R
Radio Frequency Identification (RFID)
“Automatic identification” (Auto ID) is the broad term given to a host of technologies used to identify objects. A number of technologies are considered subsets of Auto ID, including bar codes, smart cards, voice recognition, biometric scanning technologies, optical character recognition (OCR), and radio frequency identification (RFID).
RFID Overview
RFID is a method by which data is transferred via an electronic signal. In very basic terms, an RFID system includes a transponder tag (carrier of the information), an interrogator or reader, and a computer. The tag enters a radio frequency (RF) field transmitted by the reader. The signal received from this field powers the tag and enables it to transmit its unique identification number along with the application data. The interrogator identifies the signal as valid, captures the data, and sends it to a computer. The computer and its relevant application software determine whatever action is to be taken. In the most sophisticated versions of RFID, the computer can transmit additional data to the tag via the reader, changing the contents of the stored information. The use of RFID is widely viewed as the mechanism that will induce a quantum leap in productivity in the area of wholesale and retail logistics management, and other work processes. For the past few years, some of the world’s leading retailers, consumer products manufacturers, academic institutions, and technology companies have been attempting to create a unified product identification and tracking system that could revolutionize the process behind ordering, manufacturing, shipping, tracking, stocking, selling, and reordering merchandise.
It is estimated that by 2010, RFID will become cost effective enough to be utilized on individual pieces of merchandise (items). One of the large markets for these products is retail, but many other nonretail applications are possible. In addition to the operational and logistical applications, there are a number of security-oriented applications, including antitheft and fraud protection and anticounterfeiting.
Tags
The most common RFID tags consist of an integrated circuit with memory and an antenna. Active tags have a transmitter and their own power source (typically a battery), used to run the microchip’s circuitry and to broadcast a signal to a reader—the way a cell phone transmits signals to a base station. Passive tags have no battery. Instead, they draw power from the reader, which sends out electromagnetic waves that induce a current in the tag’s antenna. Semipassive tags use a battery to run the chip’s circuitry but communicate by drawing power from the reader. Active and semipassive tags are useful for tracking high-value items requiring long read ranges, such as railway cars or sea containers. They are costly and too cumbersome to use on smaller items.
Memory Capacity
Within limits, memory capacity varies by tag vendor and is often dictated by the requirements of the application. Typically, a tag carries no more than 2 kilobits (Kb) of data—enough to store some basic information about the item to which it is attached. The current trend is toward tags with less memory capacity. A simple “license plate” tag contains only a 96-bit serial number. These tags are cheaper to manufacture and are more useful for applications where the tag will be disposable.
Frequencies
RFID systems use many different frequencies, but the most common are low-frequency (125 kHz), high-frequency (13.56 MHz), and ultra-high-frequency or UHF (860–960 MHz). Microwave (2.45 GHz) is also used in some applications. Since radio waves exhibit different characteristics at different frequencies, the proper frequency must be chosen for each application type. Lower frequencies (under 10 MHz) are less sensitive to substances such as moisture or metal that inhibits the reception of the signal. However, these low frequencies are incapable of being identified at long range and require a long time within the field to transmit data. Higher frequencies are capable of longer read ranges and advanced functionality, such as the ability to read multiple tags in the field at the same time. Long-range (over 2 meters) reading requirements are prevalent in the “back end” of the retail logistics chain, where merchandise is packaged in cartons and loaded on pallets within trucks or sea containers. However, the higher the frequency, the more susceptible the signals are to blockage by moisture and metals.
Frequency Standardization
The RFID industry is attempting to follow the bar code industry by establishing worldwide frequency standards. All bar codes printed on retail merchandise in the United States contain the same convention. In essence, the bar code on a package of batteries can be scanned by virtually any retail establishment in the United States. The same approach for RFID frequency standardization will allow the industry to optimize the effectiveness of the technology and provide a stimulus to growth.
Individual countries have jurisdiction over the assignation of radio frequencies. Most countries have assigned the 125 MHz and 134 MHz areas for low frequency RFID applications. The 13.56 MHz area is used universally for high-frequency systems. Ultra-high-frequency (UHF) RFID systems have existed only since the mid-1990s, and all countries have not yet agreed on a single area of the UHF spectrum for RFID. Europe has adopted 868 MHz, and the United States uses 915 MHz. Until recently, Japan did not allow any use of the UHF spectrum for RFID but is considering 960 MHz for RFID. Many other devices utilize the UHF spectrum, so it may take years, if ever, for all governments to agree on a single frequency.
System power output is also government regulated to limit interference with other devices. Some umbrella groups, such as the Global Commerce Initiative, are encouraging governments to agree on frequencies and power output levels. RFID tag and reader manufacturers are developing systems that can work at multiple frequencies to limit the impact of a lack of uniform global standards.
Where Do Current EAS Frequencies Fit?
EAS technology is the forerunner of RFID. An EAS “system” contains every element of an RFID system. The major limitation of EAS is in the amount of “intelligence” (the amount of information that can be stored and retrieved) built into the tag. EAS systems simply interrogate the tag, determine that it is a valid component, and activate an alarm. Some EAS systems utilize this activation to activate another component, such as CCTV, via a simple electronic switch closure.
Neither acousto-magnetic EAS (58 kHz) nor Radio Frequency EAS (8.2 MHz) will be adopted as standard RFID frequencies. The acousto-magnetic EAS frequency is incapable of transmitting a sufficient quantity of data at an appropriate speed. While the RF EAS frequency may be “borderline” appropriate for item-level applications, the choice of a higher frequency allows for the creation of a much smaller tag because the antenna size can be reduced.
Assuming that the RFID industry standardizes around 13.56 MHz for item-level activities, both of the current EAS frequencies will remain antitheft tools, and not RFID tools.
Bhuptani M., Moradpour S. RFID field guide. Prentice Hall, 2005.
DiLonardo, R. L. (1998). RFID emerges as technology of choice. Security Technology & Design Magazine. July.
IBM Business Consulting Services. (2002). Applying Auto-ID to reduce losses associated with product obsolescence, IBM-AUTOID-BC-004.
RFID Journal. Frequently Asked Questions. RFID Journal [Electronic Version]. Retrieved April 20, 2006, from http://www.rfidjournal.com/faq.
Security Technology & Design Magazine. (1998). Protecting consumer products with RFID. August.
Carroll John M., ed. Confidential Information Sources, 2nd ed., Butterworth-Heinemann, 1991.
Critical Incident Management, Rod Paschall, OICJ, University of Illinois, 992.
Ira A. Lipman. How to Protect Yourself from Crime. Contemporary Books, 1997.
Berger David L. Industrial Security. Butterworth-Heinemann, 1979.
Green Glen, Farber Raymond. Introduction to Security. Security World Publishing Co., 1975.
Lieberman David J.PhD. Never Be Lied to Again. St. Martins Press, 1998.
Ricks Truett A.CPP, Tillett Bill G.CPP, VanMeter Clifford W.PhD,. Principles of Security, 2nd ed. Anderson Publishing Co., 1988.
Protection Officer Training Manual, Compilation, 6th ed. International Foundation For Protection Officers, Butterworth-Heinemann, 1998.
Hayes ReadCPP. Retail Security & Loss Prevention. Butterworth-Heinemann, 1991.
Grover Kenneth R.PhD. Retail Security Policy Manual. Butterworth-Heinemann, 1992.
Broder James F.CPP. Risk Analysis and The Security Survey. Butterworths, 1984.
Satterfield Lt. Phillip M.MPA. The Security Officer’s Field Training Guide. CA: Cypress, 1988.
Reid John E., Inbau Fred E. Truth and Deception. The Williams & Wilkins Co., 1966.
Anthony Baron S.PhD. Violence in the Workplace. Pathfinder Publishing of CA, 2003.
Federal R. KeeganJr. Avoiding Liability in Retail Security 1986; Avoiding Liability in Premises Security. Stafford Publications Inc., 1989.
Gifis Steven H. Barron’s Dictionary of Legal Terms, 2nd ed. Barron’s, 1993.
Bilek Arthur J., Klotter John C., Keegan R. Federal. Legal Aspects of Private Security. Anderson Publishing Co., 1981.
Hartman John Dale. Legal Guidelines for Covert Surveillance Operations in the Private Sector. Butterworth-Heinemann, 1993.
Hannon Leo F.JD. The Legal Side of Private Security. Quorum Books, 1992.
Nemeth Charles P.JD, LLM. Private Security and the Law, 2nd ed. Anderson Publishing Co., 1995.
Simonsen Clifford E.PhD, CPP. Private Security in America. Prentice-Hall, 1998.
Maxwell David A.JD, CPP. Private Security Law—Case Studies. Butterworth-Heinemann, 1993.
Pastor James F. The Privatization of Police in America. McFarland, 2002.
Alderman Ellen, Kennedy Caroline. The Right to Privacy. Vintage Books (Random House), 1997.
Kuhlman Richard S.Esq. Safe Places? Security Planning and Litigation. The Michie Company, 1989.
Kinnaird Brian A. Use of Force. Looseleaf Law Publishers, 1973.
Wesley Roy L., Wanat John A. A Guide to Internal Loss Prevention. Butterworth-Heinemann, 1986.
Bliss Edwin C., Aoki Isamu S. Are Your Employees Stealing You Blind. Pfeiffer & Co., Butterworth-Heinemann, 2001.
Barefoot J. Kirk. Employee Theft Investigation. Butterworth-Heinemann, 1980.
Barefoot J. Kirk. Employee Theft Investigation, 2nd ed. Butterworth-Heinemann, 1990.
Curtis Bob. How to Keep Your Employees Honest. Lebhar-Friedman Books, 1979.
Ferraro Eugene F.CPP, Spain Norman M.JD. Investigations in the Workplace. Auerbach Publications, 2006.
Zulawski David E., Wicklander Douglas. Practical Aspects of Interview and Interrogation. Elsevier Science Publishing Co., 1992.
Sennewald Charles A., Tsukayama John K. The Process of Investigation, 3rd ed. Butterworth-Heinemann, 2006.
Sennewald Charles A., Tsukayama John K. The Process of Investigation, 2nd ed. Butterworth-Heinemann, 2001.
Broder James F.CPP. Risk Analysis and the Security Survey. Butterworth-Heinemann, 2006.
Rosen Lester S.Esq. The Safe Hiring Manual. Facts on Demand Press, 2004.
Shepard Ira Michael, Duston Robert. Thieves at Work. Bureau of National Affairs, 1988.
Barefoot J. KirkCPP, Maxwell David A. Corporate Security Administration & Management. Butterworth-Heinemann, 1987.
Sennewald Charles A.CPP. Effective Security Management, 4th ed. Butterworth-Heinemann, 2003.
Fay John J. Encyclopedia of Security Management. Butterworth-Heinemann, 1993.
Healy Richard J., Walsh Timothy J. Industrial Security Management. American Management Association, 1971.
Cole Richard B. Protection Management & Crime. W. H. Anderson Co., 1974.
Post Richard S., Kingsbury Arthur A. Security Administration, 2nd ed. Charles C. Thomas, 1973.
McCrie Robert D. Security Operations Management. Butterworth-Heinemann, 2001.
Sennewald Charles A.CPP. Shoplifters vs. Retailers. New Century Press, 2000.
Hayes ReadCPP. Shoplifting Control. Prevention Press, 1993.
Christman John H.CPP, Sennewald Charles A.CPP. Shoplifting: Managing the Problem. ASIS-International, 2006.
Sklar Stanley L. Shoplifting: What You Need to Know About the Law. Fairchild Publications, 1982.
The books listed above are on your our bookshelves and can be referenced without reservation. For a more comprehensive list of security/loss prevention reference sources, obtain a copy of the ASIS Bookstore (from ASIS-International, online at [email protected], or by phone at 703-519-6200), listing hundreds of books relating to loss prevention.
Newsletters:
Security Letter (twice monthly), 166 East 96th Street, New York, NY 10128, $217 Yrly.
Corporate Security (bi-weekly), Strafford Publications, 590 Dutch Valley Road, PO Drawer 13729, Atlanta, GA 30324, $348.95 Yrly.
Premises Liability Report (monthly), Strafford Publications (Supra), $301.95 Yrly.
Private Security Case Law Reporter (monthly), Strafford Publications (Supra), $361.95 Yrly.
Security Director News (monthly), United Publications, Inc., P.O. Box 996, Yarmouth, ME 04098, FREE.
Security Director’s Report (monthly), Institute of Management & Administration, 3 Park Ave., 30th Floor, New York, NY 10016, $279.00 Yrly. Security Law Newsletter (monthly), Strafford Publications (Supra), 30324, $311.95 Yrly. Note: Prices current as of January 1, 2007.
Magazines
LOSSPrevention Magazine, 8037 Corporate Center Dr., Suite 400, Charlotte, NC 28226, FREE. Security Management, ASIS-International, 1625 Prince St., Alexandria, VA 22314, $48 yr for nonmembers.
Security Design & Technology, 100 Colony Park Dr., Suite 203 Cumming, GA 30040, FREE.
Security, 600 Willowbrook Lane, Westchester, PA 19382, FREE.
Vendor Sources:
The Security Industry Buyers Guide by ASIS—International
The annual January/February issue of LOSSPrevention Magazine Resource Guide
The preceding lists are not meant to be, nor are they, complete. Other publications and sources of information and training are available, and we apologize for any omissions.
Report Writing
The importance of a good written report of a security or loss prevention incident—whether an apprehension, fire, bomb threat, employee dishonesty case, or anything else—cannot be overstated. A written report memorializes the event, one hopes in a manner which permits the reader, at any later date, to fully understand the who, what, when, where, why, and how of the incident. The effectiveness of an investigator is judged, in large measure, by the quality of his reports. A well-conducted investigation, poorly reported, negates the degree of skill utilized in conducting the investigation.
1. The purpose of an Investigative report is to achieve the following objectives:
Record: Provide a permanent record of all significant information.
Leads: Provide information necessary to advance the investigation.
Action: Provide a factual basis for determining appropriate action.
2. The nature of the report is an objective narrative of findings.
3. The qualities of an investigative report are as follows:
All reports should answer these basic questions: who, what, when, where, how, and why.
Careful attention should be paid to grammar and syntax; avoid errors such as the following: “Me and him”; “Him and I”; “They run away”; “We was going to”; “We come back”; “He say that”; “He rung up the sale”; “We done everything possible.”
Reports must be careful that any quotes are exactly as stated. Opinions and conclusions must be clearly identified as such, and reports should be signed by the writer.
As stated elsewhere in this book, a clear, concise, accurate, and well-written incident report is frequently the best tool a company has in defending itself in a loss-prevention-driven lawsuit.
Considering the preceding required qualities of a well-written report, read the following report and see how many obvious errors you can identify.
REPORT OF INVESTIGATION
Name of User: Iam N. Investigator
Case #: RWA-01 07 -00353-C-00006
An investigation was initiated at this location on 7-15-07, based on information received from an informant, Joe Goodman, DOB 3/12/66 (phone 555–5555). When reporting, Goodman stated that he had witnessed Very Tuff and Security Guard I. M. Trouble stealing merchandise. Goodman stated that Trouble was allowing Very to exit the facility with stolen merchandise concealed in bags and under clothing.
Based on the above information, a surveillance was conducted on 7-16-07. with no results. It was then decided to interview both Tuff and Trouble on 7-17-07.
Based on this information, I. Gotchya interviewed Tuff 7-17-07, who in a signed statement acknowledged to stealing $5,000.00 to $6,000.00 of unpaid Cheap Brothers merchandise. Tuff would conceal the items under his clothing or in a bag and Trouble would allow him to exit the facility. Tuff signed a indebtness and promise to pay document for the amount of $5,000.00
Subsequently, on this same date, I interviewed I. M. Trouble on 7-17-07 who in a signed statement acknowledged to allowing Very Tuff, and B. A Filcher to exit the facility with unpaid for Cheap Brothers merchandise. Trouble admitted that the total dollar value of the merchandise is $7,000.00. Trouble further explained that both of the above associates would conceal merchandise on there person or in various bags. Trouble signed a indebtedness and promise to pay document for $6.183.55.
In addition on this date, I interviewed B. A Filcher who in a signed statement acknowledged to stealing $3.350.00 of Cheap Brothers merchandise. Filcher stole merchandise by concealing it on his person or in some type of bag and exit the guard shack while Trouble was working. Filcher’ signed a indebtness and promise to pay document for $3,350.00.
The facts surrounding this case were reviewed with M. Y. Boss and Big Boss and it was decided that Tuff, Filcher and Trouble employment be terminated.
Note: The significant errors are underlined and explained in the report reprinted here. Note the reference numbers which refer to errors.
An investigation was initiated at this location8 on 7-15-07, based on information received from an informant, Joe Goodman, DOB 3/12/66 (phone 555–5555). When reporting, Goodman stated that he had witnessed Very Tuff9 and Security Guard I. M. Trouble10 stealing merchandise. Goodman stated that Trouble was allowing Very to exit the facility with stolen merchandise concealed in bags and under clothing.
Based on the above information, a surveillance was conducted on 7-16-07 with no results11. It was then decided to interview both Tuff and Trouble on 7-17-07.
Based on this information, I. Gotchya interviewed12 Tuff 7-17-07, who in a signed statement acknowledged to stealing $5,000.00 to $6,000.0013 of unpaid Cheap Brothers merchandise. Tuff would conceal the items under his clothing or in a bag and Trouble would allow him to exit the facility. Tuff signed a indebtness14 and promise to pay document15 for16 the amount of $5,000.00
Subsequently, on this same date, I interviewed I. M. Trouble17 on 7-17-07 who in a signed statement acknowledged to allowing18 Very Tuff, and B. A Filcher19 to exit the facility with unpaid for Cheap Brothers merchandise.20 Trouble admitted that the total dollar value of the merchandise is $ 7,000.00.21 Trouble further explained that both of the above associates would conceal merchandise on there22 person or in various bags. Trouble signed a indebtedness and promise to pay document23 for $6.183.55.24
In addition on this date,25 I interviewed B. A Filcher26 who in a signed statement acknowledged to stealing $3,350.0027 of Cheap Brothers merchandise. Filcher stole merchandise by concealing it on his person or in some type of bag and exit28 the guard shack while Trouble was working.29 Filcher’ signed a indebtness30 and promise to pay document31 for $3,350.00.
The facts surrounding this case were reviewed with M. Y. Boss and Big Boss and it was decided that Tuff, Filcher and Trouble employment be terminated.
8. Name location 9. Job or Employer 10. Employer 11. There were results; should have been stated “with negative results.” 12. Where, times 13. thefts over what period of time 14. Misspelled and improper use of word 15. More correctly, a Promissory Note 16. Should be “in”, not “for” 17. Where, times 18. improper language; eliminate “to” 19. Identify Filcher in detail 20. What merchandise? Over what period of time? 21. How much attributable to each thief? 22. Misspelled word 23. More properly, a promissory note 24. This amount requires an explanation 25. Show date 26. Where interviewed, times; Further identification of Filcher needed 27. How does he know this exact amount 28. Tense; “exited” 29. Statement that Trouble knew he was stealing 30. Misspelled word 31. Properly “Promissory Note
Errors/Omissions at End of Report:
32. Should mention whether prosecuted and reason for decision
35. Copies of statements and promissory notes should be included as enclosures
1. I have reservations about mentioning Joe Goodman as the informant and source of the information about these thefts. We suggest that, rather than Joe’s name and phone number being shown, he be referred to as “Confidential Informant 25.” Without using this comment as a tutorial on documenting and handling confidential informants, Joe’s name and identifying data should be kept in a highly restricted and secure file, and he should be identified in any reports which will receive distribution and possible use in open court as a confidential informant, thus protecting his identity as well as, perhaps, his physical well-being.
2. We suggest that obtaining a promissory note from Trouble in the amount of $6,183.55 was improper. Nowhere in this report does it state, nor did Trouble admit, that Trouble stole any merchandise. While he obviously facilitated and permitted Tuff and Filcher to steal, which certainly justifies his termination and possible criminal prosecution as a coconspirator with Tuff and Filcher, Trouble himself did not benefit from their thefts, and therefore owes the company no restitution. According to the statements of all concerned, the maximum amount of stolen merchandise amounted to $9,350 (the total of Tuff’s and Filcher’s admissions). The total of all the Promissory Notes obtained is $14,533.55, or $5,183.55 more than the maximum total dollar value of the admitted thefts and loss to the company. The company cannot profit from the illegal acts of its employees.
A Well-Written Report
| Company Name | |
| REPORT OF INVESTIGATION | |
| Date: July 19, 2007 | File#: RWA-01 07 −00353-C-00006 |
| Subject: Midtown Warehouse Thefts ($9000) | Class: Theft |
| Origin: Confidential Informant #25 | Charge: 487PC |
| Report by: Iam N. Investigator | Status: Closed |
| Undeveloped Leads: None |
Synopsis: An investigation, based on information from a Confidential Informant, led to two (2) employees of the Midtown Warehouse admitting the theft of merchandise valued at approximately $9,000.00 over a period of the past 10 months. The theft was facilitated by a company security guard who knew of the thefts but allowed them to occur. Those responsible for the thefts have agreed to make restitution. All three (3) employees were terminated and criminal prosecution will be pursued. This case is closed.
Details of Investigation: An investigation was initiated at the Midtown Warehouse on July 15, 2007, based on information received from Confidential Informant (CI) #25. The informant reported that he had witnessed stockman Very Tuff and Security Guard I. M. Trouble stealing merchandise. Informant further stated that Trouble was allowing Tuff to exit the facility with stolen merchandise concealed in trash bags and under his clothing.
Based on the above information, a surveillance was conducted on July 16, 2007, with negative results.
It was then decided to interview both Tuff and Trouble on 7-17-07.
On July 17, 2007, I interviewed Tuff at Midtown Warehouse from 9:30 a.m. until 10:23 a.m.; Ms. Irma Jones, HR Manager, witnessed the interview. Tuff is a stockman in the Midtown Warehouse and has been employed there for the past twelve (12) months. He admitted, in a signed statement, that he has, over the past ten (10) months, stolen approximately $5,000.00 to $6,000.00 of merchandise from Midtown Warehouse. He stated he accomplished these thefts by concealing these items under his clothing or in a trash bag and then taking them out to his car. He further stated that Security Officer I. M. Trouble was aware of his thefts for many months but did nothing to prevent them. Tuff voluntarily signed a promissory note in the amount of $5,000.00. Tuff was then suspended, his company ID retrieved, and he was told to report to Human Relations on July 20 at 9 a.m.
On July 17 I also interviewed Security Officer I. M. Trouble at Midtown. The interview was witnessed by Ms. Irma Jones, HR Manager, and was conducted from 10:45 a.m. until 11:30 a.m. Trouble admitted in a signed statement that he had allowed Tuff and also stockman B. A. Filcher to remove company property from Midtown without paying for it. He said he allowed both Tuff and Filcher to remove this merchandise by concealing it under their clothes or in trash bags that ostensibly were going into the dumpster. This theft activity started about ten (10) months ago and has continued since then. Trouble estimated that the total dollar value of the merchandise taken by Tuff and Trouble amounted to $7,000.00. Trouble said he did not personally gain from these thefts and was unable to explain why he permitted them to occur. Trouble was suspended from his employment, his security badge and ID taken from him, and he was told to report to Human Relations on July 20 at 11 a.m.
At 1:00 p.m. on July 17 I interviewed B. A Filcher, a stockman at Midtown Warehouse, who has been employed for eleven (11) months. The interview was witnessed by Ms. Irma Jones, HR Manager, and ended at 1:42 p.m. Filcher admitted to seeing Tuff steal merchandise from Midtown about five (5) months ago; he confronted Tuff, and they then agreed that Filcher would also begin taking unpaid-for merchandise. Filcher, in a signed statement, acknowledged that he had stolen about $3,350.00 of Cheap Brothers’ merchandise. Filcher utilized the same method of stealing as did Tuff. Filcher said they were careful to steal only when Trouble was in the guard shack. Filcher voluntarily signed a promissory note in the amount of $3,350.00. Filcher was suspended from employment, his company ID recovered, and he was told to report to Human Relations on July 20 at 1 p.m.
All three (3) employees indicated the great bulk of the stolen merchandise consisted of ready-to-wear items, with a relatively few items of costume jewelry and men’s fragrances.
The facts surrounding this case were reviewed with M. Y. Boss and Big Boss, and it was decided that the employment of Tuff, Filcher, and Trouble would be terminated on July 20; the investigation will be reviewed with the district attorney for possible prosecution of Tuff and Filcher for theft and Trouble for conspiracy to commit theft.
Encl(s): Copy of Tuff’s signed statement and promissory note.
Copy of Filcher’s signed statement and promissory note.
Because we consider report writing such an important subject for LP, we have added some additional thoughts and suggestions on report writing. LP reports may be reviewed by senior management, police departments, and/or the district attorney’s office, and not infrequently worker’s compensation boards and/or hearing officers. In addition, these reports, while confidential, are available under discovery to attorneys, both plaintiff and defense. As stated earlier, the efficiency and professionalism of the LP department is reflected and judged by the quality of these reports.
Confidentiality
Security reports often contain sensitive information; it is therefore absolutely necessary that they be safeguarded against unauthorized disclosure. The reports must be stored in a secure file cabin et when not needed, and disclosure of the contents can be made only to people with the right and need to know. Every effort must be made to maintain the confidentiality of reports.
Elements of Effective Report Writing
A well-written report should provide a complete understanding of an incident to a person with no prior knowledge of the incident.
Reports should include all important details, written in a clear, concise manner. Common words are most effective, since they cannot be misunderstood. Professional jargon and police terms should be avoided.
Accuracy in spelling, punctuation, capitalization, and sentence structure is vital. If errors are made, they could change the meaning of a report.
The following elements are fundamental to good report writing:
1. Spelling: Correct spelling is essential to a professional report. If in doubt, do not guess. Refer to a dictionary or spell-check where applicable.
2. Abbreviations: Abbreviations can lack clarity. The use of abbreviations should be limited to standard dictionary or department-approved abbreviations. All abbreviations should be in parenthesis, preceded by the complete term; for example, Downtown Distribution Center (DDC).
3. Brief: Information in the reports should be stated directly. Every effort should be made to use short, concise sentences for easy reading.
4. Objective: Reports must include facts, not opinions or conclusions. Impartiality is mandatory.
5. Complete: Every report should contain all relevant facts of the incident. All the basic questions—who, what, where, when, why, and how—should be answered.
Identification of Persons
1. Each time a subject is referred to in a security report, his last name must be capitalized. Within the context of the report, the subject may be identified by his last name, or the word “SUBJECT.”
2. The names of other persons identified within the report should be typed using normal capitalization rules. Once fully identified, the person should be referred to by his last name.
3. If the proper spelling of a person’s name is not known and not obtainable, the name should be spelled phonetically with the word “phonetic” in parentheses immediately following the name.
4. If the security form requests the race of the individual, one of the following must be used:
General Information
1. LP personnel must write their own reports.
2. Proofread all reports. It is recommended that, if practical, another agent read the completed report prior to its submission.
3. Reports may be written in either first or third person. Whichever is used, it must be consistent throughout the entire report.
4. Opinions and/or conclusions of security personnel are not generally included in official security reports. If it is necessary to include such information, it is reported in a separate paragraph, with the heading “Agent’s Notes.”
5. A “Confidential Source of Information” (CSI) or “Confidential Informant” (CI) is an individual who furnishes information on a specific case with the desire to have his identity protected. Under no circumstances are CSIs or CIs identified by name in any report, and they are not to be named in any official company document. All requests to identify a CSI must be forwarded to the most senior LP executive for approval.
For example: CI 1701. CI is the Confidential Source of Information, from store #17, Pittsburgh; and 01 identifies the specific individual.
6. The original copy of all reports should be retained in the store’s LP or security department files.
Requests by Shoplifting Detainees
A particularly sensitive area in shoplifting detentions has to do with requests or demands made by the person in custody of the loss prevention department, pending arrival of the police (or pending the decision whether the police should be summoned). “Particularly sensitive” means subsequent repercussions might stem from the company’s response to such requests or demands. For example, a woman is detained for shoplifting at 2:00 p.m. and is brought to the office for processing. At the outset of the processing, she informs the loss prevention personnel she has a child in elementary school a mile away and that child will be waiting in front of the school for her at 2:30 p.m. and therefore needs to be released quickly or needs to call her husband at his place of work to pick up that child. In this case, her request requires immediate attention. The LP agent should either allow her to call whoever is necessary to pick up that child, or the Agent should make the call for her. Ignoring or not believing the woman could have catastrophic consequences. Too many times have we seen detainees’ requests ignored or arbitrarily refused, and such insensitivity to the request has the potential of adverse downstream consequences.
Following is a sampling of detainees’ requests and the recommended appropriate course of action:
• If a person asks for a drink of water, provide it.
• If a person claims he needs to take medication and has the medication, allow him to take it, but also, if possible, prevent him from overdosing.
• If a person claims he needs to take medication and has the medication and must take it with some food, provide him with the food he requests.
• If a person asks to use the restroom, accompany the person to the restroom and monitor him to ensure he doesn’t dispose of merchandise, drugs, or any other item which may be of interest to the police.
• If a person claims he is cold, take reasonable steps to make him comfortable.
• If a person claims he is too hot, again, take reasonable steps to cool him down.
• If a person claims he is sick, injured, or in pain, call the paramedics.
• If a person claims he has a friend or relative with him and that person will be alarmed and panicky over his “disappearance,” make every effort to locate that person, page her if necessary, and inform her as to the detainee’s status, if the detainee wants that done.
• If a person claims he has children or friends waiting in the car parked in the lot, attempt to locate and confirm.
• If a person claims he has the receipt for the merchandise in question in his vehicle, obtain a full description of the vehicle and its location in the parking lot and inform him the police will be so informed and will make the decision as to searching the vehicle.
• If a person requests or demands to use a phone, including his own cell phone, to call a relative, friend, or attorney, inform him that he may not make the call until the police arrive or may make the call after he is processed and released.
• If a person requests or demands to speak to the store manager, follow company policy as to a store manager’s role or responsibility in shoplifting matters.
• If the person offers an exculpatory explanation, such as prior conversation with store personnel of service desk associates, make every attempt to verify the story.
These recommendations are but guidelines for what courts have held to be reasonable responses to customers temporarily held in temporary custody in keeping with laws pertaining to the merchant’s privilege and state laws relating to arrests by private persons.
Restaurants in Stores
The trend to have restaurants or at least some minimal food service available in retail stores seems to be increasing. The food service may be either proprietary or leased out as a concession, with the store owner realizing an agreed-upon fee. This trend poses some potential security risks of interest to loss prevention.
While not strictly a loss prevention issue, the potential for spills of food and drink products increases the possibility of slip-and-fall accidents, which will undoubtedly lead to claims, lawsuits, and higher insurance costs.
Also not primarily a loss prevention issue but one that can cause losses, both financial as well as to reputation, is that of food contamination which causes illness to patrons. Maintaining sanitary food preparation and serving areas, as well as food servers who are free from disease, is essential to both reputation and business success.
Of more immediate concern to loss prevention professionals are issues connected with food service establishments or operations which can lead to theft or embezzlement.
If the establishment serves alcoholic beverages, not only is serving to underage patrons of concern, but also serving drinks which are either under or over standard alcohol content. Because most bars use a standard number of drinks per bottle of alcohol to calculate profitability, a bartender preparing drinks which are under strength can accumulate alcohol, which can then be used to prepare drinks that he will not ring up on the register and pocket the cash paid. By preparing over strength drinks (generally for friends or regular customers), profitability is adversely affected. Bar operations require “mystery shoppers” for random sampling and testing.
The operation of a restaurant, whether a simple coffee shop or a full-blown restaurant, requires considerable skill to be profitable. Whereas the economic “health” of a retailer has a direct relationship to inventory shortage, food service operations focus on food costs; i.e., when a retailer receives 90 pairs of shoes but is invoiced and pays for 100 pairs, that results in increased shrinkage. When a restaurant receives 90 pounds of hamburger but is invoiced and pays for 100 pounds, that drives up food costs. Loss prevention seldom gets involved in food costs except when specifically charged to investigate.
When food spoilage is considered, ordering supplies becomes critical to prevent excessive loss of product through spoilage. Additionally, planning menus to minimize waste is almost a science. Remember that we encounter the same potential for vendor fraud in the food supply business as in any other, but perhaps with less tolerance for losses from this source because of the other critical aspects of this business affecting profitability.
Proprietary restaurants within the confines of a major store, from time to time, will arrange for private parties and banquets which may extend beyond the normal store hours. Special arrangements must be made to accommodate these events, which typically requires loss prevention involvement. “Special arrangements” might include providing security personnel (either plainclothes or uniformed), extending the alarm times with the central station, and gating off or otherwise ensuring a barrier exists between the restaurant and the balance of the store.
Finally, we must consider the increased danger of fire from kitchen operations and the additional fire prevention (CO2 systems over stoves) devices required.
Retail Fraud
What marvels the technological revolution has brought us! On any given day at any given time, we can stand in virtually any area of our choice and peruse email, call a friend in a foreign land, check our location to within a few feet using GPS, and perform a variety of other tasks, all with devices that either slip into a pocket or clip on a belt. Inasmuch as the proliferation of technology has been a boon to most of our daily existences, it has also shown itself to be a bane to the retail industry. We utilize a wide array of electronic technology in the retail world. We have come to be very dependent on it in our day-to-day retail operation. From maintaining our supply chains to transacting our sales, electronic technology is integral to the retail world of the 21st century. Where technology has shown itself to be a bane is where it is used to perpetrate fraudulent activity against the world of retail. Whereas criminal minds have employed a wide assortment of technology to advance their ability to move above and beyond the simple techniques of days past, such as simple shoplifting, we in loss prevention must also advance and adapt our ways of doing business in order to develop and maintain programs that prevent and detect fraudulent activity. Development and implementation of fraud prevention and detection programs are as rapidly growing as traditional loss prevention programs and equally as important. Integral to fraud prevention and detection is having a plan in place which can only be referred to as “all inclusive.” By “all inclusive,” I mean that retailers must be prepared to follow through with legal action, up to and including prosecution, when fraud prevention measures are circumvented and defeated. With simple shoplifting as an analogy, most any fraud prevention and detection program you enact will be tested by the best effort today’s well-equipped criminal mind can come up with. Unfortunately, in most cases, even the best programs will suffer the occasional defeat.
Foremost in any adversarial situation is understanding the tricks of the trade of your adversary. Your adversary is the fraud perpetrator, a criminal with a wide array of tools and techniques at his disposal. Using such simple techniques as altering account numbers on checks or complex bar code printing or identity theft schemes, the criminal’s abilities are only seemingly limited by his imagination. But by knowing your adversary and knowing what to look for, today’s retail loss prevention staffers can prevent and detect fraud. What follows is a random sampling of the fraud schemes that I’ve seen or researched. In most cases I’ve effected successful prosecution of the cases. In some cases, others have effected prosecution. Your weapons in this battle: a well-written fraud prevention/detection plan, tenacity, and the drive to put a stop to a rapidly growing source of loss that is significantly affecting your bottom line on a daily basis.
Not unlike any other criminal enterprise, retail fraud has undergone an evolutionary process. It wasn’t all that long ago that fraud techniques comprised relatively simple schemes and techniques. Drawing on a bit of an archeology analogy, let’s look at specific examples of retail fraud. We’ll start with some of the earliest, refund and receipt fraud, and we’ll progress to techniques employed by the present day fraud purveyors. You will see that the archeology analogy works quite well. The techniques of old pale in comparison to what the present-day retail fraud perpetrators are capable of.
For years retailers saw refund/return fraud on a regular basis. The methodology of this from the perpetrator’s standpoint was relatively simple: Make a legitimate cash purchase of a number of expensive items usually along with one or two inexpensive items. Then either the purchaser or cohorts enlisted to help would make another visit to that store or another store of the same chain in the area. Upon making the subsequent visits, the expensive items matching the original purchase were shoplifted. Once that was accomplished, then yet another person was enlisted, usually to perform a return transaction of the original expensive items on the receipt. The inexpensive items were not returned so that the refunder was ensured that the purchase receipt was returned to them due to the fact that not all the items were returned. Then, either in the same store or by another person, a subsequent theft/return transaction was accomplished using the same receipt. Again and again the receipt would be returned to the refunder due to the fact that not all the items on that receipt were returned.
The proliferation of this eventually drew attention to the activity. Retailers began making notations of “Returned” and the date written on the receipt over the portion that pertained to the returned item. This is when the perpetrators of this activity had to adapt. Their adaptations followed a classic evolutionary path. First, all they would do is simply erase the return notation. This eventually wore out the receipt and was noticeable to alert retail clerks. The second adaptation was coating the receipt with a thin sheen of hairspray. When the transaction was complete, all the refunder had to do was use an ink eraser, and the returned/date notation was easily erased with little or no wear and tear to the receipt. Another variation of this was to give the receipt an acetone bath prior to the return attempts. This served the same purpose as the hairspray coating but was usually a bit more long-lasting than the hairspray technique.
In recent years the with-receipt refunders have evolved their techniques. They’ve obtained rolls of authentic receipt paper from major retailers and reproduced their own receipts. Using sophisticated printers and laptop computers, they have successfully reproduced authentic-appearing receipts on authentic receipt paper from any given retailer. This approach worked for quite a while until retailers either adapted a bar-coded receipt system or loss prevention professionals investigated this and tracked the activity, which effectively brought receipt fraud to an end. It was primarily through effective inter-store communication and intense examination of the bogus receipts that succeeded in convincing retailers at the corporate level that the scope of this problem, and the losses attributed to it, required sweeping change. One of the convincing pieces of evidence was when I discovered that there was a distinct difference between an authentic receipt and a copied/printed receipt. All the registers in my company used a dot-matrix printer. The dot-matrix printers used a blue ribbon. I discovered that the bogus receipts printed on a computer printer had a distinct difference. Bogus receipts had a barely noticeable blue/red shading around the edges of the printing. Barely visible except upon very close examination, this discovery brought about the slow but sure downfall of the copied receipt scam and led to numerous apprehensions. Depending on the amount and whether the criminals signed their own names, most times they didn’t, the majority of these apprehensions were for at least one felony. If your state allows for retail fraud to be non-dollar-dependent, or if the criminals do not sign their own name, then in most cases the crime is felony forgery and/or retail fraud.
During the heyday of receipt/return scams, gift cards came into being. At first, the corporate heads were seemingly under the impression that gift cards would be a fix to years of problematic endeavors. Instead of cash back for a no-receipt return, it was now a gift card. Instead of handwritten paper gift certificates, it was now gift cards. Loss prevention professionals suspected it would only be a matter of time before gift cards were also exploited by the retail fraud element. The wait was not long.
Most major retailers have used gift cards for quite some time in lieu of the age-old store credit slip when a customer presents merchandise for return without a receipt. One of the first manifestations of fraudulent activity we saw was individuals transacting a number of no-receipt returns and either amassing a significant balance on a single card or a number of cards with balances. Then the gift cards would be utilized in a plethora of techniques: sold person to person for a percentage of the card’s value, used in a large purchase, used for merchandise that was desired in lieu of the returned merchandise. Since the inception of gift cards, we’ve seen a noticeable increase in in-store pickup and return shoplifting apprehensions. The shoplifter comes into the store, picks an item off the shelf or rack, and then returns it without a receipt for a gift card. Once this scenario is accomplished undetected, then the choice of what to do with the gift card is only limited by the shoplifter’s resources. The shoplifters may use it for what they really want in the store or may trade it off for drugs to their local pusher.
Organization has also entered into retail fraud regarding gift cards. We’ve seen individuals recruit others to shoplift and refund for gift cards, turn over the gift cards, and then the individuals amass cards and make major purchases. The organizers stay isolated wherein, if the shoplifting refunders are apprehended, it remains just a simple shoplift arrest and/or conviction. We have successfully prosecuted the organizers and participants of this kind of activity, but it requires intense inter-store communication and equally intense investigative tenacity to effectuate a successful conclusion to cases such as these.
Gift cards have also been an employee enticement. Whether for themselves or their friends, employee generation of bogus gift card balances continues to be an ongoing retail problem. For the most part, employee gift card fraud cases have remained at a constant level from year to year. Retailers maintain intense scrutiny of employee gift card activity, but despite this, employees’ fraudulent gift card activity has not been significantly curtailed through the years.
Rarely seen but still occurring relative to gift cards is gift card “phishing.” Enter any major retailer today, and it’s hard not to see a large gift card display or two or more! The gift card “phisher” will swipe a number of gift cards from the displays and then record the numbers. Write them down, digitally photograph, use a camera phone—the techniques vary, but the gift card numbers are obtained nonetheless. The cards are then put back on the display where they came from. Then “phisher” just performs regular balance inquiries using the cards’ 800 numbers. When a balance is discovered, the “phisher” uses the card number on an Internet order, store purchase, or simple transfer to another gift card. All the “phisher” has to do is represent himself as one who “lost” the original card. The perpetrator uses numbers to his advantage.
The most number-dependent form of payment, other than a credit card that a retailer accepts as tender for a purchase, is a bank check. We’ll simply call it a “check.” The fact that a check is so number dependent is an advantage: The routing number points to a specific institution; the account number points to a specific account; the check number indicates to a retailer the “age” of the account. A low check number is indicative of a new account and vice versa concerning a high number. This number dependence regarding checks can be exploited by the retail fraud perpetrator with sometimes devastating results. Check fraud schemes perpetrated against retailers have run the gamut of variable creativity. From as simple as altering the routing and account numbers to using sophisticated computer printing to create entirely fictitious checks, most major retailers have seen them all. Some alter or obliterate digits in the numbers so as to pass the check at a store as one that the system has not seen before. Therefore, provided the check amount falls within the guidelines that pass close scrutiny, the check is approved. Most times, the checks are imprinted with the passer’s real name and address, and he has identification to match. Although the check and identification match, the passer has most likely moved or opened the account years prior and since closed, or any of a myriad of reasons the amateur bad check writer uses. It’s all a means to an end: pass a worthless check for the purchase.
Whereas the amateur bad check writer is most likely one who is from the local area and is going to stay in the local area, the professional bad check passer is a model of a traveling criminal enterprise. The dawn of the digital age made the traveling check passer a prime example of illicit sophistication. The traveler has a mobile print shop for making checks. Using digital imaging and copying, the mobile check passer has the ability to produce his own checks, driver’s licenses, and any supporting documentation deemed necessary to pull off this type of fraud against the retail world. In many cases, there are even bogus verification processes, such as contact phone numbers, already set up by the perpetrator. The purpose of this is that most large purchases using a check require a verification procedure. By having a bogus verification contact or contacts, the professional bad check passer has a chance at circumventing even the best acceptance policy and procedure set in place by most any retail establishment. In most cases if the pro is thwarted, he just moves on to another location and tries again. If one identity doesn’t work, maybe another will.
Identity, whether authentic or manufactured, is still identity. In the past few years, authentic versus manufactured identity has grown. Identity theft is perhaps the single most growing nemesis affecting the retail world aside from “regular” theft and error. Far too many major retailers are driven on a daily basis towards the “ICAP,” or instant credit application, performed in just minutes at register terminals thousands of times a day at any major nationwide retailer. All it takes is a driver license and a Social Security number. Once the application is approved, there’s instant buying power. Once something is bought, there’s instant possession. Once the buyer is out the door, there’s instant successful perpetration.
Although identity theft and credit fraud in the retail world are seldom correlated, there are significant parallels between the two in today’s retail environment. Once an identity is stolen, often the first places to go are major retailers to open up charge accounts and charge to the maximum in a very short time. The favorites are items with a high resale value, with gift cards topping the list. Quite a few identity theft cases have been apprehended on the spot by retailers that have an effective awareness program geared toward watching for just this type of scenario. For example, the perpetrator comes into a nationwide home improvement store and applies for an instant credit with a stolen identity. He gets approved for $10,000 limit. Then, it can go one of two ways: The perpetrator buys five $500 gift cards and two or three major appliances and then leaves, or immediately after the gift card purchase, which should raise a bit of a red flag, an aware employee notifies loss prevention staff who have access to the verification process and they confirm the identity theft. Then LP either effects the apprehension themselves or call in law enforcement. The difference between being the victim and being the end of the line for the perpetrator can be tantamount to slowing what has become perhaps the fastest growing criminal enterprise of modern time. Inasmuch as identity theft and credit fraud seemingly go hand in hand in the retail world, there are techniques that can be employed to detect and prevent loss from this activity. Most retailers simply choose to attempt to prevent and detect fraud of this type and leave it at that. Very few actively pursue remedy through the legal system, although this philosophy is undergoing a bit of an evolutionary change of its own as losses attributed to identity theft/credit fraud are adding up substantially. Some major retail chains outsource their credit departments but are now working with their retail partners more closely as credit fraud losses mount.
Credit fraud techniques in and of their themselves have also evolved as the criminal element has discovered technology. It used to be that the perpetrator simply stole a credit card and proceeded to the nearest place to use up as much of it in as short of an amount of time as possible. The thieves would steal a credit card or cards from a source like an unoccupied purse in an office or a wallet in a locker room and then either pass it off to a fellow criminal or use it themselves as quickly as possible. Speed was of the essence because they wanted to use the card before it was reported missing and cancelled. This particular form of credit fraud is still seen quite often and rarely detected at the point of sale due to one simple device: the electronic self-swiper/signature pad. In the past, the retail associate had possession of the credit card for a moment or two at the point of sale. The associate had the opportunity to check the back of the card for a signature and then compare the customer’s signature on the credit slip to the card. If there was not a match, then there was a request for a form of identification. Such is not the case anymore. At the point of sale, the customer swipes his own card and signs the electronic pad. In these times of good customer service comprising how fast we can get customers through the checkout process, we have surrendered the opportunity to be able to scrutinize any given transaction while it’s in progress. The vast majority of customers are legitimate, but in the interest of customer service, we have adapted to the criminals’ favor. Get them through the point of sale as quickly as possible. Do sales increase if we get customers through fast? Obviously, yes. Is this another angle the credit card fraud perpetrators can exploit? Again, obviously, yes. Self-service checkouts facilitate this all that much more for the criminal element due to the removal of the sales associate.
Even before swipe-your-own devices and self-checkouts, credit fraud still was a relatively technologically based crime if the perpetrator was not the steal-it-and-use-it-fast type. There has been the past and continued use of what’s referred to as “skimmer” devices. A skimmer device reads and retains the information off the magnetic strip on the back of a credit/debit card. The usual placement of a skimmer is by a dishonest associate who is employed at a location such as a gas station or convenience store. Skimmers have even been used by dishonest employees at fast-food establishments. The dishonest employee has the skimmer either in-line or adjacent to the real card reader and swipes the customer’s credit card through both devices. Once off-duty, the dishonest employee uses the skimmer as a two-way device. First, the gathered information is downloaded onto a computer. Then the skimmer is used to reprogram the magnetic strip on the card of his choice to the skimmed number. The beauty of this technique is twofold: The skimmer can reprogram his own credit/debit card with the purloined information; therefore, if his identification is checked when he uses the card, he has a match to the embossed name on the card. Although this technique does require a modicum of sophistication, it is still on the relatively amateurish side of this endeavor. The professional side has the resources available to obtain blank cards and embossing machines. Coupled with the skimmer, this credit fraud scheme is complete. Aside from hacking into a database and stealing credit card information, skimming still retains a bit of popularity with both amateur and professional credit fraud perpetrators. The arrests and prosecutions of professional credit fraud activity of this nature have made national headlines. One particular case of a semi-pro was a husband and wife team. She was a waitress; he was a computer programmer. She copied down the credit card numbers of the same type of card as an expired debit card of theirs. She would bring the numbers home, and he would reprogram the strip on the expired debit card over and over again. The couple did it a few too many times and established a pattern that was used to aid in their apprehension and successful prosecution.
Note the two big words: “apprehension” and “prosecution.” In the retail loss prevention scheme of things, “prevention” is the keyword. Retail fraud is not at all similar to anything else that leads to loss for a retailer. Preventative measures can be quite effectively used against shoplifting, employee theft, errors, and the like. Conventional loss prevention philosophy does not lend itself effective against retail fraud. While there may be some dissention as to the impact of retail fraud, all we have to do is come to the realization the sweeping changes law enforcement is putting into effect to combat this burgeoning problem. The Social Security Administration, Federal Bureau of Investigation, U.S. Postal Service, and Federal Trade Commission have all created or enhanced departments in their organizations that have fraud as a prime focus. All the while, most major retailers have not changed their loss prevention philosophy regarding retail fraud. Inasmuch as federal law enforcement and some state and local agencies have recognized fraud as a growing source of criminal activity, retailers are relatively slow to realize the same.
To combat retail fraud, there must be comprehensive awareness programs enacted as the first step. They must be followed with policy and procedure programs adaptive to eliminating retail fraud. As in all the traditional loss prevention programs already in use throughout the retail world, retailers are starting to adapt to the ever-changing battle against retail fraud. There are finite ways to steal and finite ways to commit error, but retail fraud is limited only by the perpetrators’ imagination and resources. Retail fraud has a seemingly infinite variable of perpetration. Retail fraud maintains a growing rate of proliferation. The evolution of loss prevention has been matched and in some cases exceeded by the evolution of retail fraud.
Retail Merchandising in Casinos
Depending how you reckon the beginning of gaming, the genesis of this industry stretches as far back as the beginnings of civilization, and possibly even prior to that. Throughout their history, gaming and wagering have evolved over time and across all cultures. Games of chance and games of skill have come and gone in various designs, configurations, and complexities. First evolving as a form of divination, gaming and wagering today are still routed in various mythical notions and urban legends—depending on which country you are placing the wager. Whatever you may think about the merits of gaming and wagering in the United States, the industry is now firmly routed in American culture, psyche, and business. Spanning the great divide of Wall Street to Main Street, from the simple charity Bingo and state-run lottery, to elaborate card parlors, riverboats, and mega-resort casinos, gaming is now a multibillion dollar industry.
Along its evolutionary journey, gaming and wagering have merged with numerous other industries to form an entirely new breed of super-gaming resort. Today, in addition to the standard casino, tourists are likely to find a wide array of nongaming amenities that are designed to add value to their vacation as well as ensure that they do not leave the property and therefore spend every disposable dollar on the premises. Beginning with the hotel, today’s gaming mega-resort will have some version of a full-service spa, workout center, business center, vehicle rental center, day care, wedding chapel, movie theater, bowling alley, arcade, showroom, theme park, art museum, antique auto collection, dolphin or shark tank, pools with sandy beaches and manmade waves, and the ever-expanding retail area.
Once upon a time, the retail outlet of a gaming resort or hotel was nothing more than a simple gift shop. Though this may still be the case in some rural or tribal casinos, the ma-and-pa gift shop has evolved into super malls rivaling most freestanding malls or plazas not connected to a casino resort. In some Las Vegas casinos, revenue generated from dining, drinking, dancing, and merchandising is at least equal to or surpasses the income generated from the wagering games in the casino. The modern retail malls built in conjunction with casino mega-resorts have become entertainment centers in their own right. Containing some of the more expensive stores found in the most ritzy retail centers of Los Angeles, Beverly Hills, and New York City, these hospitality-based mega-resort malls can challenge the wallets and credit limits of even international high-rollers.
Along with the revenue generated from these gaming-resort retail plazas and malls has come a range of challenges in the implementation and administration of security and loss prevention. The convergence of gaming and retailing has resulted in the collision of gaming, innkeeping, and merchants’ laws. This hybrid business entity and the attendant statutes regulating its operation have created confusion, misunderstanding, and misapplication of the various criminal laws by security personnel. Even among members of the legal community, there can be a raging debate regarding the application of the various statutes, some of which are not only confusing, but are also conflicting.
Notwithstanding the administrative confusion and conflict that sometimes occurs, hospitality-based retail merchandising will continue to grow as gaming expands into other jurisdictions both in size and scope. As this sector of retail grows, it will provide employment opportunities for security and loss prevention professionals who wish to develop and cultivate long-term careers.
From Myth and Magic to Gaming and Wagering
All stories have a beginning, a middle, and an end. The story of gambling and wagering is no different, though the end is probably nowhere in sight as of this writing. A quick journey back into very ancient history, back into Biblical lore, may begin with the story of Adam and Eve, of whom, it is said, made the first recorded wager in the human race. According to one version, to eat or not eat the fruit of the forbidden Tree of Life in the Garden of Eden was a wager as to whether the heretofore-unknown sacred knowledge would be bestowed upon the consumer of the fruit. Another version relates that the actual bet between Eve and the serpent was regarding the number of seeds the apple contained. When Eve apparently swallowed a seed, she lost the bet and, as the saying goes, “you know the rest of the story.”
Primitive man was inclined to make any natural phenomenon into some sort of fetish (a superstitious belief that objects contained certain magical powers). Some of the first fetishes were pebbles that had peculiar natural markings and gave rise to “sacred stones”; these were much sought after. Necklaces and bracelets of beads and stones strung together formed a collection of sacred stones, a veritable phalanx of potent charms. Ancient tribes accumulated sacred stones that supposedly possessed many powers—to ward off evil, to attract good fortune, and to divine the future. And as for divination, various references are made in the Old Testament of the Bible regarding lots being drawn, not as an appeal to chance for entertainment purposes, but rather to determine God’s will.
Over time as number and counting systems came into being and evolved, certain numbers were regarded as unlucky, such as the number 13. Numbers 3 and 7 were seen as bestowing luck. When early man recognized the four directions of the compass headings, the number 4 was consequently seen as being lucky. And so from such simple induction, primitive man would confer implied good and bad luck.
Overtime, superstitious beliefs became more refined and evolved into ceremonial magic—the method of supposedly manipulating the spirit world so as to explain the inexplicable. The goal of magic and sorcery involving fetishes was to obtain insight into the future and favorably influence nature.
Primitive man concocted magical charms from a wide variety of objects—animal claws, teeth, bones, venom, hair, and plants. As far back as 3500 B.C.E. bones were particularly viewed as being magical, and it was from such material that the first dice were fashioned. The astragal was the earliest form of die. It was a small, four-sided bone obtained from the ankle of a goat, sheep, or other domesticated animal and has been located in vast quantities on prehistoric sites.
The modern six-sided dice have been dated as far back as 3000 B.C.E. in Iraq and India. The configuration of the current die whereby the opposite sides adds up to seven was introduced around 1400 B.C.E. It was at the foot of the Cross for the robe of Christ that Roman Centurions wagered with some form of die or marked stones.
Gaming in America
The Early Days
Centuries before the arrival of the first White Man, Native American Indians wagered on anything where the outcome was apparently uncertain—the weather, harvests, races, animal combat, you name it. Inter- and intra-tribal gambling on contests of skill and chance were very popular. Wagering became such a part of the Indians’ sacred ceremonial rituals and so integrated into their culture, there was little hope that future missionary or White Man laws could alter that reality. Archeological sites indicate that many tribes engaged in various forms of wagering. Burial sites of the Zuni, Chippewa, and Crow have revealed artifacts that appear to be ancient gaming devices.
In the early days of the colonies, the Puritan and other religious colonists did not permit gambling and lotteries. Gambling was viewed as an unacceptable occupation that did not contribute anything useful to society. Gamblers it was believed, particularly if they were successful at their trade, only victimized the less fortunate in society. Many of the colonies maintained laws prohibiting gambling on moral grounds; however, throughout the 1700s lotteries were still used to finance many public-works projects. When the American Revolution came along, lotteries were vital in raising revenue to purchase weapons and supplies for the fledging Revolutionary Army.
After the years of the American Revolution, private and public gambling underwent many changes. From the Northeast states to the former states of the Confederacy and extending out to the Frontier Territories of the west, laws came and went that, at first, prohibited gambling and then sought to regulate it and then tax it for revenue.
Throughout the 1830s and 1840s the country experienced a vast movement against moral corruption and “sin and vice.” Lotteries were falling in disfavor as part of a growing national movement that was fueled by several widespread lottery scandals. Many states began passing legislation to ban all unauthorized lotteries—in other words, those that were not operated by the state itself. The result of this momentum was that many state constitutions were drafted or amended to prohibit the operation of lotteries altogether or to sanction only staterun lotteries. After the Civil War, many cities witnessed the spawning of criminal gambling syndicates within both the shanty parts of town and the social elite sections. As the American West opened and expanded, frontiersman gambling halls were common while back east state legislators enacted restrictions against the perceived “vice.”
The Modern Era
In the early 1900s gambling syndicates were fairly well entrenched throughout the country. In 1919 the United Sates passed the 18th Amendment prohibiting the sale and distribution of alcohol and thus began 3 years of the Prohibition and its byproduct, bootlegging. Immigrants of Jewish, Irish, and Italian descent entered into the lucrative, if not risky, enterprises of operating speakeasies—private gambling salons where the alcohol flowed freely. Parts of the country experienced a “clustering effect” where local illegal gambling became prominent. Such regional gambling centers rose from the east to the west coasts, most notably in Hot Springs, Arkansas; Miami, Florida; and in both Reno and Las Vegas, Nevada. Nevada had already outlawed gambling in 1910, but the illegal activity continued discreetly and less publicly in the backrooms of saloons and hotels.
With the collapse of the stock market and the ensuing Great Depression, the need for finding creative ways to generate revenue became paramount. States began to take a second look at wagering, horse racing, and lotteries as a source for that vital revenue. In 1927 Illinois legalized pari-mutuel on-track betting; both Ohio and Michigan passed the same laws in 1933.
The Volstead Act took effect as a result of the 18th Amendment in 1920, but by 1930 common citizens had lost their zeal and support for Prohibition. In 1931 Nevada passed the “Wide Open Gambling Bill,” which legalized gambling throughout all of its 17 counties. Legislators saw the passage of this bill as a way to tap into the revenue already being generated by the illegal games copiously found in the backrooms of Wild West saloons in every town. Half of the tax revenue was retained by the county where the gambling occurred, and the other half went to the State of Nevada.
In 1955 Nevada created the Gaming Control Board, and in 1959 the state passed the Nevada Gaming Control Act. Both of these events were instrumental in bringing gaming and wagering into the modern era. Rules and regulations were established by the board, along with numerous statutes passed by the legislators. Examples of some of the gaming statutes in Nevada are as follows:
NRS 463.0169 “Licensed gaming establishment” defined. “Licensed gaming establishment” means any premises licensed pursuant to the provisions of this chapter wherein or whereon gaming is done.
NRS 463.0152 “Game” and “gambling game” defined. “Game” or “gambling game” means any game played with cards, dice, equipment or any mechanical, electromechanical or electronic device or machine for money, property, checks, credit or any representative of value, including, without limiting the generality of the foregoing, faro, monte, roulette, keno, bingo, fan-tan, twenty-one, blackjack, seven-and-a-half, big injun, klondike, craps, poker, chuck-a-luck, Chinese chuck-a-luck (dai shu), wheel of fortune, chemin de fer, baccarat, pai gow, beat the banker, panguingui, slot machine, any banking or percentage game or any other game or device approved by the Commission, but does not include games played with cards in private homes or residences in which no person makes money for operating the game, except as a player, or games operated by charitable or educational organizations which are approved by the Board pursuant to the provisions of NRS 463.409.
NRS 463.0153 “Gaming” and “gambling” defined. “Gaming” or “gambling” means to deal, operate, carry on, conduct, maintain or expose for play any game as defined in NRS 463.0152, or to operate an inter-casino linked system.
Today’s hotel-retail-gaming resorts have been compared to mini-cities in that they are a self-contained living, working, shopping, dining, drinking, entertaining, and banking minimetropolis, a veritable “casinopolis.” Some of the grandest larger-than-life mega-resorts span many city blocks with thousands of hotels rooms, employing several hundred or more employees per shift and catering to hundreds of thousands of guests and patrons over any given busy weekend. The evolution of gaming and wagering is a complex and historical study in and of itself. Such a journey would span the post-Depression era gambling halls operated by Wild West personalities to the casinos of the mid-20th century run by organized crime syndicates and ending with the contemporary super mega-resorts owned and managed by corporate America trading its stock on the Big Board. Such a comprehensive treatment would also examine gaming as it migrated from state-run lotteries, private horse racing, and Las Vegas casinos and formally entered Native American territory on land and riverboats coursing the waters of the Mississippi.
Retailing in the Hospitality Industry
Gift Shops Within Hotels
Retailing both as a business practice and as a serious source of cash flow to the hotel or motel evolved from humble beginnings. Post World War II America witnessed the rapid expansion of the interstate highway system across the United States. This phenomenon accelerated the explosion of hotels and motels, restaurants and cafes, theme parks and campgrounds, and the ubiquitous gasoline service stations. Prior to this explosion of the modern hospitality industry, hotels simply provided lodging and perhaps an internal eating venue strictly for its guests. If guests required accessories common for travelers, they had to leave the hotel and find an appropriate store in that locale. Higher-end hotels would have such items purchased and retrieved by their staff from nearby stores as a value-added service for their guests. Such amenities were found mainly in larger metropolitan hotels catering to wealthier clientele. Other than a few isolated instances and locations, the concept of merging innkeeping with shopkeeping had not really caught hold at this point.
During the years spanning the mid-1940s through the late 1950s, retailing within a hotel was an unsophisticated practice. Small gift shops stocked with items targeted to travelers and guests were common in larger hotels within metropolitan areas. Not too unlike contemporary gift shops, these early venues provided the typical shaving, cleaning, and other hygiene products, coupled with items for those who smoked, had a sweet tooth, or simply needed the local newspaper. Beyond the outskirts of these city-oriented hotels, suburban and rural motels were even less sophisticated in the art of retailing, though they did not miss the opportunity to address the needs of their guests. Gift shop items were readily provided by vending machines that are still popular within many city and inter-state motel franchise chains.
As highways expanded linking metropolitan freeways with back-country rural byways, larger numbers of Americans loaded up the family station wagon and hit the road in search of adventure and Kodak memories. More travelers, both sophisticated and less-seasoned, translated into an aggregate increase in demand for more inns, lodges, motels, and hotels, along with the attendant amenities they could provide. This demand was also reflected in the hotel gift shop and even within the humble vending machine. By the early 1970s, some hotel gift shops began to resemble mini-grocery stores complete with snack foods, premade sandwiches, beverages, alcohol, and laundry supplies. It is interesting to note that around this time a similar change was occurring within traditional pharmacies and drug stores. Once reserved for filling prescriptions and providing over-the-counter medicines, first aid supplies, and various hygiene items, pharmacies began a radical shift into department store retailing. As with their modern pharmacy counterparts, today’s hotel gift shops look more like a synthesis of grocery and department stores. In most cases, they provide a vast assortment of actual trinkets and “gifts”—memorabilia to commemorate yet another vacation or items to address the critical needs of the harried last-minute shopper in need of something for birthdays, holidays, and other celebratory events.
Many state statutes provide some formal definition for hotel premises. In Nevada a hotel premises has been clearly defined in NRS Chapter 651 as follows:
Hotel Gift Shops Emerge as Mini-Department Stores
By the late 1970s hotel establishments had evolved into far more than merely lodging accommodations. Enter now into super-hotels and resorts hosting thousands of rooms with adjoining convention centers and exhibition halls. No longer content with the standard hotel restaurant or cafe, these new resorts provided multiple eating establishments, each catering to a different menu and budget. A new era of the all-inclusive hotel-resort emerged whereby management made every attempt to keep guests on the property as long as possible and, consequently, retain every dollar that the guests could not spend elsewhere shopping or getting groomed. Put simply, if guests did not have to wonder off in search of services that the hotel could already provide, each value-added amenity would constitute yet another revenue stream merging with that of the front desk.
Added to the amenity list were elaborate pools, spas, exercise gyms, hair salons, and onsite auto rental outlets. And as the conventional hotel evolved into modern multiamenity resort, the small town and charming gift shop took on new dimensions. Enter now the supergift shop, a veritable grocery and department store merged into one single retail unit. Still retaining its core inventory of sundries and hygiene items, these new hotel-retail outlets now offer a wide array of merchandise ranging from prepacked foods and beverages up to small electronics and resort-logo branded clothing. Hospitality retailing has emerged into a precise discipline and business practice no different from that conducted in shopping malls and plazas. Employment has gone from the role of a typically lone elderly cashier to that of employing staff having college degrees in merchandising and/or past experience working in a retail setting. Both the business of merchandising and the psychology of displaying merchandise have evolved to a level where it is not uncommon to find a member of senior management possessing the title of Director (or higher) of Retail Merchandising or some other similar designation.
The amount of cubic feet allocated to any amenity in a resort is usually the function of the rate-of-return that activity is likely to bring to the enterprise. If the increase of square footage is any indication, hospitality retail is adding—and is expected to continue—substantially to the bottom line of most hotel operators.
Specialized Malls as an adjunct Amenity Within Hotels and Casinos
As hotels continued to evolve into full-fledged resorts during the late 1970s and early 1980s, they increasingly became more diverse in their areas of specialization. Though no particular classification scheme is used to categorize hotel-resorts, they generally can fall into one or more of the following market specialties.
1. Tourist Resorts: Hotels with lavish facilities and amenities catering to out-of-the-area guests who are seeking rest, relaxation, and entertainment. These facilities are typically situated near some sort of spectacular setting or landscape, such as a coastline (such as Florida or California), a mountain (such as Aspen or Vail), or the desert (such as Las Vegas or Phoenix).
2. Convention and Conference Resorts: Hotels with comprehensive facilities capable of hosting large conventions with an attendee base numbering in the tens of thousands.
3. Business-Oriented Hotels: Hotels that are typically located in close proximity to concentrations of business venues, usually in heavily populated metropolitan areas. The rooms are designed to accommodate business travelers with high-speed computer connections and 24-hour business-support services.
4. Gaming-Oriented Resorts: Hotels that are built in, on, around, or adjacent to a gaming facility, whether that be small-scale European wagering salon or a full-scale Vegas-style casino. These facilities usually provide lavish shows, high-end dining establishments, exotic nightclubs, and eclectic retail venues.
5. Mix-Use Resorts: Hotel facilities that represent a combination of one, two, or all the above operating profiles. These unique venues arrived on the scene in the early 1990s with the opening of the mega-resort hotel-gaming resorts found in Las Vegas, Nevada. Since then, such mix-use facilities have migrated from Las Vegas and catapulted north to Detroit, south to the Gulf, and east to a newly revitalized Atlantic City, New Jersey.
Concomitant with the emergence of these specialized venues came the development of a new concept in hotel-gaming resorts, namely the separate-though-attached shopping mall experience. In all the aforementioned markets, as well as the dozens not referenced, specialized shopping arenas built in, on, around, or adjacent to the hotel-resort are quite common. Ranging from boutique stores and expanding up to full-scale diversified plazas, these retail portions of hotel-gaming resorts have become self-contained, autonomous malls offering gamblers, hotel guests, and nonhotel patrons a complete shopping experience.
In Nevada, state statutes provide a clear definition of a “resort hotel” in NRS 463 as follows:
NRS 463.01865 “Resort hotel” defined. “Resort hotel” means any building or group of buildings that is maintained as and held out to the public to be a hotel where sleeping accommodations are furnished to the transient public and that has:
1. More than 200 rooms available for sleeping accommodations;
2. At least one bar with permanent seating capacity for more than 30 patrons that serves alcoholic beverages sold by the drink for consumption on the premises;
3. At least one restaurant with permanent seating capacity for more than 60 patrons that is open to the public 24 hours each day and 7 days each week; and
The distinction between hotel premises previously defined and a “resort hotel” under the gaming statutes is that the gaming laws specifically assign lodging, eating, and drinking amenities with a minimum number of rooms or seats that need to be provided. Moreover, a gaming area is also a component that is required in the hotel-resort complex.
Shopkeeper Statutes in the Retail Industry
Shopkeeper Statutes in Non-Gaming Retail Establishments
Practically every state has a set of statutes specifically focused on crimes that may occur in a retail establishment. Known variously as “shopkeeper statutes” or “merchant laws,” these statutes address a range of issues, including but not limited to shoplifting by customers, embezzlement by employees, burglary by outsiders, and fraudulent use of credit cards and other financial instruments. For operators of retail outlets, their employees, and loss prevention personnel, the statutes dealing with crimes indigenous to shopping outlets are generally well known, though not necessarily applied correctly. A comparison of merchant law and other areas of specialized law quickly reveals some common similarities—and some interesting distinctions.
As for similarities, private citizens acting as sales associates or security personnel have no greater legal power or authority as that of any other citizen in any other industry. When a situation comes down to the application of law or the utilization of force, store personnel must conduct themselves in a manner that is consistent with the principles of common and case law and the mandates of statutory law.
As for distinctions, most shopkeeper statutes have certain allowances for retail personnel not commonly found in other industries. Generally speaking, shopkeeper statutes accord greater latitude to store personnel in so far as areas of arrest and detention are concerned. This broader latitude is generally referred to as merchant’s privilege. Without getting bogged down in specific statutes from any particular state, the general principle at the core of most merchant law is straightforward. Stated simply, if a sales or security associate witnesses a customer concealing merchandise while in the store, the employee can order the suspect to uncover the merchandise and keep it plain view, purchase it, or leave it and exit the store.
If the store personnel did not directly observe any concealment or theft as a percipient witness but were told of the “alleged” theft by another party, whether an employee or not, store personnel may still take appropriate action. The legal basis for the action is founded in the store personnel having, at a minimum, reasonable suspicion that a crime occurred, that such notification the crime was received from a believable source, and that a particular suspect committed the alleged act. Some jurisdictions draw a distinction between “reasonable suspicion” and “probable cause,” with the latter having a higher degree of belief than the former. Some jurisdictions do not. In any event, it is on this point that merchant privilege expands its latitude more than nonshopping theft laws.
In the event of a shoplifting incident, store personnel can, with reasonable suspicion, detain the suspect even for a misdemeanor not committed in their presence. This privilege does not extend to other categories of misdemeanor crimes not committed in the presence of store personnel.
Many statutes regarding shoplifting have wording that is similar because certain statutory models are shared and promulgated by legislative bodies across the country. In Nevada the chapter that addresses merchant and shoplifting law is Nevada Revised Statutes (NRS) 597. The NRS, which defines shoplifting and clearly stipulates the legally permissible actions that can be taken by the merchant or its agents, is fully reproduced here as NRS 597.850. The civil liabilities for shoplifting by either adults or minors are enumerated as NRS 597.860 and 597.870, respectively.
NRS 597.850 Shoplifting: Merchant may request person on premises to keep merchandise in full view; detention of suspect; immunity of merchant from liability; display of notice.
Any merchant or his agent who has reason to believe that merchandise has been wrongfully taken by a person may detain such person on the premises of the merchant for the purpose of recovering the property or notifying a peace officer. An adult or the parents or legal guardian of a minor, who steals merchandise, is civilly liable for its value and additional damages.
NRS 597.860 Shoplifting: Civil liability of adult who steals merchandise from or damages property on merchant’s premises.
1. An adult who steals merchandise from, or damages property on, a merchant’s premises is civilly liable for the retail value of the merchandise or the fair market value of the other property, plus damages of not less than $100 nor more than $250, costs of suit and reasonable attorney’s fees. An action may be brought even if there has been no criminal conviction for the theft or damage.
2. An action under this section may be brought as a small claim in a Justice Court if the total amount sought does not exceed the statutory limit for such a claim. NRS 597.870 Shoplifting: Civil liability of parent or guardian of minor who steals merchandise from or damages property on merchant’s premises.
The implication of this Nevada statute, as well as those like it from other states, will be made more apparent in a following section—“Misinterpretation and Misapplication of the Statutes.”
Shopkeeper Statutes in Gaming Environments
As previously written, retail establishments can take many forms in, on, around, or adjacent to gaming casinos and as a component to the overall property configuration. Though these retailers are a part of the gaming premises, the shoplifting statutes are just as applicable as they are in nongaming establishments. In other words, there are no separate sets of statutes that apply to retailers who happen to operate stores on gaming premises.
In jurisdictions where gaming is prevalent, there are typically dedicated sections or chapters in the statutes addressing the specialized areas of arrest and detention for the commission of gaming crimes. In Nevada, that chapter is NRS 465. Other gaming jurisdictions have used the Nevada statute as a model to craft their own gaming detention statutes. NRS 465.101 provides clear instructions to gaming personnel regarding the detention of persons on a gaming premise; see the following:
NRS 465.101 Detention and questioning of person suspected of violating chapter; limitations on liability; posting of notice.
1. Any licensee, or his officers, employees or agents may question any person in his establishment suspected of violating any of the provisions of this chapter. No licensee or any of his officers, employees or agents is criminally or civilly liable:
2. Any licensee or any of his officers, employees or agents who has probable cause for believing that there has been a violation of this chapter in his establishment by any person may take that person into custody and detain him in the establishment in a reasonable manner and for a reasonable length of time. Such a taking into custody and detention does not render the licensee or his officers, employees or agents criminally or civilly liable unless it is established by clear and convincing evidence that the taking into custody and detention are unreasonable under all the circumstances.
3. No licensee or his officers, employees or agents are entitled to the immunity from liability provided for in subsection 2 unless there is displayed in a conspicuous place in his establishment a notice in boldface type clearly legible and in substantially this form:
Any gaming licensee, or any of his officers, employees or agents who has probable cause for believing that any person has violated any provision of chapter 465 of NRS prohibiting cheating in gaming may detain that person in the establishment.
In Nevada, as in some other jurisdictions, the issue is not so much of retailing coming to gaming, but just the opposite. Within many retail establishments, it is not uncommon to find a separate area set aside for gaming devices, usually slot machines. In such settings, gaming and wagering laws apply within those small, partitioned sections of the retail stores. In Nevada, retailers are permitted no more than 15 slot machines at any one location. Other states have set a varying number of wagering devices in such locations.
When two different industries such as retailing and gaming merge in a singular business setting, the laws of more regulated of the two, typically gaming, will prevail within the gaming area of the premises. In such circumstances, such as in Nevada, the Gaming Control Board (the enforcement arm of the Gaming Commission) will clearly provide definitions of what constitutes specific retail environments where gaming will be permitted. Regulation One (Reg.1) stipulates, among other things, the definitions of retailers where gaming may be allowed:
ISSUANCE OF REGULATIONS: CONSTRUCTION; DEFINITIONS “Convenience store” defined. “Convenience store” means a business selling groceries at retail such as, but not limited to, food for human consumption, articles used in the preparation of food, household supplies, dairy products, meat, and produce, and normally having at least 1,000 square feet and no more than 10,000 square feet of floor space available to the public. (Adopted: 7/99. Effective: 2/1/2000.)
1.130 “Grocery store” defined. “Grocery store” means a business selling at retail groceries, such as, but not limited to, food for human consumption, articles used in the preparation of food, household supplies, dairy products, meat, and produce, and having more than 10,000 square feet of floor space available to the public. (Adopted: 7/99. Effective: 2/1/2000.)
1.141 “Liquor store” defined. “Liquor store” means specialty retail store which deals exclusively in alcoholic liquors for off-premises consumption, and the incidental sale of related items including magazines, newspapers and snack foods. For purposes of this section, “alcoholic liquors” means the four varieties of liquor, namely, alcohol, spirits, wine and beer, and every liquid or solid, patented or not, containing alcohol and intended for consumption by human beings as a beverage. (Adopted: 7/05.)
1.145 “Premises” defined. “Premises” means land together with all buildings, improvements and personal property located thereon. (Amended: 9/82.)
Application of the Statutes: Theory Versus Reality
The Convergence of Merchant Law, Innkeeper Law, and Gaming Law
Up to this point we have visited key points within the domains of merchant and gaming law but have not done so with innkeeper law (sometimes referred to “hotel/ motel law”). Put simply, innkeeper law is a combination of state statutes and case law addressing the operators of hotels, motels, inns, and boarding establishments that provide lodging, accommodation. and entertainment. When compared to the number of gaming facilities across the United States, there are exponentially far more lodging establishments. Hotels began to be incorporated in and onto gaming premises for the last three-quarters of a century. This integration has progressed in waves commencing in 1931 in Nevada, 1977 in New Jersey, 1988 for approved Native American Indian tribes, and continuing from 1990 to the present for all other nongaming jurisdictions, both land-based and maritime.
In those settings where a casino, retail store, and hotel converge under one roof, understanding the statutes germane to each of these areas is vital to operating and behaving within the law. Misinterpretation and misapplication of the statutes inevitably will open a “Pandora’s Box” of legal problems, both criminal and civil.
The following four scenarios illustrate a “best practices” approach where all the statutes from the aforementioned domains converge in a workplace settings.
Scenario One: A Gift Shop Operating Within a Hotel Located in Nevada
In this case a gift shop located in the main lobby is owned and operated by a hotel company, and there is no gambling component to the premises.
The gift shop cashier witnesses a teenage male remove some items from the shelf and conceal them on his person. The cashier telephones a front desk supervisor for assistance. The college-educated 32-year-old manager arrives and is directed to the suspect. The manager is told that the value of the items is around $50, which is well below the $250 statutory limit for a misdemeanor crime. So what can the manager do?
Even though the incident occurred on the premises of a hotel, the alleged crime happened within the gift shop, involving its inventory. Shopkeeper laws extend discretionary latitude to the manager to investigate and challenge the suspect, up to and including detaining the person if that is the only way to recover the merchandise. This latitude is referred to as “merchant’s privilege.” Since the manager has no reason to disbelieve the cashier, he therefore has sufficient reasonable suspicion or probable cause to take some degree of assertive action to determine what exactly has occurred.
The manager approaches the subject and identifies himself as a front desk manager who has received a report that the teenager may have taken merchandise from its display and concealed it. The next move is up to the subject.
Option # 1: The teenager denies the allegation and commences to quickly exit past the manager. What can the manager do? He blocks the teenager from exiting and informs the young subject that the manager is now exercising merchant’s privilege to make a detention and then call the police for an apprehension. The manager takes the subject into custody, recovers the merchandise, and then calls the police to file charges. Even though most citizen’s arrest or detention statutes require the person making the detention to have actually witnessed the crime if the violation is a misdemeanor, such is not the case for retail theft. An agent of the store may detain a shoplifter for a misdemeanor theft not committed in the presence of the detaining party. Such is the nature of merchant’s privilege. This privilege is extended to agents of the hotel/store, provided that retail outlet is owned and operated by the landlord/hotel itself.
Option # 2: The teenager affirms that he has the concealed items and reveals them to the manager. What can the manager do? Since the subject has not yet exited the store, the manager can (1) advise the youth to purchase the items immediately or (2) remove the items and order the subject to exit the store. Such an order may or may not involve a trespass notice.
In the preceding scenario, no innkeeper law would be applicable because the incident occurred specifically within a retail environment involving merchandise from the store. Let’s say (as sometimes happens) the theft of gift shop merchandise occurs by a guest who returns to her room with the stolen items. Has anything changed? No and yes.
No, nothing has changed—from the standpoint that the merchant’s privilege would still permit recovery of the stolen items and detention of the guest, since the hotel constitutes the “premises” of the gift shop.
Yes, something else has been added to the equation, since the guest has committed a theft on the premises and therefore breached her common law duty not to harm the innkeeper when residing at the “inn.” At this point, the guest can be evicted and her residency privileges terminated.
Scenario Two: A Gift Shop Operating Within a Hotel Located in Nevada
In this case a gift shop located in the main lobby is operated by an outside specialty company under contract to the hotel company, and there is no gambling component to the premises. The space is leased to the retail contractor by the hotel. Typical of such contracts, the hotel earns revenue from the lease and a percentage of the gross sales from the gift shop.
The gift shop cashier witnesses a teenage female remove some items from the shelf and conceal them on her person. The cashier telephones a front desk supervisor for assistance. The college-educated 32-year-old manager arrives and is directed to the suspect. The manager is told that the value of the items is around $50, which is well below the $250 statutory limit for a misdemeanor crime. So what can the manager do?
Option # 1: The manager knows that the gift shop is neither owed nor operated by the hotel; therefore, there is little in the way of direct action that he can take against the alleged thief. The manager cannot act on behalf of another company’s interest as a nonemployee. The manager advises the store cashier that she can either (1) make a citizen’s detention herself while the manager ensures her safety or (2) call the police and ask for assistance.
Option # 2: While the suspect is leaving the store, the cashier attempts to make a shoplifting detention resulting in her being shoved aside by the would-be thief while this action is observed by the manager. At this point the manager has witnessed a misdemeanor committed in his presence and can intervene with a citizen’s arrest with reasonable force upon the thief/assailant.
Option # 3: While the suspect is leaving the store, the cashier attempts to make a shoplifting detention resulting in her being shoved aside by the would-be thief, but this action is not observed by the manager. At this point the manager has not witnessed any crime committed in his presence but is, instead, told of the details of the incident by another employee in the lobby. Since force was being used to take and retain personal (the stolen) property, the simple misdemeanor would escalate into a felony robbery, and the manager can intervene with a citizen’s arrest with reasonable force upon the thief/assailant. This would be permitted because, in a significant majority of states, private citizens can take direct action for the commission of a felony not committed in their presence, provided the detaining party has probable cause to believe that a felony has occurred and that the suspect committed the crime.
Scenario Three: A Gift Shop Operating Within a Hotel Located in Nevada
In this case a gift shop located in the main lobby is owned and operated by a hotel company, and there is no gambling component to the premises.
The gift shop cashier witnesses a teenage male remove some items from the shelf and conceal them on his person. The cashier telephones a front desk supervisor for assistance. The college-educated 32-year-old manager arrives and is directed to the suspect. The manager is told that the value of the items is around $255, which is at or above the $250 statutory limit for a felony crime of grand larceny. By the time the manager arrives to the gift shop, the shoplifter has left the store and exited the hotel lobby to the public sidewalk outside. So what can the manager do?
Option # 1: Upon learning of that the shoplifter has left the building, the manager proceeds to catch up with the thief and does so several feet outside the main exit. Can the manager take direct action? Yes, because the theft was a felony, and as stated previously, private citizens can take direct action for the commission of a felony not committed in their presence, provided the detaining party has probable cause to believe that a felony has occurred and that the suspect committed the crime. In this option, the manager takes the shoplifter into custody and returns the thief back to the store to await the arrival of the police.
Scenario Four: A Gift Shop Operating Within a Nevada Hotel-Casino
In this case a gift shop located in the main lobby is owned and operated by a hotel company, and there is a gambling component to the premises.
The gift shop cashier witnesses a teenage male remove some items from the shelf and conceal them on his person. The cashier telephones a front desk supervisor for assistance. The college-educated 32-year-old manager arrives and is directed to the suspect. The manager is told that the value of the items is around $50, which is well below the $250 statutory limit for a misdemeanor crime. So what can the manager do?
Option # 1: The manager arrives and is told of the details of the theft by the cashier while the thief is still in the store. As with Scenario One, the manager can assert direct action and detain the thief either for recovering the merchandise or summoning the police to make an arrest.
Option # 2: The manager arrives and is told of the details of the theft by the cashier while the thief has exited the store. The manager calls the surveillance unit of the casino to assist in locating the suspect, resulting in the thief being spotted halfway across the gambling floor. The surveillance unit calls two nearby security officers and informs them of the location of the shoplifting suspect. They proceed to the designated location, and the question now is: Can the guards take direct action even though they did not witness the shoplifting crime directly? Put simply, yes, and for the same reason given in Scenario One with the hotel manager. Since the gift shop is (1) owned and operated by the hotel-casino and (2) the store is located on the premises, the casino security personnel may therefore detain for a shoplifting misdemeanor crime though not committed in their presence.
The preceding four scenarios and each of their optional outcomes represent only a handful of the numerous permutations of what could, and actually does, take place in the real world. These scenarios represent the correct application and interpretation of the underlying legal principles dealing with the convergence of gaming, innkeeping, and shopkeeping laws. Unless security personnel possess the correct interpretation of the statutes and know the appropriate application, problems can easily occur that will give rise to inevitable legal repercussions.
Misinterpretation and Misapplication of the Statutes
The preceding section examined several scenarios that expressed the legal principles at work when there is a convergence of different bodies of law operating within a hybrid environment, such a retail outlet within a hotel-casino establishment. As you may now appreciate, misinterpretation of the relative statutes could probably result in misapplication of the law in day-to-day business reality.
An environment such as a hotel-retail-casino resort provides some interesting challenges for security and surveillance personnel. States where gambling is authorized usually have a statute that defines and may even describe each category of employee constituting a “gaming employee.” This statutory declaration is required when such employees are expected to go undergo more intensive background checks and/or obtain special licenses to be employed on gambling premises. In Nevada the statute listing gaming employees is NRS 463.0157 and it is as follows:
NRS 463.0157 “Gaming employee” defined.
A close examination of the list of gaming employees will reveal that each is involved in some fashion with the administration, application, implementation, and/or enforcement of wagering games, rules, regulations, revenue, credit, and supervision. Considering the number of categories, you can appreciate the fact that large numbers of employees are mobilized on any given day just to make a medium-size casino (50,000–75,000 square feet) operate smoothly, efficiently, and legally. For the moment, our attention will focus on category (r) of this list, security personnel.
A gaming premise is defined as all the buildings constituting the establishment sitting on all the land owned by the gaming licensee. This all-inclusive definition encompasses the entire property and its business operations including, but not limited to, the hotel, conference center, concert halls, restaurants, condos, time-share units, sports arenas, retail outlets, shopping malls, boutique plazas, wedding chapels, and maybe even a specialty theme park. The acreage which this city-like enterprise occupies can range from a dozen acres up to and over 100 acres, especially if the property has an onsite golf course, skeet range, or private lake. Patrolling these buildings and the surrounding acreage is a small army of security officers who are typically directed from a central dispatch and/or surveillance unit. This means that there are very few locations where the security officers are not either present or do not visit at some point on any given shift.
Gaming security officers usually patrol the retail outlets that are owned and operated by the gaming licensee and whose employees work for the gaming operator. This typically includes the gift shop, but also may encompass specialty shops such as boutiques, liquor and cigar stores, pool-side cabanas, and small clothing stores with items bearing the brand and logo of the casino. Since these outlets are owned and operated by the licensee’s retail division, security personnel have full authority to respond to incidents of alleged shoplifting and act in accordance with that state’s particular shopkeeper statutes. In such cases, merchant’s privilege is extended to the casino-resort security personnel.
Where the hotel-retail-casino property has an adjoining shopping mall, the extent of authority for the casino security officers may change. Such adjoining malls or plazas are typically leased and managed to a professional retail management company, which, in most cases involving large shopping outlets, has its own proprietary or contract security force for the common areas of the mall. The individual stores within such malls decide for themselves whether in-store loss prevention personnel are going to be used—or not.
Where the adjoining retail mall is separately leased and has its own security force, the hotel-casino security personnel typically do not venture onto that portion of the property, though there is nothing that would prohibit such visitations. Remember that the entire property is considered part of the gaming premises. However, in such a bifurcated management and security arrangement, there is no merchant’s privilege extended to the hotel-casino security officers. The usual scenario whereby hotel-casino security personnel will cross over into the retail mall area is if the mall security force asked for assistance. Such situations usually involve incidents when there is a structural fire, a broken water pipe, a medical emergency, or some sort of business disruption such as when gangs or juveniles congregate or engage in fighting in the common mall area.
Under the typical contractual arrangement between the casino operator and the retail management, the shopping mall’s security force is totally and exclusively responsible for the security and safety of the common mall areas, nonpublic areas, and adjoining parking garages. This is important to remember in the event of a lawsuit where the plaintiff is trying to determine who is responsible for what areas of the overall hotel-retail-casino property.
Attempting to keep clear and comprehensible all the complex issues of overlapping ordinances and laws, rules and regulations, contractual obligations, and restrictions, as well as legal and operational boundaries can prove to be quite challenging. Sometimes in the “fog” of protecting and administrating security programs, errors will occur, some of which will give rise to litigation. Experience has shown that these errors originate from one of two general sources.
The first source is simple individual human error; humans make mistakes because of flawed decision making. The only way to remedy this source of error is to learn from the mistakes and share the lessons learned with the entire department or organization. Additional training in both formal classroom settings and on-the-job (OJT) will reinforce the correct way of doings things and, one hopes, alter the erroneous behavior.
The second source is institutional error. This occurs when flawed doctrine regarding policy and procedure is embedded within the department ranging administratively from the top to the bottom. In other words, from the office of the Director of Security down to each supervisor and security officer out on the floor, each has incorporated some fatally flawed practice into daily operations. With nobody really knowing any better, doctrinal error has been inculcated to such a degree that the only real wakeup call occurs after a significant incident has happened and severe litigation results.
Whether individual or institutional in nature, the error in practice, if sustained over a sufficient length of time, will result in the “perfect storm” of problems and litigation. Here are some of the typical misinterpretations and misapplications of overlapping laws.
Scenario One: A female patron in the casino has reported to a male security officer that she believes a particular suspect has unlawfully taken something of value from a nearby customer. The security officer makes an inquiry with the customer and learns that the missing item is a $100 camera. A description is given and a search begins, resulting in the “suspect” being detained in another part of the casino. The security officer has done this sort of thing many times before in the gift shop, so he is familiar with the procedures. The suspect is taken to the security office and questioned, at which time he is also searched to locate the camera allegedly taken. No camera is found. The female witness is asked to personally identify the suspect, and she now reports that, though he looks like the person she saw, she is not certain. The young suspect is told that he is free to go, at which time upon exiting he yells back to the security supervisor that his dad is an attorney and that “You haven’t heard the last from us … I’m going to sue you S.O.B.s!” Is there a problem here? Yes.
Everything was going fine up to the point where the security officer took custody of the alleged suspect and detained him. The laws are clear—a private citizen must have witnessed the misdemeanor crime before any arrest can occur. The value of the camera clearly renders the crime a petit larceny and one that was not witnessed by the security officer. A mistake in identity is no excuse or exemption to the citizen’s arrest statutes, yet it occurs everyday, arising from both individual and institutional errors. The result is that the security officer has committed a false imprisonment (kidnapping in some states), and in Nevada, this is a gross misdemeanor (the level of crime just below a felony.)
Scenario Two: The female cashier of a hotel-casino gift shop waves her arm signaling to get the attention of a passing casino security officer in the lobby. As the guard enters the gift shop, the cashier reports that some merchandise is missing from a nearby display and that a particular middle-aged woman probably took it. As she is relating the story to the security officer, the cashier points to the woman exiting the hotel lobby into the taxi stand area. Without hesitating, the security officer immediately runs out the door and intercepts the woman at the valet curb. He tells her about the situation in the store, and she responds that she did not take any items. The security officer does not believe her story and, while taking the woman’s arm, forcibly leads her back into the hotel as she is complaining loudly. The police are called, investigate the matter, and determine that there is insufficient cause to charge or arrest the woman. They inform the security supervisor accordingly. While leaving the store, one police officer sarcastically tells the supervisor that the hotel “should make sure they have a good lawyer.” So what went wrong?
Merchant’s privilege allows detention of a suspect for shoplifting in the event there is reasonable suspicion or probable cause. The security officer possessed neither in the preceding case. The mere coincidence of a patron in the vicinity of merchandise that might be missing from a display does not probable cause nor reasonable suspicion make. It only amounts to coincidence, nothing more. No items were actually seen being taken or concealed. As with the previous scenario, this one also constitutes battery (taking the woman by the arm) and false imprisonment (taking her forcibly back to the store).
Scenario Three: The supervisor from a shopping mall adjoining a casino-resort calls over to the casino dispatch and informs them that a suspect has exited the common mall area and entered the casino. The dispatcher asks for details and is told that the fleeing suspect allegedly was involved in a juvenile fight by punching another teenager in the food court. Meanwhile, contract security guards from the mall enter the casino, searching for the juvenile suspect. Upon locating the alleged youthful offender, the mall guards give chase as the suspect is merely walking away. When they catch up to him, one of the guards executes a football-like tackle, taking the youth crashing to the ground. The violent fall results in a broken arm for the suspect. The casino then calls the police and requests an ambulance. So did anything go wrong? Yes, and on multiple levels.
The youthful suspect did indeed punch another in the mall, but the guards had no jurisdiction in the casino; their contractual authority extended only to the mall. Even if an argument could be made that the mall guards could pursue their suspect into the casino, they never witnessed the commission of the misdemeanor battery and therefore had no statutory privilege to make an arrest. And even if an argument could be made that there was some sort of statutory privilege, the amount of force used to take the suspect into custody was arguably excessive under the circumstances. As with the previous scenarios, a combination of individual and institutional errors combined to make a “perfect storm” of misapplication of the overlapping laws. Arising from such storms are the probable and inevitable civil lawsuits or even criminal charges against employees who thought they were merely doing their jobs.
Liability Repercussions Arising from Erroneous Application of the Statutes
The aforementioned scenarios are but a handful of illustrations of what could go wrong when the many overlapping statutes involving retailing and gaming are misinterpreted and thus misapplied.
When any employee of the hotel-retail-gaming resort uses unlawful force upon another to make an arrest or seemingly overcome resistance to such an arrest, that employee has, in effect, committed a crime. The victim of such unlawful behavior may, if he so chooses, charge the perpetrator and seek to have him prosecuted under state statutes. This has occurred throughout the industry with sufficient regularity that it is still no less than amazing that such egregious behavior continues as part of some workplace cultures. This is the result of institutional behavior that is implicitly advocated by management and explicitly implemented by staff.
In addition to facing criminal charges by the state, each crime reflects its mirror counterpart, the civil tort. Not only will the errant employees be named as defendants in a lawsuit, but potentially so will their supervisor, shift manager, departmental director, and possibly right up the corporate hierarchy to the general manager. This hierarchy of defendants will be named especially if the plaintiff is advocating that the egregious behavior was rooted in institutional dysfunction and negligence.
Under the general caveat of negligence, the specific allegations will encompass claims of negligent hiring, training, and supervision; negligent procedures and practices; negligently inadequate security; negligently excessive use of force; and negligent retention, just to name a few.
Most states have created statutes that are modeled after the wording found in various federal civil rights legislation. Far too many hospitality-gaming establishments claim in writing (employee handbooks, promotional literature, etc.) to believe in such laws, but in practice, the reality can be very different. This is particularly true for some employees whose personal prejudices are not restricted and abated by management at the earliest manifestations of aberrant behavior.
Nevada, like other states, has declared its intent that places of public accommodation are open to equal enjoyment by all persons. Moreover, specific penalties are stipulated for any person who deprives another of his rights as provided in these public accommodation statutes. An examination of Nevada’s NRS 651.050 reveals all the places that the legislators consider to be “public accommodation.” The two statutes that follow declare that all persons are entitled to equal access to this place and then provide for penalties for depriving persons of their rights under these statutes (see NRS 651.070 and 651.080, respectively):
EQUAL ENJOYMENT OF PLACES OF PUBLIC ACCOMMODATION NRS 651.050 Definitions. As used in NRS 651.050 to 651.110, inclusive, unless the context otherwise requires:
NRS 651.070 All persons entitled to equal enjoyment of places of public accommodation. All persons are entitled to the full and equal enjoyment of the goods, services, facilities, privileges, advantages and accommodations of any place of public accommodation, without discrimination or segregation on the ground of race, color, religion, national origin or disability.
NRS 651.080 Deprivation of, interference with and punishment for exercising rights and privileges unlawful; penalty.
Summary
The contemporary colloquialism “You’ve come a long way, Baby!” could be applied to any industry that has evolved and emerged over a 100-year period. This is no less true than of the convergence of retailing within the hotel-gaming environment, except that this merger is still a work-in-progress. In many cases the laws written 50 or more years ago for each industry have not kept pace with the new super-hybrid environments in which these industries jointly flourish. In some states and in some cases, the laws actually contradict one another, and it is for this reason that today’s security director must be as informed and educated on these overlapping and seemingly contradictory laws, rules, and regulations. Seeking the advice of in-house legal counsel or from the law firm that has been retained by the company is the ideal way to achieve the level of understanding needed by today’s security management professional. Sadly for the employer and gladly for plaintiff attorneys, this readily accessible advice is not sought as often as it should.
As long as the worlds of retailing and gaming continue to grow and operate within the hotel environment, a new constellation of business hybrids will emerge across the country in varying markets toward the mid-21st century. Most of those markets will be ill equipped to address the statutory and regulatory challenges facing such enterprises. The best response to such a forecast is for today’s protection and loss prevention professionals to expand their backgrounds to encompass legal training and education. Indeed, a friendly classroom is a far better place than a hostile courtroom to learn such lessons.
RFID—Informed Consent: Ethical Considerations of RFID*
Radio Frequency Identification (RFID) has incubated in relative obscurity for over 60 years, quietly changing our lives with scant attention outside the technology community. First used to identify Allied aircraft in World War II, RFID is now well integrated in building security, transportation, fast food, health care and livestock management.
Proponents hail RFID as the next natural step in our technological evolution. Opponents forewarn of unprecedented privacy invasion and social control. Which is it? That’s a bit like asking if Christopher Columbus was an intrepid visionary or a ruthless imperialist. It depends on your perspective. One thing is clear: As RFID extends its roots into common culture we each bear responsibility for tending its growth.
For Your Eyes Only
RFID functions as a network of microchip transponders and readers that enables the mainstream exchange of more—and more specific—data than ever before. Every RFID transponder, or “smart tag,” is encrypted with a unique electronic product code (EPe) that distinguishes the tagged item from any other in the world. “Smart tags” are provocatively designed with both read and write capabilities, which means that each time a reader retrieves an EPC from a tag, that retrieval becomes part of the EPC’s dynamic history. This constant imprinting provides real-time tracking of a tagged item at any point in its lifespan.
Recognizing the potential commercial benefits of the technology, scientists at the Massachusetts Institute of Technology (MIT) began developing retail applications of RFID in 1999. Install a reader in a display shelf and it becomes a “smart shelf.” Network that with other readers throughout the store and you’ve got an impeccable record of customers interacting with products—from the shelf to the shopper; from the shopper to the cart; from the cart to the cashier, etc.
Proctor & Gamble, The Gillette Company and Wal-Mart were among the first to provide financial and empirical support to the project. Less than five years later RFID has eclipsed UPC bar coding as the next generation standard of inventory control and supply chain management. RFID offers unparalleled inventory control at reduced labor costs; naturally the retail industry is excited.
Katherine Albrecht founded the consumer advocacy group CASPIAN (Consumers Against Supermarket Privacy Invasion and Numbering) to educate consumers about the potential dangers of automatic-identification technology. She warns that “smart tags”—dubbed “spy chips”—increase retailer profits at the expense of consumer privacy.
RFID provides a continuous feed of our activities as we peek, poke, squeeze and shake tagged items throughout the store. Advocacy groups consider this electronic play-by-play a treasure for corporate marketing and a tragedy for consumer privacy.
Albrecht’s apprehension is understandable. However, shopping in any public venue is not private. It’s public. The decision to be in a public space includes a tacit acknowledgement that one can be seen by others. That’s the difference between the public world and the private world.
What if those worlds collide? CASPIAN and other consumer groups are concerned about retailers using RFID to connect public activities with private information. Because each EPC leaves a singular electronic footprint, linking each item of each transaction of each customer with personally identifying information, anyone with access to the system can simply follow the footprints to a dossier of the customer and their purchases.
Again, we must be clear. RFID does enable retailers to surveil consumers and link them with their purchasing histories. As disconcerting as that may be, it is neither new nor unique to RFID. Anyone who uses credit cards agrees to forfeit some degree of privacy for the privilege of buying now and paying later. Credit card companies collect and retain your name, address, telephone and Social Security numbers. This personal information is used to track the date, time, location, items and price of every purchase made with the card.
Don’t use credit cards? Unless you pay with cash, someone is monitoring you too. The now familiar UPC bar codes on nearly all consumer goods neatly catalogue the intimate details of all check and bank card purchases. Cash remains the last outpost for the would-be anonymous consumer. Of course, all things are subject to change. RFID inks may be coming soon to a currency near you, but that’s a discussion for another day.
If RFID is no more intrusive than a curious fellow shopper or a ceiling mounted security camera, what is the downside for consumer groups? If RFID is no more revealing than a bank or credit card transaction, what is the upside for the corporate suits? There must be more.
Indeed, there is. Bear in mind that “smart tags” are uniquely designed to pinpoint tagged items anytime, anywhere from point of origin through point of sale. And, theoretically, beyond.
Ah, the great beyond. RFID’s potential is limited only by our imaginations. And not just our imaginations; the imagination of anyone who has a reader and a transponder. Wal-Mart. Your employer. The government. Anyone.
Everything Costs Something
Members of German privacy group FOEBUD see shadowy strangers lurking in the imagination playground. Their February 2004 demonstration in front of Metro’s RFID-rigged Future Store was intended to raise public awareness of the implications of RFID.
“Because the spy chips are not destroyed at the shop exit, they continue to be readable to any interested party, such as other supermarkets, authorities, or anyone in possession of a reading device (available to the general public)…. The antennas used for reading are still visible in the Future Store, but soon they will be hidden in walls, doorways, railings, at petrol pumps anywhere. And we won’t know anymore who is when or why spying on us, watching us, following each of our steps.”
Freedom Is Slavery
Dan Mullen would call that an overreaction. Mullen is the President of auto-identification consortium AIM Global. He cautions that unrealistic fear can obscure the very real benefits of RFID: “Many of the concerns expressed by some of the advocacy groups are frankly, inflated. The technology can be set up so that identifying information is associated with the item, not with the people interacting with the item. Tracking individuals? That’s not how the technology is used.”
When asked, “Could it be used that way?” Mullen was doubtful. “I don’t think so. Not at this point. And I don’t see a benefit to anyone.” We’d like to think he’s right, but someone obviously sees a benefit. RFID has been used exactly that way.
Wal-Mart is one of the retailers who have tested photographic “smart shelves” in some of their U.S. stores. The technology did what it was supposed to do—photograph customers who removed tagged items from a display. Unfortunately, Wal-Mart didn’t do what they were supposed to do. Goliath didn’t tell David about the camera.
The most disturbing aspect of the project was Wal-Mart’s emphatic denial that they had secretly photographed their customers. They weren’t confused. They didn’t make a mistake. They chose to lie. It was only after Albrecht exposed the evidence that Wal-Mart finally admitted conducting the pilot tests in an effort to combat shoplifting and employee theft. After all, the argument goes, this type of inventory shrinkage costs U.S. retailers as much as $32 billion each year. Don’t feel too sorry for our friends in blue. The bill for this hefty loss is passed on to you and me.
The public was unmoved by Wal-Mart’s defense, and the project has been aborted. At least for now. Wal-Mart’s smiley face logo belies the arrogance wrought by its success, and we will likely see the photographic “smart shelf” again. Or it will see us, anyway.
Wal-Mart is somewhat like a spoiled child, a casualty of indulgence, who is accustomed to doing quite what he wants when he wants to and rarely anything that he doesn’t. It hardly seems fair to expect the child to accept “no” when he only vaguely recognizes the word, and even less so, it’s finality.
Bear in mind that RFID does not create opportunities for consumer profiling. We do. Every time we enter a store we expose ourselves to scrutiny. Every time we purchase goods or utilize a service we are assimilated, Borg-like, into the collective revenue stream. Everything costs something.
Worldwide spending on RFID is expected to top $3 billion by 2008, almost triple the market of a year ago. Wal-Mart’s decree that its top 100 suppliers must be RFID compliant by 2005 told the rest of the world to either get on the train or get off the track. The U.S. Department of Defense has since issued a similar mandate, and falling technology prices coupled with the establishment of uniform RFID communication standards are making it easier for other industries to do the same.
The War on Drugs
It’s no longer enough to just say no to the schoolyard crack jockeys. We have new enemies in the war on drugs. Our increasing reliance on chemical relief—born of a pervasive spiritual poverty as much as our aging demographic—has made us attractive to drug counterfeiters.
Counterfeit drugs are sub-potent or inert imposter pills that are channeled into the prescription drug pipeline and sold as legitimate medication. The World Health Organization estimates that in less-developed countries as many as half of all prescription drugs dispensed are counterfeit. The economic cost to defrauded and dying consumers is staggering. And it is almost meaningless compared to the emotional cost.
In February 2004 the U.S. Food and Drug Administration’s Counterfeit Drug Task Force released its report “Combating Counterfeit Drugs.” FDA Commissioner Mark McClellan directed the group’s six month review of America’s prescription drug channels.
Its conclusion? The supply of prescription drugs in the United States is overwhelmingly safe. The FDA’s complex system of regulatory oversight insures that with rare exception, the pills we pop have been manufactured to the highest standards of purity and potency, distributed safely and dispensed as the doctor ordered.
However, later in the same report McClellan warns that drug counterfeiters are better organized and more technologically sophisticated than ever before. According to McClellan, the FDA’s current system can not meet the evolving challenges of the new century, and he recommends full-scale implementation of RFID technology by 2006.
Without question, RFID is a more formidable guardian than our present paper-based drug audit system. The savviest saboteur will find RFID tags extremely difficult to counterfeit and almost impossible to do so at a profit. EPCs afford flawless accountability, which is a distinct impediment to illegal diversions and substitutions. And no doubt every overworked, carpal tunnel-strained pharmacist would welcome RFID’s promise of tighter inventory and simplified service.
Does this justify the enormous expense of a complete system overhaul? Do the benefits outweigh the privacy concerns? Are you comfortable enlisting RFID in the battle against drug terrorism?
Before you decide, consider this: The FDA may incorporate “at least two types of anti-counterfeiting technologies into the packaging and labeling of all drugs, at the point of manufacture, with at least one of those technologies being covert (i.e., not made public, and requiring special equipment or knowledge for detection)..”
“Not made public, and requiring special equipment or knowledge for detection.” Hmm … so, RFID tags can be hidden in our prescriptions without our knowledge or consent … and we will be unable to detect or remove them.
Consider, too, that companies in the U.S., Canada, Sweden and Denmark have developed electronic blister packs that monitor pill removal and automatically notify the physician’s computer when a patient has dispensed (or neglected to dispense) the medication as scheduled.
Here’s a better idea. The FDA should explain how concealing information from me about my prescriptions makes the world a safer place. And then they can explain how spying on your medicine cabinet—and tattling to your doctor—thwarts drug counterfeiting.
The FDA’s prime directive is to protect and advance the public health. They have done this remarkably well for over 140 years at an annual cost to taxpayers of only about $3 per person. When evaluating any policy change the FDA must always preserve that which is most fundamental to its success—indeed, its very existence—the public trust. RFID may prove vital for the continued integrity of our prescription drug pipeline, but never more vital than the continued integrity of the FDA.
RFID is in its spring. These tiny chips, sown by science and nourished richly by corporate support, will burgeon beyond imagination, penetrating our lives like the roots of a willow. This is the time for discourse. This is the time to shore our boundaries. If we cede the opportunity to deliberate, we accept surveillance as a norm. Our indifference will do nothing to stem its growth.
Riots
A riot may be considered the ultimate extension of “civil unrest,” which can get physical and extend into violence, whereas a “riot” is pure violence accompanied by the intentional and wanton destruction of property by a large number of people and more often than not results in personal injuries and the loss of life.
We were both previously employed by companies with stores in the Los Angeles area and had occasion to observe the destruction caused by rioters, as well as attempt to take preemptive measures to minimize such damage. In the section “Civil Disturbances,” we discussed some general approaches to this problem. More specific guidance is perhaps best left to corporate attorneys and policy makers, with respect to determining to what extent the company will go to defend its property against damage. Part of the determination of this question is to what degree the company wants to place personnel in harm’s way while defending property. These questions require careful and deliberate thought, since the answers are fraught with all sorts of both intended and unintended consequences.
Suffice it to say, based on our personal experiences, once a riot develops, it takes on a life of its own, and little, short of deadly force, which itself may not be sufficient, can prevent damage to property if that property is in the riot area.
Historically, some merchants have retained the service of local security companies to provide armed uniform officers. Many shop owners have purchased weapons and have taken a stand in their own stores, prepared to shoot to protect themselves and their businesses, if necessary.
During the infamous Watts Riots in Los Angeles in 1965, I purchased shotguns and armed approximately 20 of my security agents to protect the Broadway Department Store in the area near the rioting. Nonsecurity personnel were not allowed to remain or be in the store. All the store lights were kept on each night, and would-be attackers could see the armed force inside. No attacks were made.
Based on historical evidence from the Watts riots (during which I worked 12-on/12-off shifts for 5 days as a Reserve LA County Deputy Sheriff), other riots (such as those resulting from Vietnam demonstrations), and policy decisions, the Macy’s/Bullock’s/Magnin companies determined their policy would be to close stores potentially exposed to riotous conditions. In the case of the April 1992 Rodney King riots, it became evident that rioting would be extensive throughout Los Angeles. Stores in the affected areas were closed at noon on the day rioting began, and all personnel were sent home while public transportation was still functioning. Windows in stores potentially exposed to rioters were boarded up with plywood.
Figure R-1 shows the back of a caseline in the I. Magnin Wilshire Boulevard store after the Rodney King riots in Los Angeles in April 1992. The entire first floor of the store was trashed, and only one piece of merchandise remained—only because it got caught in a fixture and couldn’t be pulled free. The glass in every showcase was broken or cracked, every POS terminal was destroyed, and carpets showed evidence that someone attempted to set fires. Other floors (the basement, second, and third floors) were also damaged and looted, but less extensively.
Other retailers and businesses in the area suffered similar fates. Witnesses who lived nearby reported seeing cars and trucks being driven up to the store doors and merchandise carried out by the armfull and hauled away. The theft of the merchandise is perversely understandable, but the senseless and wanton destruction of terminals, showcases, fixtures, and furniture only attests to the “mob psychology” riots produce.
The day following the riot we contracted with professional photographers and videographers to record all the damage for insurance purposes. We also had LP personnel carefully walk the floors and verbally record on tape recorders all their observations regarding damage.
Based on our observations of the King riots, we formulated the opinion that any attempt to have tried to “defend” that store against damage and looting would have resulted in the death of either the defenders or the looters, or most likely both. Property can be replaced—lives cannot.
Civil unrest and the possibility of rioting ignited by racial or religious reasons is a realistic threat in modern society, as evidenced not only in the United States, but internationally as well. And the once localized, single-city disturbances have grown to national events, as best demonstrated in France in the recent past; i.e., each night, city by city across the French landscape was illuminated by the fires of rioting.
Robbery: Prevention Checklists and Questionnaire
Store owners and managers of small retail businesses should look at the store as a total environment.
Put yourself in the place of a potential robber. Stand away, detached from your business, and try to determine its attractiveness to a robbery. Are your exterior, access, and parking lot areas adequately lighted? What about the interior of your business? Is your interior lighting sufficient so that major points of vulnerability are clearly visible from the outside? Do any and all window surfaces in your storefront provide unobstructed visibility into the store?
Consider this example: I flew to Las Vegas, Nevada, to meet with lawyers and a private investigator to inspect the crime scene of a violent robbery of a Texaco gas station. From the airport, they drove to the intersection where the station was located, and upon arrival, the occupants of the auto noted there were two Texaco stations, on opposite sides of the intersection. The lead attorney had never been to the scene and was confused as to which station was the one in question, so he commenced dialing his office with his cell phone for the correct address. I calmly pointed to the correct station, saying, in effect, “This is the station that was robbed.” Moments later that fact was confirmed. “How did you know?” asked the attorney. “Well, if I was a robber I wouldn’t rob the other one; it’s too open, widows are too big, and the interior is too visible from the street and customers pumping gas. There’s no shrubbery obstructing visibility around the building.”
Following is a sample of a Robbery Advisory and Reporting Form that should be available in your business and reviewed with employees periodically. The instructions on this form should be followed in case of a robbery, and observations made during the robbery should be recorded as soon as possible after the robber leaves the premises.
1. STAY CALM! DO NOT ATTEMPT HEROICS! Serious injury or death of employees or customers may result.
2. BE ALERT! Concentrate on getting a detailed description.
3. SPEECH CHARACTERISTICS! Listen when the robbers talk.
4. GUN! Observe the weapon used.
5. WHAT IS ROBBER CARRYING! Observe bag, briefcase, or other container robber may use.
6. GETAWAY CAR! Observe the getaway car if possible to do so without endangering yourself.
Direction of car when lost seen
7. CALL YOUR NEAREST LAW ENFORCEMENT AGENCY AS SOON AS IT IS SAFE TO DO SO AND GIVE THE FOLLOWING INFORMATION:
8. SECURITY DEPARTMENT! Call your security department as soon as you have called the police.
9. IMMEDIATELY WRITE AN ACCOUNT OF WHAT HAPPENED! Include time, date, day of week, and every detail you can recall.
10. WITNESS! Have all other employees who were involved or who observed the robbery write their own independent account of what they saw. Do not discuss your observations with other employees; it is important each person report only what he personally observed and not be influenced by others.
11. COMPANY POLICY. Stay informed of company policy regarding what is expected of you.
As stated earlier, when the business is examined in an effort to determine robbery vulnerabilities, it must be viewed in totality. To assist in making such an examination as meaningful as possible, a Robbery Security Checklist follows. A careful and detailed use of this form, coupled with corrections of noted deficiencies, should help minimize the business’s vulnerability to robbery.
Robbery Security Checklist
1. Are your exterior, access, and parking lot areas adequately lit?
2. What about the interior of your business?
3. Is your interior lighting sufficient so that major points of vulnerability are clearly visible from the outside?
4. Do any and all window surfaces in your storefront provide unobstructed visibility?
5. Do you have signs placed toward the lower portion of your door which say: “No cash is kept inside” or “Exact change only after 8:00 p.m.”?
6. Is your cash register clearly visible from the outside?
7. Using the security checklist that follows, identify your business’s points of high vulnerability to the crime of robbery.
A Security Checklist for the Crime of Robbery
1. Is your business a likely target for robbers?
| YES | NO |
2. Is your business isolated from other businesses?
| YES | NO |
3. Does the business operate late at night?
| YES | NO |
4. Does the business make change after dark?
| YES | NO |
5. Is the business known to keep substantial cash on hand?
| YES | NO |
6. Is cash transferred according to a set routine?
| YES | NO |
7. Is the business obviously operated by a single cashier?
| YES | NO |
8. Does the business have little exterior lighting?
| YES | NO |
9. Is there normally only one employee working at a time?
| YES | NO |
10. Can a robber easily case your business?
| YES | NO |
11. Is your cash register hidden from other employees?
| YES | NO |
12. Is the cash register within reach of customers?
| YES | NO |
13. Is there only a single courier for cash transfer?
| YES | NO |
14. Do you have a set routine for cash transfer?
| YES | NO |
15. Does the business lack a telephone?
| YES | NO |
16. Is the light level in your store much higher or lower than outside your store?
| YES | NO |
17. Do posters and displays block the view of the cash register from outside?
| YES | NO |
If your answer to any of the preceding questions is “Yes,” try to improve visibility, money-handling routines, lighting (exterior), employee coverage, use of CCTV, and any other action that turns the answer to any question from “Yes” to “No.” Consider, for example, placing a height marker on the exit doorjamb; this will help employees accurately estimate the height of an escaping robber. Also consider the use of a floor safe and make frequent “drops” of cash into the floor safe when it can be done safely and discreetly.
Roof Security
Building construction may or may not require approval of the security/loss prevention department. We hope such approval is part of the planning and construction process. It is, however, more likely the risks inherent in unsecured roofs, in stores, distribution centers, and warehouse facilities are a present problem that requires security inspection and possible remedial action. The problem, as discussed in this section, may serve as a guide for future construction planning.
What’s the risk? It’s a given that any and every commercial building represented by a “box” is secured by various kinds of lock hardware on all four sides, and typically, the various possible points of unwanted entry—i.e., windows and doors—are protected by some type of alarm system. But what about the roof? It’s no secret that many criminal penetrations have been negotiated through roofs during the middle of the night, and such entries could have been prevented had a knowledgeable security executive inspected that roof prior to the discovery of the crime.
Here’s an example: After I was transferred to a division of stores, local management expressed suspicion of the long-time uniformed security officer who patrolled the interior of the multistory store during the hours at night when the store was closed. They suspected he was engaged in theft but had no idea as to how the officer was removing merchandise. Forearmed with that information, and in the normal course of familiarizing myself with the physical attributes of the store in question in downtown San Francisco, I conducted an inspection of the “warehouse,” which was the top floor of the building. During that inspection, I noted a very high vertical latter accessing the roof. At the head of the ladder was roof hatch, secured by a padlock and hasp. The door was also equipped with a mercury switch alarm designed to signal an alarm if the trap door was lifted (the mercury would flow from its regular “level” mode to one end, making contact and sending the electric impulse activating the alarm). I noted, during this daytime inspection, the switch had been tampered with, allowing the opening and the flow of mercury was not sufficient to reach the contact end; hence, the switch was essentially disarmed. Continued inspection of the roof disclosed a long, coiled rope and a few weathered price tags and merchandise tickets.
Further investigation revealed the guard, who had the key to the hatch padlock, compromised the alarm switch and used that roof hatch to access the roof. He would drop the end of the rope back down into the warehouse, bundle merchandise of his choice, pull up the bundle through the hatch, and then lower the bundle on the rear exterior side of the store to an awaiting confederate in the alley below.
Maintenance personnel, who occasionally went to the roof, felt the hatch was secured by lock and key and paid no attention to or never saw the rope, which was stashed in a remote corner, or the weathered tickets. This theft activity lasted for years undetected!
Inspection of the Roof
The “inspector” should answer these questions:
1. How can someone gain access to the roof from inside the building?
2. How can someone gain access to the roof from outside the building?
3. Once on the roof, how can someone access the interior of the building without forcing a door or hatch, which may be alarmed?
Bear in mind, once a burglar is on the roof, he’s more often than not out of public view and has time to take advantage of any weakness in the structure and penetrate the building. It’s the duty and responsibility of the security/loss prevention department to “harden” this part of the store, warehouse, and distribution center. This includes “temporary warehouse” facilities, many times rented during the holiday season.
* Originally published in The America.n Chronicle, June 1, 2006, and reprinted with the author’s permission.