protection Conference. He has been featured on several TV programs and different networks, including the National Geographic Channel, Destination America, CNBC, The Today Show, and local news. He is no stranger to newspapers and higher-brow print media as well, including Popular Mechanics and various security and surveillance industry magazines. “I consult widely, and I have people I talk to all over the world.” Part of the rationale of this very public profile is deterrence—the don’t-even-think-about-it approach, and while encouraging people to come to Vegas, only do so if you plan to play by the rules.

JOHN WILSON is executive editor of LP Magazine EU. A graduate in law and criminology, he is a business journalist with more than twenty-five years’ experience in newspapers, magazines, broadcast media, and public relations, as well as providing external affairs support for ORIS Forums. Wilson can be reached at john.wilson@orismedia.eu.

Fact versus Fiction

It is easy to see why people would confuse Whiting for the Andy Garcia character in Oceans Eleven, the first of the franchise where Ocean’s gang sets up a heist of three casinos simultaneously. Garcia plays the ever-exasperated owner of the three gaming palaces, but apart from the fact that it is set in Las Vegas, that is where the similarity ends. The glamorous image of George Clooney and Brad

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DIGITAL DIALOGUE By Jacque Brittain, LPC Brittain is editorial director, digital, for LP Magazine. Formerly a director of learning design and certification, Brittain managed the development of the LPC and LPQ certification programs in collaboration with the Loss Prevention Foundation. Prior to that he was vice president of operations for the industry’s largest executive search and consulting firm. In his thirty-plus years in the LP industry, he has helped build and enhance many learning initiatives and provided career counseling for thousands of industry professionals. Brittain can be reached at jacb@lpportal.com or by phone at 704-246-3143.

Something Given, Something Earned, Something Lost

espect is a word that carries powerful messages. It is something that we look for and expect from others. It is something that is both given and received. Depending on our frame of reference, we may see this as something that is established over time. Respect can be viewed as something that has to be earned. It is also something that can be lost. As professionals there are many different ways that respect can become part of our discussions. There is the respect that we share with our coworkers and counterparts. There is the respect that we share with our supervisors and subordinates. There is the respect that we share with our business partners and solution providers. There is the respect that we have for our companies, our departments, and all of the many resources that help us to perform our jobs. But because respect has so many different ways that it can be applied in our lives, occasionally lines are crossed, messages are blurred, and meanings are lost.

Even the most hardened individuals should be managed with every reasonable effort made to leave their dignity intact. It’s not our place to impart our personal moral character upon others. It’s not our responsibility to pass judgment or pass sentences. For example, we’ve all heard the introduction “with all due respect” as a prelude to a conversation. Most often it is a sincere and reverent means to address a difficult or delicate subject or discussion. But occasionally we will still come across those that will attempt to hide behind “with all due respect” in a poorly veiled attempt to mask the true implication: “With little or no respect whatsoever, I’m going to share with you this message or insult.” Most of the time it’s easy to distinguish one from the other—often due to the character of the specific individual using the words—but as a result, there are other circumstances when we are left questioning the true motive.

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Another important distinction may occur between an individual and a job or role. For example, we may respect a particular position, but not hold much respect for a particular individual holding that position due to a specific or general flaw in their attitude or character. However, a particularly difficult differentiation of respect for many loss prevention professionals can occur when attempting to separate individuals’ actions from the individuals themselves. Many learn to separate one from the next, especially with time and experience. But for others, the distinction is much more challenging.

The Dilemma

For those of us who deal with theft and crime on a consistent basis, we regularly experience the bad decisions and poor behavior of the criminal element. We are often in close contact with individuals who have shameless attitudes and corrupt intentions. We occasionally see those who will do whatever it takes to get what they want, even if it means hurting or even killing others in the process. We see the outcomes that result from theft, fraud, and other criminal behavior, and it leaves an indelible impression on us. We despise these acts because of the consequences. We see the stupidity of the actions. We deal with the aftermath and emotional scars that follow a robbery or assault. We’ve seen how all of this can destroy lives and ruin companies. We’ve seen people when they’re at their worst. They lie and yell and cry and fight and insult—whatever they think it might take to get out of the situation that they’ve put themselves in, and all of this is most often at our expense. This has the potential to build heavy calluses. When we are dealing with theft, we see a thief. When we’re in the moment, it remains our priority. Our concern is taking appropriate action based on the incident at hand. We have a professional responsibility to deal with the situation and resolve the matter based on our company policies and practices. We follow the necessary guidelines and move toward resolution. However, we must be especially careful when these behaviors threaten to stoke animosity. This can lead to bad judgment and poor decisions on our part and can ultimately bring about regretful outcomes.

Acknowledging the Separation

What we always have to keep in mind is the difference between the act and the individual. We have to keep in perspective that, in most cases, we are seeing individuals at their continued on page 54 |

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continued from page 52

very worst. Most aren’t criminal masterminds; they’re simply people who have made extremely poor decisions. That’s not to excuse what they’ve done or minimize the event, but it’s an important distinction that can help us manage and navigate the situation, and even mitigate potential incidents. Even the most hardened individuals should be managed with every reasonable effort made to leave their dignity intact. It’s not our place to impart our personal moral character upon others. It’s not our responsibility to pass judgment or pass sentences. This isn’t intended to be a message of clemency or leniency. We absolutely do have a professional responsibility to deal with the situation and resolve the matter based on our company policies and practices. Those policies are constructed by our leadership to provide objective standards and appropriate measures to guide our decisions in the best interests of the company and all others concerned. But a critical aspect of our professional conduct is dignity and respect, and typically that is written directly into our policies and codes of conduct.

is truly what happened, these alleged criminals were bullied and humiliated for the sake of effect. Somewhere along the way, those involved lost sight of an essential aspect of their responsibilities, and now two people are gone. We may attempt to view these incidents as extreme events, even while acknowledging that they aren’t isolated incidents and have happened before. We can look at other similar events that have occurred and cite different outcomes. While that doesn’t

We all have our own opinions of right and wrong. We may not like or personally accept the reasons put forward by those involved in theft and related criminal acts. Yet we have a professional obligation to treat everyone with a degree of dignity and respect. We have a responsibility to protect the profits of our companies thoughtfully, sensibly, respectfully, and with appropriate discretion.

When Dignity Is Lost

Recent news stories have been reported and discussed through our digital channels that provide us with vivid and unfortunate examples of what can happen when we fail to make the appropriate distinction between respect for the act and respect for the individual. One incident involved a young man with a developmental disability who was accused of theft and then was allegedly submitted to a “walk of shame” in which he was paraded through the store in handcuffs in front of his fellow employees—a practice that other employees claim happens on a regular basis. His employment was terminated, but he was never charged with a crime. According to reports, he was “shocked, confused, and mortified” at being handcuffed and paraded through the store and “had no idea why he was being arrested.” He later told his family, “This is the worst day of my life.” Three days later he jumped off a nearby building, taking his own life. Was he actually involved in a criminal event? Would that justify the way he was treated? The retailer is currently facing litigation for false imprisonment, intentional infliction of emotional distress, negligence, and wrongful death. A second incident involved a young woman who was apprehended for switching price tags at a store in the United Kingdom and subsequently charged with fraud. According to reports, a TV production company that was filming for a reality show in the store captured the incident. According to reports, the young woman was repeatedly “hounded” with messages stating that the footage would appear on television for a national audience. Dreading the threat of being exposed on national television, she took her own life, hanging herself at her home. It wasn’t simply theft or fraud that led to these tragic outcomes. The actions described and the way these incidents were handled won’t be found in any company policy or practice, nor will they have been condoned in any way by company leadership. If in fact these events occurred as described, they were much more likely the actions of a few individuals who took it upon themselves to “send a message” about their perceptions of just behavior based on their extremely limited views of theft and punishment. If this

MARCH - APRIL 2015

make it right, it still might only mean that we were lucky similar events didn’t lead to tragic endings. Yet whatever our own answers may be, it should still lead each of us to pause and reflect on ourselves, our people, and our programs—even if it’s simply out of respect for the possibilities and the memories of those lost.

What Judgment Means in LP

Every year shoplifting incidents, employee theft, fraud, and other criminal acts wreak havoc on our businesses, costing retailers billions of dollars. They are serious problems that cost all of us in countless ways and have directly contributed to the demise of many companies. This legitimizes the need for a loss prevention program. It supports our policies, practices, and initiatives. However, it does not give anyone the right to deliberately and purposefully exploit or humiliate. We all have our own opinions of right and wrong. We may not like or personally accept the reasons put forward by those involved in theft and related criminal acts. Yet we have a professional obligation to treat everyone with a degree of dignity and respect. We have a responsibility to protect the profits of our companies thoughtfully, sensibly, respectfully, and with appropriate discretion. Failing to follow our most basic principles can lead to tragic results. Respect is indeed a word that carries powerful messages. But perhaps the most important is the message of responsibility. When that responsibility is neglected, self-respect is ultimately what is lost.

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FEATURE

PRECIOUS CARGO A CLOSER LOOK AT TIFFANY’S SUPPLY-CHAIN NETWORK By Steven Palumbo, LPC, CFI

TIFFANY’S SUPPLY-CHAIN NETWORK

very retail organization requires supply networks that are efficient, streamlined, and able to move quickly to meet consumer-driven demand. The competitive nature of the business requires resourceful and proficient channels that quench the customer’s desire for variety, availability, and immediacy. Every product that eventually ends up in the hands of a customer reaches this destination as a result of the cumulative efforts of a complex system of people and processes, all of which must be accomplished while balancing

suppliers, manufacturers, warehouses, and stores so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time. From the point of origination to the hands of the customer, products can pass through many locations and cross thousands of miles. Each stage of the process can present unique challenges for security and product protection efforts. When managed effectively, every product is considered precious cargo. As we continue to explore the details of the supply-chain network, let’s take the voyage with one of the gems of the retail world.

sells timepieces, leather goods, sterling silverware, china, crystal, fragrances, and accessories. Tiffany designs and produces many of the world’s premier sports trophies, such as the Commissioner’s Trophy (baseball), the Larry O’Brien Championship Trophy (basketball), the Vince Lombardi Trophy (football), and many others. But long before a knee is bent to offer a ring to a future bride, a family heirloom is passed to a grandson or granddaughter, or a trophy is raised in victory at a sporting event, these treasures must be sourced, crafted, and delivered through a worldwide network of facilities and transportation

The Tiffany & Co. Supply Chain

Tiffany & Co. designs, manufactures, and retails jewelry worldwide. Headquartered in New York City, the company has been highly regarded as one of the world’s premier jewelers since 1837. The company currently operates stores throughout the Americas, Asia-Pacific, Japan, Europe, and other locations across the globe in addition to Internet and catalog sales, business-to-business sales, and wholesale distribution. For more than 175 years, Tiffany has been synonymous with luxury and style, crafting jewelry and other high-quality creations of timeless beauty and superlative craftsmanship. Its products include fine, fashion, and statement jewelry; engagement rings and wedding bands; and non-gemstone, metal jewelry including sterling silver and gold. The company also MARCH - APRIL 2015

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services before ever reaching that final destination. That journey ventures both the details and distance of a sophisticated supply chain with strict controls, hardened facilities, and advanced security resources to protect the products as they make their way from the mines to the global marketplace.

Responsible Sourcing

Historically diamond, gemstone, and precious metal supply chains have been complex and often lacking in transparency. Today that is changing dramatically, with the jewelry industry committed to better understanding the social, economic, and environmental impacts of the mining and processing of precious materials, as well as working to better ensure that those activities are conducted responsibly. The Kimberley Process Certification Scheme was a resolution intended to

TIFFANY’S SUPPLY-CHAIN NETWORK strengthen the diamond industry’s ability to block sales of “conflict diamonds” or “blood diamonds” and prevent these gems from entering the mainstream rough diamond market. The resolution called for an international certification system on the export and import of diamonds and legislation in all countries to accept only officially sealed packages of diamonds. It imposed criminal charges on anyone trafficking in conflict diamonds and instituted a ban on any individual found trading in conflict diamonds. This resolution was intended to ensure that buyers of diamonds are not contributing to aggression around the globe and are not financing rebel movements and other violent acts. Tiffany has been a leader in working toward a more responsible jewelry industry and championed efforts to seek congressional approval of US participation in the Kimberley Process. Traceability is key to ensuring that mines are operated in environmentally and socially responsible ways, and the company has developed direct sourcing relationships with mines

around the world. In many cases the output of those mines is delivered directly to Tiffany’s own diamond cutting and polishing facilities. By establishing rigorous standards for responsible mining, sourcing precious materials directly from mines that are committed to social and environmental stewardship, and working with industry colleagues and other organizations to establish more rigorous standards for responsible mining, business can be conducted in ways that are acceptable to all stakeholders in the process. Other jewelers in the US have also been passionately involved in this movement.

Diamond Procurement and Processing

African operations include facilities in Botswana, Namibia, and Mauritius that provide diamonds for manufacturing and are sourced directly from local mines. Company executives deal directly with mine operators, working off of prearranged agreements to source rough stones. Once the stones are purchased they are processed

into manufactured diamonds through a series of steps that include: ■ Marking—the process that determines how the stone will be cut, to include size and shape, ■ Bruting—cutting the stones to give the diamond its round shape, ■ Cutting—cutting the stones by machine to give the diamond its shape, ■ Polishing—placing the stone above a rotating wheel that smoothes the stone to create the diamond’s finished look, and ■ Quality assuring—establishing the weight, quality, clarity, color, and other distinguishing features of the stone. The European facility is located in Antwerp, Belgium, the world-renowned diamond capital of the world with 90 percent of the world’s diamonds passing through these facilities. It is home to the largest of the Tiffany diamond factories and processes the majority of the diamonds sold at Tiffany stores worldwide. Sourcing stones from Russia, Canada, and the United Kingdom, diamonds are purchased and processed as they are in the African facilities, but in much greater volume.

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TIFFANY’S SUPPLY-CHAIN NETWORK

At Tiffany both employees and products are considered precious resources. Every professional has a responsibility to learn as much about the different functions within the company as they possibly can, and that clearly includes various aspects of the supply-chain network. This remains a critical need within the retail environment and an opportunity for professional growth as security continues to evolve. Asian factories in Vietnam and Cambodia play an important role in diamond production within the supply chain. These sister facilities, known as “melee factories,” only work with diamonds that are 0.18 carat or smaller. Stones are sourced from the facility in Antwerp. They are also marked, bruted, cut, and polished at these sites. However, the process is extremely meticulous and much more delicate due to the size of the stones. All of the processing facilities are meticulously hardened to include best-in-class equipment, strict access controls, and the latest in protection technologies to ensure the safety and protection of the workers and products. Stringent and detailed audit processes are in place to manage the inventory and accountability of the stones during processing. Special clothing and other requirements may also be in place to maintain the highest levels of security and protection. Once the stones are processed, they are sealed in special containers and shipped via armed, armored carrier to the United States facilities.

Diamond Manufacturing

After receiving finished stones from company factories in Africa, Europe, and Asia, the US facilities located in New York and Kentucky produce over 70 percent of all Tiffany diamond jewelry sold in the world. The largest factory is located in Pelham, New York, and produces everything from solitaire diamond rings to diamond earrings, necklaces, and bracelets. Its satellite factory in Mt. Vernon, New York, handles overflow from Pelham and produces many of the same types of products. The facility in Lexington, Kentucky, is a relatively

new venture and primarily produces solitaire diamond rings along with a small assortment of other jewelry. Naturally, security is at a premium in these facilities with state-of-the-art alarm and surveillance systems, the latest in today’s technology, and stringent, detailed audit processes to manage the inventory and accountability of the products during processing. All merchandise, once completed, is shipped via armored carrier to the company distribution center in Parsippany, New Jersey.

Colored Gemstones

We are a world that treasures variety, and that is certainly no less true in our tastes in jewelry. Precious gems come in a kaleidoscope of colors, valued based on the type of stone, the internal clarity of the stone, the depth of color, size, shape, and many other variables. Long known as the color gemstone capital of the world, Thailand is the newest addition to the Tiffany supply chain. A small factory newly opened, it is responsible for manufacturing colored gemstone jewelry for Tiffany. Stones are purchased precut from local vendors and manufactured into jewelry of all types that feature colored stones.

Metal Manufacturing

The largest factory in the supply chain, Tiffany’s facility in Cumberland, Rhode Island, is home to almost 800 employees. All metal jewelry is produced here, from silver bracelets and earrings to platinum and gold settings for diamond engagement rings. Material resources are received here in manufactured forms (flat sheets, tubing, or chain) from precious metal vendors throughout the United States. Once MARCH - APRIL 2015

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received, the metal will travel to one of two facilities depending on the material. Finished goods, such as silver bracelets, are shipped directly to the company distribution center either by UPS or an armored carrier, depending on the product. Shanks for rings or necklaces that will hold diamonds are sent to one of the diamond manufacturing facilities. These pieces are typically shipped via armored carrier. The Cumberland facility is also home to the hollowware shop, which produces silver platters and dinnerware and crafts most of the professional sports trophies awarded across the United States. Silver merchandise, a small but important part of the supply chain, is produced in the Rhode Island factory and then shipped to a Dominican Republic factory, which provides the final polish for all silver jewelry sold at Tiffany & Co. Once the product has reached a level of polish that meets Tiffany standards, it is sent back to Rhode Island for final manufacturing. This environment presents some of the greatest opportunities for losses in the supply-chain network, primarily as a result of scrap metal thefts and similar incidents. For example, many of the rings manufactured are created with multiple rings attached to a sprue, which is a common target for theft. A sprue is a metal framing that holds the rings during manufacturing, very similar to the way plastic model pieces are attached to a plastic sprue, which is the plastic framing that holds all of the pieces together. The sprues are made out of the same precious metals as the rings they hold, which means that they will hold material value as a precious metal source that can be melted continued on page 60

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TIFFANY’S SUPPLY-CHAIN NETWORK continued from page 58

and re-used. As a result, they are often the targets of attempted theft. Posts, shavings, and even the dust gathered as part of the polishing process are all composed of the precious metals, making them attractive targets for theft. In addition to hardened security requirements, strict controls, and metal detection equipment, special shoes and other clothing items are required in these facilities to help mitigate theft opportunities and other potential losses.

Distribution

While the Tiffany supply-chain network may offer some unique challenges for the security team, the need for strong controls, appropriate protection, investigative prowess, and well-managed training and awareness efforts strike a common chord in every retail operation. Every supply-chain network requires attention and protection, regardless of the retailer or the needs of that particular company.

Located in Parsippany, New Jersey, the Retail Service Center (RSC) is Tiffany’s primary distribution point, supplying all retail locations with final finished product. The facility is housed within a hardened and strictly protected corporate park and is home to over 500 employees. Shipments are received from internal manufacturing partners and select external vendors. Once received, products are stored in a designated secure area based on product value and other related variables. Depending on the specific products, orders are then shipped via UPS or armored carrier for sale in the Tiffany store locations worldwide. The Hanover, New Jersey, Customer Fulfillment Center is located just five miles from the main distribution facility. Home to more than 200 employees, this facility fulfills orders for customers that use online services at Tiffany.com to shop. Products are primarily supplied through the RSC with fulfillment provided through a highly sophisticated and largely automated

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TIFFANY’S SUPPLY-CHAIN NETWORK process within the facility. It is also home to many value-added services such as engraving, hand engraving, and etching. The Tiffany Service Center (TSC) located in Queens, New York, is the main hub for repair and maintenance of all Tiffany customer products. If customers return merchandise to a store for repair or service, it is sent to the TSC. Orders are received via UPS or armored carrier and serviced by a team of over 100 jewelers and craftsman. Once the merchandise is repaired, it is then shipped directly to the store of origin.

Supply-Chain Protection

Considering the value and demand for Tiffany products, safety and protection is always a paramount concern. Security resources must be highly effective, well-contained, and rigorously managed. Security protocols must be well conceived, meticulously followed, and strictly enforced. And while the company security program has been highly successful, there are always those looking for ways to steal the products. Some will pursue creative and covert methods, while others may attempt force and more violent means to gain access. Some will attempt a combination of both. Either way, there’s little room for error. This requires a well-trained and highly disciplined security team to keep the employees safe and the products protected. There must be leadership buy-in and employee ownership at every level of the organization. It is a process that must start from the point of origin and be maintained throughout the entire network to ensure maximum efficiency. While the Tiffany supply-chain network may offer some unique challenges for the security team, the need for strong controls, appropriate protection, investigative prowess, and well-managed training and awareness efforts strike a common chord in every retail operation. Every supply-chain network requires attention and protection, regardless of the retailer or the needs of that particular company. At Tiffany both employees and products are considered precious resources. Every professional has a responsibility to learn as much about the different functions within the company as they possibly can, and that clearly includes various aspects of the supply-chain network. This remains a critical need within the retail environment and an opportunity for professional growth as security continues to evolve. We don’t all need to work with precious metals to develop a gold-standard management program. But the right tools, strong partnerships, and the right approach can help us achieve that goal. STEVEN PALUMBO, LPC, CFI is currently group director of security for distribution and manufacturing at Tiffany & Co. He has more than twenty-eight years of experience in loss prevention and retail security, having held leadership positions both internationally and domestically in retail and supply-chain security. He serves as the chairperson for the Northeast Chapter of CFI. Palumbo has a BA in criminal justice from Seton Hall University and a MS in protection management from John Jay College of Criminal Justice. He can be reached at 212-230-6855 or steven.palumbo@tiffany.com.

LP MAGAZINE | MARCH - APRIL 2015

STRATEGIES By Gerald Becker

How to Get More Money for Technology Acquisitions

Becker is a widely recognized expert on security technologies. He is vice president for physical security at USS, a leading integrator of IP video and access-control systems.

he loss prevention budget is typically the smallest in most organizations. This is especially true when it comes to acquiring technology. But what if you could somehow tap into the budgets of other departments? What if other people in your organization could help you buy the system that you are having a hard time getting approved by your C-level stakeholders? Here is one such example. The LP team from a nationwide retail chain purchased a video platform from my team. We tried to create the budget for the rest of the year, so they could acquire cameras and equipment for more locations, but they were always capped at a certain point. “We can’t do anything more. The budget ran out,” we heard often. So the idea we got was to leverage existing cameras to tie in retail analytics that other departments could benefit from. Specifically, we brought in software that counts people, tracks footpaths within a store, and creates “heat maps.” It was a simple add-on to the existing video surveillance system, so the retail chain now had expanded capabilities beyond just loss prevention. The new analytics were very interesting to the marketing and operations departments, so they joined the project. Marketing was interested in the new analytics because they could now better understand consumer behavior. For example, they could see which direction customers were going as soon as they entered the store. They could also see the footpaths within the store and understand where customers spend the most time. This helped them place merchandise better, especially end caps, to capture more business. Heat mapping also allowed marketing to understand which merchandise was being touched more. So if they had an item that was becoming popular, they could now pair it with a complimentary product on the same display. In other words, they could up-sell and increase their revenue or saturate a popular store zone with the product with best margins. Another benefit was that merchandisers could easily check for compliance—did the store set up displays exactly as the merchandisers wanted? One retailer gets displays from a manufacturer for that manufacturer’s products. If the displays are installed exactly as the manufacturer wants, the retailer gets reimbursed for the installation labor. So now, instead of having someone drive to ten different locations to check, they simply look up the video to see if everything was installed properly, take a screen shot, and send it to the manufacturer for reimbursement. Operations appreciated the new ability to properly analyze employee scheduling. The people counter could tell them exactly how much traffic they had for every hour of every day. And they could do it for not just one store, but

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Video analytic software shows the direction customers are going after entering the store. The software runs on the same server used for video surveillance, allowing different departments to derive benefits from the same asset.

Marketing was interested in the new analytics because they could now better understand consumer behavior. Operations appreciated the new ability to properly analyze employee scheduling. entire regions. So they could say, “Okay, at this location, we don’t need ten employees on this day. We only need six.” The operations team understood that if you can analyze the number of customers coming in at certain times, you could have more efficient scheduling and save money on payroll. The end result for the LP team in this example was that for every four video systems that were purchased from LP budget, they got one more for free bought from the budgets of marketing and operations. And they did this for three years. The ROI was there. The company as a whole benefits from this approach, too. It buys one asset, and multiple departments get to use it. Talk about cost efficiency and asset optimization. This also helps unify common interests within the company and reduces complexity by having one platform that multiple departments are familiar with. The bottom line is this—with the help of other departments, LP can get the technology it needs to make its job easier. Involve other departments early; get them in the same meeting when technology is discussed. They will help you get the buy-in from the C-level and help you stretch your already-stretched budget. |

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MY TURN By Frank Muscato

Time for Some Hard Work on Soft Sentencing I recently watched a video of a panel discussion on organized retail crime (ORC). The panel discussed current ORC issues, legislation, coalitions, online sales of stolen property, and industry information sharing. The panel consisted of six of the top ORC minds in the industry. I knew five of the six members personally and have worked on ORC issues or cases with all but one. The panelists agreed that ORC is on the rise, and more and more criminals are committing these nonviolent crimes. The moderator asked specific questions relating to retail theft, and these experts were quick to answer and share information on steps they are taking to battle ORC. They talked about the many successes in the past few years, which include building law enforcement interest (ORC coalitions) across the country. There are more than thirty organized law enforcement retail coalitions nationwide and more being developed every year. Getting police and retailers working together to solve these crimes is by far the most important element concerning ORC. They also discussed the importance of city, state, and national databases for information sharing on criminal activity relating to retail crime. Online sales were discussed at length. Since many brick-and-mortar stores are now selling more of their products online, fraud has become a serious issue, and these frauds are viewed as ORC. There was conversation regarding new online marketplaces, much smaller yet similar to eBay, that are continually appearing. The panelists all agreed that these new sites will make it even easier for fences to move stolen product and that retailers need to be aware and prepared to deal with these websites. Questions were asked concerning ORC legislation. The panel agreed that the twenty-four states that have passed ORC legislation of some type have enhanced loss prevention and law enforcement success in arrest and prosecution of these criminals. No discussion was held of the twenty-six states that do not have ORC on the books. The panel talked about the real need for federal ORC legislation but did not mention any proposed federal bills for 2015. All in all, the ORC panel discussion was very informational but left several questions in my mind regarding new strategies dealing with ORC issues. Little was discussed concerning the many states that are moving forward with non-prison sentencing for nonviolent crimes or the early release from

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Muscato retired from the Dallas Police Department’s intelligence division as a case supervisor in 1993 following twenty-five years of service after being recruited by Walmart to create retail’s first organized retail crime (ORC) division. He remained there for eleven years during which he created and supervised the first retail loss prevention legislative team. Muscato left Walmart in 2004 for Walgreens to assist in creating its ORC division. He is recognized nationally for work done with ORC and legislation and is affectionately referred to as “The Godfather of ORC.” He left Walgreens in 2010. He is now semi-retired and continues to consult on legislative issues and ORC. He can be reached at fcmuscato@gmail.com or 214-930-9359.

prison for those criminals. I wrote an article for this magazine’s January-February 2012 issue titled “The Prisons Are Full: The Impact on Retail Crime” that addressed truth-in-sentencing laws and how they will be serious issues for retailers. Already, some states have passed legislation that threatens the ability of retail loss prevention and law enforcement to stop these criminals from coming into stores and working their trade.

Criminals involved in these types of low felonies realize the best payoff is retail theft. Although fences are readily available, many boosters know they can sell their stolen products online without the need of a fence. Indiana will become the place to be for those involved in ORC, both boosting and fencing. Soft Sentencing in Indiana

Indiana’s legislature, which is controlled by conservatives in both houses, and its governor’s office changed many of the misdemeanor and felony laws and sentencing levels. Before these changes, theft was a felony regardless of its dollar value, and a misdemeanor catch-all charge of conversion existed for minor thefts. Indiana changed all that in 2014. Theft under $750 is now a misdemeanor. Even worse for retailers, the four levels of felonies (A, B, C, and D) have been changed to seven levels (murder and felonies 1 through 6). Of course, theft and fraud are Level 6 felonies. The legislature also changed laws regarding prison sentencing. Those committing nonviolent crimes will not be sentenced to prison but rather dealt with at the community level. Programs (which many people suspect will be mostly soft |

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probation) are supposed to be set up to help these nonviolent criminals. We know that many of these criminals are addicted to some form of narcotic or drug and, if not sentenced more harshly, will almost certainly continue with their behavior. Criminals involved in these types of low felonies realize the best payoff is retail theft. Although fences are readily available, many boosters know they can sell their stolen products online without the need of a fence. Indiana will become the place to be for those involved in ORC, both boosting and fencing. Other states are planning to adopt similar truth-in-sentencing laws in 2015 and many more in 2016. Alternative legislation being worked in those states was not discussed on the panel. I am not blaming any of the panelists regarding these changes. It’s certainly not their fault. But it wouldn’t be hard for chain stores’ government relations departments to get involved to push more aggressive sentencing. Getting states to stop making changes to sentencing is probably impossible, but it would be easy to write language into proposed bills to help protect retailers from these nonviolent criminals. For example, an Internet fencing bill would not be difficult to write. Those in government relations can make legislators aware of these serious crimes and their impact on retail business, taxes, and customers, asking for language that helps protect retailers from these emerging online sales. Also write bills that make these crimes more seriously punished if drugs are involved in the crime or if committed by persons with prior convictions of any type of retail theft; bills that enhance the penalty when crime is committed by two or more convicted felons or by undocumented persons; and bills that enhance sentences if store employees are involved or (and this is important) if the fence is buying stolen property while employed by or owning a retail business.

or a portion of their probation. Using GPS technology might work well in this instance. If a person can’t enter the store, they can’t steal from the store. Recruiting others to assist them might be their next tactic, but we could put language in the law to address that aspect also. Though these changes can’t be done in the next twelve months, I think they can be done! Working legislation can be difficult, but we must educate legislators as to what is involved in these losses. Most will listen. Legislators understand that retail is the second-largest industry in our country, and many legislators are involved or have family involved in our industry.

Technology

Next Steps

Technology is also an issue not discussed on the panel. We have technology available to assist retail in fighting ORC. Camera systems are excellent and have come a long way, and emerging camera technology is getting better every day. RFID should continue to help some retailers and will become an even more needed asset going forward. GPS has proven itself repeatedly, but we have yet to touch on the many possible future uses of GPS. There are so many possibilities for GPS to contribute to loss prevention and law enforcement that it may actually be the most underutilized tool available to help prevent retail theft. Though there are legal issues involving some uses of GPS, I really believe through perseverance some of these issues can be worked out legislatively. Retailers must continue to explore these technologies as states reduce punishment on convicted felons. As these criminals remain on the street, we lose the ability to reduce rampant retail crime. I think it’s very important to look down the road at new ways to keep convicted felons out of our stores. Many states have trespass laws, but what convicted felon worries about these misdemeanors? What thief can’t find another store with the same merchandise to steal? Legislation can surely help stiffen the consequences of violating these types of bans. A good start would be legislation that bans convicted retail-theft felons from entering retail stores during their probation

Much can be done, but someone has to be willing to step up to the plate and lead the way. One of the legislators involved in the recent 2014 Indiana changes said she heard very little from retailers or other businesses. She knew little about ORC and only vaguely recalled talk from previous sessions about changing some retail laws. So it appears that government relations departments did little to prevent the changes that took place in the 2014 Indiana legislative session. We will have to live with these new laws unless someone takes the initiative to try and amend some of these changes. We can all agree that legislation is an important avenue in controlling ORC. With that thought, I plan to meet with officials from the Coalition of Law Enforcement and Retail (CLEAR) to discuss scheduling a two- to four-hour block at the next national conference. I hope to get interested loss prevention and law enforcement professionals together in round tables to write some new model legislation and possibly even amendments to current ORC legislation to make it stronger. These will be model drafts our industry professionals can take back to their home offices. I believe together we can generate interest in combating truth-in-sentencing laws. We can implement changes to legislation that will help ensure punishment is a fair representation of the seriousness of the crimes committed, rather than continue allowing ORC to be the most profitable, lowest consequence crime in society today.

LP MAGAZINE | MARCH - APRIL 2015

CERTIFICATION

Separating Yourself from the Pack T

his is another in a series of interviews with working LP professionals who have earned their LPQ or LPC certifications from the Loss Prevention Foundation (LPF) to hear in their own words why they pursued certification, and how it has benefited their careers. What influenced you to pursue certification? I think that if you are serious about your career, you have to be willing to do more to achieve more. I am on a mission of personal growth to be the best, most well-rounded professional that I can be, and the LPC helps me pursue that mission. My company offered to pay for the process as well, and I believe that if your company believes that much in the program and is willing to offer that kind of opportunity, you take it. I earned my certification in October of 2011. Was the course what you expected? Somewhat, but it was a rigorous course and more than I expected. There was a tremendous amount of information to digest, and a number of areas were covered that I am not typically exposed to within the realm of my current responsibilities. It covered the loss prevention subject matter that I expected, but it also covered history, law, leadership, safety, and security subjects that I was not as familiar with and wasn’t expecting. The course gave me a greater understanding of issues and areas of loss prevention that I hadn’t experienced, which I feel provides me with a significant advantage as I move forward in my career. I travel a great deal in my current position, and the coursework was easily accessible. While I was free to set my own pace, I tried to set aside time each day to work through the course content leading up to the exam to ensure that it was fresh in my mind. I felt the program content covered a broad spectrum of topics that most every LP professional would encounter regardless of the specific business you would be involved in. The exam was tough but fair. I would recommend that you take the necessary steps to get prepared and make sure you get plenty of rest prior to taking the exam. What benefits have you seen from taking the course? I have a broader view of the entire loss prevention profession than I had prior to becoming certified. It changes your perspective and allows you to consider other potential avenues of loss prevention and professional development that you may not have

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Interview with Troy Young, LPC Troy Young, LPC, is currently a divisional loss prevention manager with AutoZone. He began his 16-year career in the LP industry as a supply-chain LP manager with AutoZone, and also served as regional LP manager and divisional investigator before his promotion to divisional LP manager in 2007. Troy holds a bachelor of science in criminal justice/ law enforcement administration from Cedarville University.

considered prior to taking the course. I serve on an industry committee with many companies that have different approaches to the business. While I may not have direct experience with their specific approaches to the profession, I feel like I can better understand where they are coming from as a result of the certification process. I believe that you get out of your career what you put into it. When you’re willing to put forth a little extra effort, it can make a big difference in so many important ways. If you could offer one key takeaway to someone currently considering getting certified, what would it be? Do you want to be an average performer, or are you willing to take a progressive and serious approach to your profession? If you want a broader understanding of loss prevention and to grow personally and professionally, then the LPC or LPQ will help you achieve those goals.

I believe that you get out of your career what you put into it. When you’re willing to put forth a little extra effort, it can make a big difference in so many important ways. Going through the program gave me a sense of accomplishment. Many courses or certifications require you to show up and participate, and you pass. This certification is something that is earned—and something to be proud of. It will make you a better LP professional by helping to fill in the gaps of knowledge that you may not have been exposed to otherwise. Would you recommend certification to others? Definitely. All of us have a responsibility to our companies, our positions, and our professional development. But all things being equal, I think certification demonstrates a willingness to separate oneself from the pack by learning all aspects of the industry. It

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expands your understanding of loss prevention, makes you more marketable, and shows how serious you are about your professional and personal growth. Coupled with performance, it will cause others within your organization and the industry to take notice, which should lead to greater opportunity. I believe that people who choose to become certified are serving notice that they are serious about their careers and want more out of them.

Newly Certified

Following are individuals who recently earned their certifications.

Recent LPC Recipients Justin Baker, LPC, Lowe’s Kenneth Boston, LPC, DICK’S Sporting Goods James Contakos, LPC, MA, CFI, Sterling Jewelers John Copen, LPC, HomeGoods Martin Culshaw, LPC, Wegmans Food Markets Kevin Earley, LPC, Rite Aid Kimberly Fleshner, LPC, PVH Corp Mary-Elaine Floyd, LPC, Delhaize America Jonathan Graham, LPC, Lowe’s Anthony Hastings, LPC, HomeGoods Brian Hayes, LPC, Sterling Jewelers Lawrence Hartman, LPC, Burlington Coat Factory Mark Hibbs, LPC, JCPenney Michelle Jennings, LPC, JCPenney Michael Keenan, LPC, The Gap, Inc. Millie Kresevich, LPC, Luxottica Retail Leo Lussier, LPC, CVS Caremark Lucas Moeller, LPC, Lowe’s Willie Oliver, LPC, Lowe’s George Ozog, LPC, Lowe’s Larry Robbins, LPC, Lowe’s Vincent Romano, LPC, Home Depot Blanchard Sigmon, LPC, Lowe’s James Theisen, LPC, Lowe’s Jose Varela, III LPC, CVS Caremark Larry Walker, LPC, Lowe’s Denise Zeiders, LPC, American Eagle Outfitters

Recent LPQ Recipients Massimiliano Alfieri, LPQ, CPO, Granite Guard Byron Barrett, LPQ, Dollar Tree Stores Jeremy Bauer, LPQ, Festival Foods Francesca Boyea, LPQ, Genesco Juanita Calloway, LPQ, American Eagle Outfitters Ryan Clay, LPQ, T.J. Maxx Jamie Cornes, LPQ, Caffe Nero Kennard Dilworth, LPQ, Publix Danielle Gajewski, LPQ, Publix Juan Guerrero, LPQ, Hermes of Paris Ryan Mallory, LPQ, Cabela’s Danielle Martinez, LPQ, Publix Elisa Owens, LPQ, 7-Eleven Whitney Stevens, LPQ, 7-Eleven Bradley Susral, LPQ, G4S

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LP MAGAZINE | MARCH - APRIL 2015

SOLUTIONS SHOWCASE CAMBRIDGE SECURITY

The Cambridge Model: A Networked Approach to Retail Security By Jon Miller

Miller is a freelance writer and communications consultant who frequently writes about security, business, and the environment. He can be contacted by email at jmiller221@gmail.com.

the more willing they are to negotiate on price. This is key to making the Cambridge model work. Lower affiliate rates enable Cambridge to offer clients a one-stop shop for all their security needs, anywhere in North America, and still keep prices competitive.

etworks are reshaping 21st century business, and retail security is no exception. Cambridge Security Services pioneered the network approach starting in the 1990s when the company began expanding its reach not by opening regional offices, but by carefully building a network of trusted affiliates across North America. Today, Cambridge has the most extensive network of security personnel in the country—some 650 security companies throughout the continental US, Alaska, Hawaii, Puerto Rico, and Canada, including approximately 3,500 off-duty police officers. In the process Cambridge has amassed a huge amount of information about each potential subcontractor—what each is best at, which regions it can service, and most importantly, how reliably each performs. Many firms have been rejected when they failed to measure up to the

Over the years Cambridge has taken two important steps to ensure the long-term success of its networked model. First, the company developed a proprietary database called data source intervention (DSI) that gives Cambridge instant access to all the information it gathers about its affiliates. At the same time the company also created a national command center from which it could direct, coordinate, and monitor all active projects anywhere in the country, 24 hours a day, 365 days a year.

high standards Cambridge demands. But many more have proved that they can be counted on to respond quickly and professionally. Companies that make the grade have seen just how significant the Cambridge business can be. Much of the work may be temporary—store openings and closings, renovation projects, emergencies of all sorts—but by the end of the year, the Cambridge assignments add up, frequently becoming a significant part of an affiliate’s business. And the more that affiliates come to rely on Cambridge assignments and profit from the relationship,

In 2012 the command center and corporate headquarters were brought together in a new, state-of-the-art facility designed to function without interruption even in the event of natural or man-made disasters. With these resources in place, Cambridge can respond promptly to requests from retailers anywhere in the country. Within minutes of a client call, an affiliate selected from the database receives a work order specifying every detail of the assignment. Once the work begins, the command center monitors the affiliate’s performance in real time. And when the situation warrants it, Cambridge sends key executives to personally supervise the work on site.

Building a Network

LP MAGAZINE | MARCH - APRIL 2015

The company created a national command center from which it could direct, coordinate, and monitor all active projects anywhere in the country, 24 hours a day, 365 days a year.

“It’s worth it to us to fly our top people out there,” said Senior Vice President David Malefsky, “to guarantee that our clients are getting the service they require.” Donald Horan of Gordon Brothers Group is one of the company’s satisfied customers. “Cambridge Security is a proven resource for rapid-response, short-term needs, as well as sustained service engagements,” he said. “The infrastructure and oversight they bring to a project, combined with their versatility of service offerings, is unrivaled in the business today.”

Serving Most Retailers

Cambridge now serves most of the retailers in the country. It didn’t take long before some of the major national security companies began contracting with Cambridge to handle jobs for their retail clients. Limited to locations where they have offices and burdened by the overhead of maintaining those offices, the national

With these resources in place, Cambridge can respond promptly to requests from retailers anywhere in the country. Within minutes of a client call, an affiliate selected from database receives a work order specifying every detail of the assignment. 70

MARCH - APRIL 2015

companies know that they cannot profitably serve all their clients’ needs in every location, especially for short-term or emergency work. Cambridge offers an attractive solution. Having worked in loss prevention for some of the country’s leading retailers, including Loehmann’s, Foot Locker, Staples, Filene’s and A&P, Paul Lunt, president of Beacon One Group, calls Cambridge “a reliable business partner.” “Cambridge has provided emergency and permanent guard coverage nationally at my locations,” said Lunt. “I’ve relied on Cambridge to provide special events coverage at all my national events. I found their team to be very professional and committed to customer service.” Malefsky estimates that Cambridge now serves a majority of the country’s major retailers, either directly as clients or indirectly through other security companies. Often the retailer doesn’t even know that Cambridge is handling the job because the guards who do the work are not wearing Cambridge insignia. But those guards have been assigned by Cambridge, are following the instructions Cambridge gives them, and stay in constant touch with Cambridge throughout the assignment. “The retailers are pleased because they’re getting the high-quality security they want,” explained Cambridge President Stanley J. Czwakiel. “The national security companies are pleased because they’re able to meet their clients’ needs simply and efficiently. And we’re pleased because we’ve proven that there’s a better way to provide quality security at an affordable price anywhere in the country.”

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SOLUTIONS SHOWCASE INSTAKEY SECURITY SYSTEMS

A.C. Moore Arts & Crafts Digital Key Control Creativity

or over thirty years, A.C. Moore Arts & Crafts has focused on being the customer’s first choice for creative possibilities. A.C. Moore provides a large inventory selection of arts, crafts, and floral merchandise to a broad demographic of customers, securing 140 stores in eighteen states and cost effectively managing over 40,000 stock keeping units (SKU) per store. Over the past two years, A.C. Moore’s Director of Loss Prevention Steven Werner and his team have targeted creative digital solutions to help reduce shrink, improve culture, and streamline data collection. “As loss prevention professionals, we are chartered to do more with less, so you have to be creative,” said Werner. A recent area of focus was to modernize the company’s lock-and-key program.

“The new web-based application allows our GM’s to update the key holder’s key serial number, creating an assignment audit trail and history. This simple digital process has noticeably improved our key holder accountability and store compliance and has immediately reduced our rekeying trend by over 50 percent,” said Werner.

Improved Program Compliance

Steven Werner, Director of Loss Prevention, A.C. Moore

Cost Savings with Hardware Technology

In 2009 A.C. Moore chose to secure stores’ high-traffic doors with InstaKey Security Systems’ KeyControl® program. Its goal was to reduce rekeying expenses associated with management turnover resulting in locksmith call outs. Historically, these expenses, averaging $400 per callout, were absorbed as a result of management turnover. With a KeyControl foundation of restricted keys, rekeyable locks, administration, and data accessibility, the stores now only need to rekey when a key is lost, stolen, or unaccounted for. “The best savings is not having to rekey because we get the keys back. But when we do lose a key, the simple rekeying process allows the general managers to secure the store quickly. We now average $50 per event, reflecting a substantial savings,” added Werner.

Time Savings with Software Technology

In the summer of 2014, the loss prevention team further enhanced its KeyControl program by identifying alternative techniques designed to improve key-holder compliance. A new digital technique further prevents rekeying events and improves cost controls. It provides a digital key holder tracking portal at the store level that allows general managers the ability to login and update key holder information in real time.

InstaKey Security Systems provides the only patented, web-based software application called SecurityRecords.com®, which is designed for loss prevention’s quick analysis of KeyControl program compliance at any time from any web-enabled device. The software’s KeyControl dashboard presents exportable data graphically allowing for simple measurement, drill-down analytics, and quick reaction to non-compliance or exceptions. “By adding this data stream to our existing store audits, we’ve been able to improve store compliance, allowing for a tighter focus on other critical areas,” said Werner. “InstaKey’s KeyControl solution provides us with better tools to monitor, measure, and leverage our stores’ security compliance. Lock and key programs are often a facility’s responsibility, but as a result of our creative culture, our internal teams were able to identify, enhance, and further reduce our operational expense.” A.C. Moore’s KeyControl program evolves as a result of collective, creative solutions and operational partnerships. Its original design and customization for a simple, cost-effective solution for the stores’ security continues to provide measurable ROI and improved compliance performance. For more information about InstaKey Security Systems’ KeyControl, call 800-316-5397 extension 125 or email sales@instakey.com.

LP MAGAZINE | MARCH - APRIL 2015

INDUSTRY NEWS by Robert L. DiLonardo DiLonardo is a well-known authority on the electronic article surveillance business, the cost justification of security products and services, and retail accounting. He is the principal of Retail Consulting Partners, LLC (retailconsultingllc.com), a firm that provides strategic and tactical guidance in retail security equipment procurement. DiLonardo can be reached at 727-709-6961 or by email at rdilonar@tampabay.rr.com.

Cyber Threat Predictions for 2015

014 was undoubtedly the year of the data breach in retail. As an encore to the massive Target customer credit and debit card hack first reported in 2013, retailers such as Goodwill Industries, Dairy Queen, P.F. Chang’s, Neiman Marcus, and Home Depot, among others, reported significant point-of-sale breaches during the last year. A recent Forbes article underscores the severity of the situation, especially for retailers. Kevin Jones, senior IT security architect for Thycotic, opined, “Companies that have enormous resources dedicated to infrastructure security at point-of-sale terminals are failing.” SentinelOne Labs (sentinelone.com) published its very informative Advanced Threat Intelligence Report summarizing the top IT threats reported in 2014 along with predictions on what’s in store in 2015. Here are some of the lowlights.

Five Trends

Point-of-Sale. POS systems are sitting ducks for malicious malware because of older operating systems like Microsoft XP and outdated antivirus software. According to the experts, there is no silver bullet yet available. However, these threats should be mitigated over a period of time.

Erstwhile cyber criminals can now simply “visit a website, select the desired malware platform and capabilities to build a Trojan, choose their target assets (online banking credentials, credit and debit card numbers, healthcare records, and so forth), request a specific number of infections (targets), pay with an underground money transfer provider or bitcoin, and be in business.”

Top Hijacking Techniques

Eight-three percent of documented attacks in 2014 were perpetrated by only five techniques: Distributed Denial of Service (23 percent). A distributed denial of service (DDoS) attack occurs when a multitude of compromised systems attack a single target, causing denial of service of the targeted system to legitimate users. The flood of incoming messages to the target system essentially forces it to shut down. Structured Query Language Injection (19 percent). Using SQL, web applications interact with databases to dynamically build customized data views for each user, such as a list of merchandise for sale. An attacker can manipulate the parameter’s value to build malicious SQL statements. This could result in customers receiving a wrong item or being charged an incorrect price. Unknown (18 percent). Isn’t it scary that the IT “experts” are at a loss to explain the cause of almost one in every five data breaches? Defacement (14 percent). Website defacement is an attack on a website that changes the visual appearance of the site or a web page. These are typically the work of system crackers who break into a web server and replace the hosted site with one of their own. Defacement is generally meant as electronic graffiti, although recently it has become a means to spread messages by politically motivated cyber protesters or “hacktivists.” Account Hijacking (9 percent). As the name implies, hackers can hijack any type of account information—from emails to credit cards to social security numbers.

MARCH - APRIL 2015

Ransomware. This class of malware restricts access to the computer system that it infects and demands a ransom paid to the creator of the malware in order for the restriction to be removed. Some forms of ransomware encrypt files on the system’s hard drive (cryptoviral extortion), while some may simply lock the system and display messages intended to coax the user into paying. The advent of the bitcoin has transformed ransomware into a cybercrime that anyone can use. Currently, there is no effective security measure against it. Top Target—Windows. However, attacks targeting MAC OS X, Linux, iOS, and Android are on the rise. The major cyber criminals haven’t focused on mobile payment platforms yet. Targeted, Advanced Evasion. In network security, evasion means the bypassing of an information security device to exploit, attack, or deliver some other form of malware to a target network or system without detection. Evasions are typically used to counter network-based intrusion detection and prevention systems, or to bypass firewalls. Another target of evasions is to crash a network continued on page 74 |

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security device, rendering it ineffective to subsequent targeted attacks. Espionage Malware. Unfortunately, complex malware designed for espionage has fallen into the hands of cyber-crime groups. These products enable any type of malware to operate in stealth mode and be completely invisible to all security measures. The experts are watching this development closely.

What’s Next?

Mac OS X and Linux. Until now, these two operating systems have escaped heavy targeting by attackers. The large-scale adoption of these two operating systems in enterprise data centers indicates that they will become a target in the near future. Since these operating systems have been considered “safe,” there are very few security products available to protect against sophisticated attacks. Enterprise Hostage-Ware. The SentinalOne Labs experts believe that ransomware will be used to coordinate a “time bomb” attack on a large enterprise. The potential impact of such PRODUCT PROTECTION

an occurrence could be devastating and would force companies to pay a high price for the release of their systems. Infrastructure Shut Downs. Apparently, according to the report, there have been a few unpublicized attacks that have shut down power grids for short time periods. Much of the critical infrastructure has old or outdated IT technology, making it especially vulnerable to attack. Cyber Attacks for Political Retaliation. The experts predict that nations, such as Russia and China, will continue to use cyber attacks against their enemies. Russia is supposedly responsible for last year’s attack on Home Depot’s POS system, as well as numerous attacks on US-based financial institutions. Attacks as a Service. Erstwhile cyber criminals can now simply “visit a website, select the desired malware platform and capabilities to build a Trojan, choose their target assets (online banking credentials, credit and debit card numbers, healthcare records, and so forth), request a specific number of infections (targets), pay with an underground money transfer provider or bitcoin, and be in business.” I had no idea we are so vulnerable and seemingly ill prepared. If this didn’t get your attention, reread the last paragraph.

Physical Security Executives Gather to Demystify IT Techno-Babble In response to the growing number of cyber attacks and data breaches that are increasing the exposure to corporate C-suites and boards of directors, a select group of thirty high-level security executives gathered in Chicago on February 26 for networking and sharing strategies to better position themselves in C-level discussions. The intent of the meeting was to provide a plain-English translation of IT security concepts and actions intended to give the physical security leaders the background to engage in discussions of protecting information and technology with their corporate peers and executives. “This was a unique gathering of senior security professionals that included the current president of ASIS International and

MARCH - APRIL 2015

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three past presidents,” said Ray O’Hara, executive vice president of AS Solution and one of the past presidents. “It is amazing how much our existing security expertise directly relates to the information security world.” Dave Tyson, chief information security officer at SC Johnson and the first CISO to lead ASIS as its 2015 president, addressed the attendees. A recognized expert on the topic, Tyson started his career in traditional security practice before earning his MBA in digital technology management. Prior to SC Johnson, he worked for companies such as IBM, eBay, and Pacific Gas and Electric. Tyson provided the attendees easily understandable explanations of common IT buzzwords to demystify the techno-babble. The goal was to allow security practitioners to understand the challenges and make better business decisions related to: ■ Infrastructure ■ Applications ■ Cloud ■ Mobile ■ Big data ■ Social media ■ TOR ■ Dark web Hosted by Keith Blakemore, director of security and loss prevention at WW Grainger, the gathering came about from discussions by Blakemore, O’Hara, and Tyson. A December 27, 2014, Forbes magazine article titled “Why It’s Time for a Board-Level Cybersecurity Committee” by Betsy Atkins, a three-time CEO and a director at Darden, HD Supply, and Schneider Electric, reinforced the need for the meeting. In the article Atkins wrote, “Step one for every board is to understand that it is supposed to be offering oversight on these risks as part of its fiduciary duty. The board needs to assure there are internal controls in place to protect the corporation’s cyber assets. The stakes are high. A study found that up to $21 trillion in global assets could be at risk from cybercrime. What is needed is a solid board structure for monitoring and managing cyber risk in the company. To begin, [what] I recommend is a series of committee briefings so ‘cyber security’ is demystified and better understood.” The full article is available on forbes.com.

PEOPLE ON THE MOVE Todd Mace was made Regional LP Manager for 24 Hour Fitness.

Danielle Falk is now a District LP Manager for Kohl’s.

Scott Martyka, CFI, CRT was appointed Corporate LP Manager at ALDI.

Randy Johnson was appointed Corporate Director of LP for Performance Food Group.

Amazon made the following changes: Tyson Robertson and Hector Coronado, CPP, DSE to Regional LP Managers; Pat Moran to East Region Sort Centers LP Manager; and Howard Stone to Senior Manager, North American Logistics LP. Tim Visty was appointed Senior LP Investigator for American Food & Vending. Bed Bath & Beyond announced the following appointments: Michelle Kaplan is now Director of LP, Les Piserchio is now Director of LP Logistics; Walter Dubose is now Senior Manager of LP; Edwin Colon and Jeff Bevins are now Area LP Managers. Chris Bitner was appointed Global Chief Information Security Officer for Bloomin’ Brands. Felix Soto, LPQ is now Area Manager, Field LP, and Security, and Ann Schwab is now LPBI Analyst and Investigator for the Coast Guard Exchange. Jimmy Pappas is now Regional LP Manager for The Children’s Place. Steve Bothma, CPP is now Regional LP Manager for Cotton On Group. Delhaize America announced the following changes: Sarah Jacobs to Pharmacy Compliance Investigator, Cheri White to Field Investigator, Roy Towle, Jr. to Emergency Services Supervisor, and Joshua Rogers, CFI to Divisional LP Manager, Central. Patrick Smith, CFI is now a Regional LP Manager for Helzberg Diamonds. Mike Battles, CFI is now Manager V, General Investigations for Texas HHSC Office of Inspector General. Shawn Blankenship was appointed VP of AP, and Ed Shelley was named District Operations Manager for The Home Depot. Ryan Roby, CFI is now District LP Manager for King Soopers.

Jon Williams is now Associate Director for Protiviti. Ken Warfield was appointed SVP Premium Division North America and AP for Regis Corporation. Ramon Jara was made Senior Area LP Manager for Ross. Sheila Hunt was named National Manager of AP Learning and Development, and Brad Buckley was appointed Director of AP, Retail Excellence for Sears. Dan Nesselroth is now Corporate Investigator at Sony. Damon Cavasin was appointed Regional Director AP for SpartanNash. Kimberly Miller is now AP Business Partner, and Roy Cox is now AP Team Leader for Target. Tamara Locke is now LP Investigations Manager for T-Mobile. Catherine Stasiowski was made Senior Manager, Internal Audit and Investigations for Total Wine & More. Howard Storie and Shane Baumgardner are now Market AP Managers for Walmart. Jay Mealing was appointed VP, AP, Security, and Investigations for Walmex.

To stay up-to-date on the latest career moves as they happen, sign up for LP Insider, the magazine’s weekly e-newsletter, or visit the People on the Move page on the magazine’s website, LPportal.com. Information for People on the Move is provided by the Loss Prevention Foundation, Loss Prevention Recruiters, Jennings Executive Recruiting, and readers like you. To inform us of a promotion or new hire, email us at peopleonthemove@LPportal.com.

LP MAGAZINE | MARCH - APRIL 2015

CALENDAR March 3 – 5, 2015 Jeweler’s Security Alliance 37th Annual Security Seminar and Expo Marriott North, Fort Lauderdale, FL jewelerssecurity.org March 9 – 12, 2015 Food Marketing Institute Asset Protection Conference Peabody Hotel, Memphis, TN fmi.org March 23 – 26, 2015 Merchant Risk Council e-Commerce Payments & Risk Conference Aria Resort, Las Vegas, NV merchantriskcouncil.org April 15 – 17, 2015 ISC West Sands Expo & Convention Center Las Vegas, NV iscwest.com April 29 – May 1, 2015 International Organization of Black Security Executives Annual Spring Conference Hosted by The Home Depot Atlanta, GA iobse.com May 3 – 6, 2015 Retail Industry Leaders Association Asset Protection Conference Gaylord Palms Resort & Convention Center Orlando, FL rila.org June 23 – 25, 2015 National Retail Federation NRF PROTECT Conference & EXPO Long Beach (CA) Convention Center nrfprotect15.nrf.com August 2 – 5, 2015 Restaurant Loss Prevention & Security Association 2015 Annual Conference M Resort Spa and Casino Las Vegas, NV rlpsa.com September 8 – 9, 2015 International Supply Chain Protection Organization 2015 Conference Scottish Rite Children’s Hospital Conference Center Dallas, TX iscpo.org September 28 – October 1, 2015 ASIS International 61st Annual Seminar and Exhibits Anaheim (CA) Convention Center asisonline.org

ADVERTISERS 3SI................................................................................. 60 3sisecurity.com Agilence...................................................................... 25 agilenceinc.com/retail-2020 Alpha............................................................................ 17 alphaworld.com American Military University................................... 13 amuonline.com/lpf Axis Communications.................................................. 9 axis.com/lovehate Cambridge Security................................................... 61 cambridgesecurityservices.com CAP Index.................................................................... 57 capindex.com/outsmart CEC............................................................................... 27 correctiveeducation.com Checkpoint.................................................................. 19 checkpointsystems.com ClickIt Inc.................................................................... 33 clickitinc.com Contact, Inc................................................................. 51 contactinc.com Detex............................................................................ 37 detex.com FireKing Security Group............................................ 67 fireking.com Industrial Security Solutions.................................... 45 isscorpus.com InstaKey Security Systems...................................... 50 instakey.com Intelligent Loss Prevention....................................... 42 intelligentlossprevention.com International Assoc. of Interviewers...................... 68 certifiedinterviewer.com ISCON.......................................................................... 31 isconimaging.com Kenwood..................................................................... 21 kenwoodusa.com/protalkinfo LockUp by Digilock...................................................... 7 lockup.com Loss Prevention Foundation..................................... 53 losspreventionfoundation.org LPI................................................................................. 74 lpinnovations.com LPjobs.......................................................................... 63 lpjobs.com Milestone.................................................................... 49 milestonesys.com NAVCO......................................................................... 59 navco.com NRF PROTECT............................................................. 73 nrfprotect.com/register NuTech National........................................................ 41 nutechnational.com ONCAM GRANDEYE.................................................. 47 oncamgrandeye.com Palmer, Reifler and Associates............................... 35 palmerreiflerlaw.com Protos Security............................................................. 3 protossecurity.com The Retail Equation...................................................... 5 theretailequation.com/success RILA.............................................................................. 39 rila.org/ap Salient Systems.......................................................... 34 salientsys.com Securitech................................................................... 23 securitech.com/simplythebest Security Resources................................................... 79 securityresources.net Sony............................................................................... 1 sony.com/4ksecurity Turning Point Justice................................................ 48 turningpointjustice.com Tyco Integrated Security.......................................... 80 tycois.com/retail USS................................................................................. 1 universaleas.com/ip Verisk Retail.................................................................. 2 veriskretail.com

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PARTING WORDS

Change

Jim Lee, LPC Executive Editor

You Reap What You Sow

ow for all of you farmers, landscapers, or agronomists out there who have turned to a career in loss prevention, you understand that you always prepare the earth before planting. You turn the soil, fertilize it, and then give it some water. Only then are you ready to plant. It seems to me to be the same process when planting seeds of change in your LP department. You’ve got to prepare the soil if you expect the change to take root and grow. Some don’t do the digging necessary, but rather go for the buy-in on a new program after they have introduced it. That seems like the five-cent approach to me and backward. Let’s take a look at a pair-of-dimes approach to cultivating change within loss prevention. Over the past several weeks I have spent considerable time studying three organizations, two of which are the pair of dimes and the other is the nickel group.

A Pair of Dimes and a Nickel

The dime groups had two essential characteristics in common—trust and caring. The LP team trusted the boss and the environment, and they felt cared about and acknowledged. Where LP management treated its people with respect and understanding, told the truth, and kept their word, the people were more positive about change, open to innovation, and more engaged with the forthcoming changes. Caring comes from treating individuals with respect and empathy, and acknowledging their efforts and contributions. In the nickel group you could hear people say, “The department I work for lacks trust,” and “You just cannot rely on your worker partners because the company is forcing them to perform beyond one’s limits,” and “Everyone is looking out for themselves and not the good of the company.” You can make the choice to trust each other, work together, and grow and succeed or to take the path of adversarial relationships and fail. If you give your people freedom and empowerment and hold them accountable, they will be fair in return. If you show them that their input and decisions are trusted and valued...and truly mean it...you will have the best people can give.

The dime groups believe that trust is fragile. It has taken them a long time to establish, and they realize that it can be lost in a split second. A working relationship can crumble by not delivering on a promise or by getting caught in a lie. Once lost, it is much harder to reestablish. Lies do have long lives. The dime groups believe that caring about the people and making them feel meaningful is an essential part of the job. While the nickel group thinks that caring is a soft concept and a naive approach to tough-minded and sometimes ego-driven LP leadership. When you ask your people to make a change, you are asking them to take a risk and to jump into the fray. Some can worry that they may not have a job afterward. The dime groups are characterized by high levels of caring, thus the team is clearly loyal, more willing to adapt, and more responsive to challenges because they believe their interests are considered. It seems simple—the people care about the leadership team because the leadership team cares about them. In the nickel group changes are met with suspicion and five cents worth of compliance. Would you go to the wall or dive in a foxhole for a friend who did not care about you?

“I” and “We”

It seems so basic, but it is always evident to me that groups who adapt to change and strategically move forward are those who understand the difference between “I” and “we.” Talking “I” at a time when teamwork is so valued by the LP groups leaves the wrong impression. Most people see right through that individual arrogance. However, focusing on the team’s effort elevates one from their current role to the role of a leader. Instead of being a good performer, you can be seen as someone who knows how to run, direct, and guide a team. Focusing on the “we” is a good career move. “We” is an inclusive term, whereas “I” is exclusive. Inclusion builds loyalty, increases morale, and allows your team to accept change as a pair-of-dimes group would and not with the nickel approach.

Trust and Caring

Trust just can’t be bought; it’s got to be built a brick at a time and not just by mouthing the words. It is earned by companies and departments that demonstrate it through their actions of honesty, integrity, and openness.

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March - April 2015

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