Combating Refund Fraud: 'How-To' Case Studies (Part 3)

Liz Martinez is back with more tips on improving your loss prevention skills

It's summertime, and it seems like the whole world is on vacation. Except for thieves. They're at work rain or shine. And although summer is supposed to be a lazy time of year, the end-of-season sales and back-to-school offers make for attractive opportunities to steal. Internal theft is responsible for the lion's share of retail losses, and the increased store traffic is a perfect cover for sticky-fingered employees.

The previous two columns (part 1 and part 2)presented case studies of internal theft and provided solutions and advice for other retailers to avoid being victimized in the same ways. This final column in the series examines even more methods employees find to rip off stores.

In the last column, we presented The Case of the Gang Members' Girlfriends: an opportunity for readers to help solve the case. We received an enormous response, and as promised, the best ones appear in this column.

If you didn't get a chance to write in last month, please see The Case of the Runaway Sneakers below. We're looking for the best solutions to this case of internal theft, so please post your thoughts in our loss prevention forum.


The story: Gang members encourage their girlfriends to obtain legitimate employment in retail stores in order to have access to customers' credit cards. In some cases, the girls "forget" to give the cards back to the shoppers (in other words, they steal the credit cards). In other cases, the women are recording the card information for later use. The gang members use the data or the cards to make purchases that they either fraudulently return so that their girlfriends can process cash refunds, or they keep the merchandise. Observers are pretty sure that the money being used to further gang activities, but it's difficult to prove the link and almost impossible to stop the thefts.

Solution No. 1: First, background checks. When talking to the clerks, look for telltale gang tattoos, which any girlfriend or gang member willing to participate in this scam would likely have. Then update programming at the terminals to prevent the full credit card number from printing, or being accessed, without a greater authorization. Set up a camera on a dedicated system (to prevent missed frames) with a view close enough to see everything the checker does with the credit cards. Coordinate with the credit card companies and police department to let the employee steal a card number off of a bait card and begin tracking the card. You will record the clerk stealing a card, (if you're lucky), see her passing it or its information to her boyfriend, then recover video of the boyfriend using the card, as well as electronic evidence for prosecution. For greater reliability, use a proprietary card with just enough on it for the initial bait purchase at the questionable register. To further improve tracking, use the same card for multiple suspects, but document what was purchased: different people and different purchases.
-- submitted by Elburn Templeton, Alpine Advantage Security consulting, Breckenridge, Colo.

Solution No. 2: The solution is actually very simple. Install POS equipment that allows the customer to swipe his or her own card and enter a PIN (if required). By using this technology, the employees never touch -- much less see -- the credit card.
-- submitted by Gene Thomas, Dacula (Atlanta), Ga.


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