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Preventing POS Theft

BY Connie Gentry

Over a two-day period, one shopper purchased 15 power washers from The Home Depot. Same store, same shopper, but not the same shopper identity. In fact, this particular shopper used credit cards from six different identities. Albeit, in a multiple-lane store such as Home Depot, it probably was not the same checkout clerk each time—and yet, it would take a brazenly confident crook to strike repeatedly at the same location.

During a session on fraud prevention at the annual convention hosted by the National Retail Federation in January, it was evident this type of theft has become the norm. NRF attendees were introduced via video testimonies to convicted criminals who had made careers out of POS theft.

Criminals are smarter, more creative and more brazen than ever before. They look just like every other customer shopping in your stores, and they have no qualms about looking your POS clerk in the eye while they rob your store.

Take Mike, the power-washer perpetrator. With a clean-cut, non-descript demeanor, athletic build and dressed like a personal trainer, it was easy to see how he successfully blended into gym parking lots where he stole credit cards, checks and personal identities from an average of 40 cars a day.

Store associates who compared his signature to that on a credit card were easily duped—all Mike did was copy the signature onto the middle finger of his left hand, which he glanced at while signing with his right hand.

Counterfeit tender is just as popular as stolen cards and checks. Leann, another reformed felon whose testimonial was broadcast at NRF, was considered one of the best false-ID makers in the country and worked with a ring of more than 200 criminals. Now she works for a bank that hired her after she was released from prison, because of her inside knowledge of how false cards are created. She mastered the art of creating and spending counterfeit cards, explaining that she “never spent more than $299.00 on a transaction because $300 is the threshold when they have to call to confirm the account.”

Replicating and selling credit cards is a huge business, according to Chuck Whitlock, chairman of Vancouver, Wash.-based Crimeline, which teaches retailers how to detect and prevent fraudulent payments. Whitlock cautioned, “Don’t have anyone working at checkout who has not been adequately trained and tested.”

His advice was to equip and educate POS associates to be able to easily detect counterfeit cards, IDs and cash. For instance, installing a black light at the POS and showing employees what to look for can intercept fake driver’s licenses and counterfeit credit cards. In less time than it takes to read this sentence, a POS clerk can glance at the card under a black light and determine if it is authentic.

Counterfeit currency can also be detected with proper training. However, Whitlock warned that the commonly accepted deterrent of marking bills with a yellow pen to catch fake tender is not reliable. “Counterfeiters can impregnate their fake bills with chemicals that produce the same reaction as authentic bills,” he said.

In addition to training employees about what to look for on cash and cards, associates should also be taught how to tactfully confirm a shopper’s identity, such as requesting that shoppers give their address and making sure it matches the one on the driver’s license.

Asked how to prevent online credit-card fraud, Whitlock cited the success Dell has experienced by asking questions at its e-commerce checkout to confirm shoppers’ identities.

For instance, questions that online retailers might ask to confirm a cardholder’s identity include: “Which of the following three addresses have you never lived at?” or “Which is the last four digits of your Social Security number?”

A side benefit, noted Whitlock, is that Dell reduced its credit-card processing costs by approximately 30% due to abandoned attempts to thwart the system.

On the NRF exhibit floor, Digital-Persona, Redwood City, Calif., demonstrated how fingerprint biometric solutions can also be used to deter theft at the POS, both in stores and online. DigitalPersona’s new fingerprint recognition software and hardware, U.are.U, is compatible with Java-based POS terminals.

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Lampert, the Eli Manning of retail?

BY CSA STAFF

HOFFMAN ESTATES, Ill. The New York Giants triumph over the highly favored New England Patriots in the Super Bowl earlier this month, has become an example of coming from the bottom to win it all. Sears Holdings chairman Edward Lampert is one of the latest to use the Giants win, even going as far to compare himself, and the leaders of his company, to quarterback Eli Manning.

The Giants analogy, and Eli Manning comparison, is applied mainly to the company’s Kmart division. In a letter to investors, posted on the Sears Holdings investor relations Web site, Lampert said during Kmart’s bankruptcy in 2002, the unit was “like an undrafted free agent who nobody thought had a chance to play in the big leagues.” Lampert went on to say, “Like Eli Manning, we know what it’s like to be underestimated and questioned, but we intend to keep working on our game to achieve our full potential.”

Sears Holdings reported net income of $426 million, or $3.17 per diluted share, for the fourth quarter ended Feb. 2, compared with net income of $811 million, or $5.27 per diluted share, for the fourth quarter ended Feb. 3, 2007. For the fiscal year ended Feb. 2, 2008, net income was $826 million, or $5.70 per diluted share compared with net income of $1.5 billion, or $9.58 per diluted share, for the fiscal year ended Feb. 3, 2007.

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Circuit City investor seeks to replace board

BY CSA STAFF

RICHMOND, Va. Circuit City Stores today acknowledged that it has received two proposals from shareholder Wattles Capital Management regarding its board of directors. Wattles holds approximately 6.5% of the outstanding shares of the company’s common stock.

Circuit City reported that Wattles proposed the idea of replacing the company’s Circuit City 12-member board of directors with its own nominees. Circuit City said its board of directors will review carefully the shareholder’s proposals and the qualifications of the nominees in accordance with its fiduciary duties, mindful that the proposal would give the shareholder absolute control of the entire board, which would be disproportionate to its relative ownership of the company’s shares.

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