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Stemming Consumer Theft
Stemming Consumer Theil By BRUCE R. SIECKER
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onsumer theft costs the American public billions each year. It is an especially serious problem for community pharmacists because of the large number of small, expensive items they sell that are attractive to both amateur and professional shoplifters. And pharmacies are a traditional favorite with the youthful thief. But shoplifting does not even begin to describe the whole problem. Pharmacists also must contend with a resurgence of counterfeit currency, bad-check artists, and even efforts by gangs to extort money and stock from the pharmacy. These problems are just as serious and, like
shoplifting, tend to increase during periods of recession, high unem-
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ployment, and a rising cost of living. In the past two years, pharmacy has witnessed a surge in shoplifting and other forms of consumer theft, in spite of improvement in the economy. Public attitudes and the courts seem increasingly to take the side of the "poor soul" who has to steal, and there is no apparent end to the ways people steal from a pharmacy. New and less secure forms of packaging, fewer blister packages, self-service displays, and high shelves that thwart surveillance make it even easier to steal from a pharmacy. These problems, combined with management frustration, make this threat to a pharmacy one of the
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most difficult to counter. But self-education, tenacity, and a well-designed plan that centers on employee training and vigilence can reduce losses sharply. One salient factor is "outsiders": security experts claim that outsiders-mainly robbers, burglars, and shoplifters-account for about 25 % of all losses in a pharmacy, while respondents in a recent survey of chain pharmacies estimated that outsiders represent 56% of the losses. Another survey found shoplifting to be responsible for 82% of external losses. Yet with a well-executed plan, it is possible to reduce these kinds of losses from the current average of 2V2% of total revenues to 1% or even less.
The Shoplifting Threat A pharmacy's most prevalentand possibly most aggravating-security problem is shoplifting. It is also a pharmacy's second most expensive security problem, right behind employee theft. One chain of 35 pharmacies apprehended 3,800 shoplifters andrecovered more than $20,000 of merchandise in a six-month period as a result of a well-designed security plan. The head of security for that company estimated that probably ten times as much was saved, because successful shoplifters usually return for more, and word-ofmouth about "easy" (and not so easy) targets spreads rapidly among professional shoplifters. Shoplifters take stock without paying for it, change or switch price stickers, and exchange package caps when the price sticker is located on the top of a package. There are dozens of techniques, ranging from the "grab and run" hoodlum to the geriatric thief who feigns mental confusion when asked to pay for the prescription that "fell" into a purse or pocket. The real artisans-mostly the hardcore professionals-use "booster boxes" (which have false bottoms), "palming," covering one item with another, "hooker belts" (designed to hang many items inside a coat), '
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umbrellas, coats with large pockets sewn on the inside, newspapers, and even baby carriages to carry out their work. The pros often work in pairs; they quickly hand off items to protect one another against arrest once they have left the pharmacy, and to increase the chances of a false-arrest suit. Depending on the source consulted, shoplifters are: evenly divided between men and women; 75% women; mostly teens and young adults; mostly teen boys aged 17 or younger; or usually elderly. The statistics are so contradictory that the only plausible observation is that everyone steals from a pharmacy! A survey in Florida found that the elderly are increasingly caught for shoplifting violations. They seem to prefer prescription products, internal nonprescription analgesics, and diabetic supplies. When confronted, they often act confused and quickly offer to pay for anything that was inadvertantly placed in their purse or pocket. Under these conditions, there is little that can be done because of possible bad publicity-who wants to have a 70-year-old arrested?-and the fact that the court probably would not do anything, anyway.
Crime of Opportunity According to a survey done in southern California, the average number of items taken by each individual is 2.6, with a retail value of $8.12. Adults average $10 per incident, while juveniles are caught with an average of $5.64 worth of merchandise on them. Young females make off with $7.81 worth of stock, while young boys get only $4.16 on each trip. The most active times are: 3-6 p.m. (35% of the apprehensions), noon3 p.m. (29.3% ), and 6-9 p.m. (20. 9% ). December is the busiest month for the shoplifter (10.4% ), with September the slowest (6.6% ). Friday, Saturday, and Sunday are the top three days of the week for shoplifting, representing almost half of all incidents. Except for the elderly, most shoplifters are after cosmetics, personal
care items such as panty hose, nonprescription drugs, candy, gum, food, magazines, consumer electronic items (calculators, radios, and stereos), cameras, records and tapes, and so on. Most pharmacy shoplifters-possibly as high as 90%-are amateurs, and there is a strong belief among experts that shoplifting is more a crime of opportunity than the result of a well-executed plan. Supporting this conclusion is the fact that it seems to involve all age groups and both sexes, and is reasonably constant by time, day of the week, and month.
Countering the Threat The shoplifting threat is not easily dealt with. Experienced security analysts warn that nothing works for very long and that all security programs tend to lose their effectiveness unless managers maintain a constant emphasis on them. As a first rule, no pharmacy today should be using marking crayons to price products. All prices should be printed in ink on non-peel, self-destructing price stickers (with thick paper and heavy glue). Employees should be taught to place the price sticker on the front of each package, preferably below the package cap to discourage switching. One advantage of the newer optical scan cash registers is that they virtually eliminate price changing and switching. It is a good idea in large pharmacies to collect all packages that shoppers bring in from outside and to staple shut all outgoing packages. Often, suppliers offer a choice in packaging. If so, ask for blister packs. Further, all display cases should be locked. Recording tapes and records should be stored inside displays that do not allow shoppers to remove them, or an employee station should be set up in the area to maintain tight surveillance. Expensive consumer electronic products are prime targets for the shoplifter, especially the professional. These should be locked in display cases or chained. Some pharmacies use magnetized cards that set off a sensor and alarm if
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someone attempts to carry an item containing the card outside without a clerk demagnetizing or removing the card.
Pharmacy Layouts Much can be done by changing the pharmacy's layout. Displays and gondolas should be lowered to about 48", certainly no higher than 52". Long runs of gondolas should be broken up with cross aisles to encourage employee and shopper circulation. One thing a shoplifter wants is seclusion. If everyone can circulate freely, it reduces the chances for success. High-risk items should be moved closer to employee stations. The front of the pharmacy should be kept clear so cashiers can clearly see who is entering and leaving the pharmacy. Turnstyles still work, but many pharmacies have eliminated them due to servicing problems. It is a good idea to raise all employee stations several inches off the floor to improve surveillance; employees can observe shoppers more easily, discouraging would-be robbers. However, observation posts that use one-way mirrors are costly to install and tend to end up as white elephants. The only justification for installing observation mirrors occurs in instances where an employee normally works in an office that adjoins the selling floor. In such cases, a one-way mirror would be ' helpful in discouraging shoplifters and robbers. Closed-circuit cameras are of two types: fake and real. Phony cameras can be spotted easily and are not worth the investment. Real cameras tend to be quite effective-for about 30-50 days. After that, they blend into the background and no one, including employees, pays much attention to them. The same pattern tends to hold true for convex mirrors that are installed over aisles and in corners. They cost much less than cameras, but also lose their effectiveness over time. Guards are a preferred tactic in many chain pharmacies. There is
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controversy over whether a guard in uniform or in plain clothes is more effective. Some feel the uniform deters shoplifters, while others think it acts only as a challenge. There is agreement, however, that two guards, one in uniform and one wearing street clothes, are highly effective. The problem is cost. Most pharmacies cannot afford to hire welltrained guards for long enough to make the effort pay off.
Training Employees Everyone seems to agree that employee training and vigilance are the key elements in an effective shoplifting prevention program. Employees should be shown what effect shoplifting has on the pharmacy, and hence their jobs and wages. The loss of a $10 item represents the net income on $333 worth of revenue for a pharmacy with a 3% net income. Employees should know that the manager will take shoplifting losses into account when annual reviews are done and that raises are dependent on whether the pharmacy achieves an adequate income.
Job descriptions and periodic employee reviews should include an assessment of whether the employee greets and recognizes everyone who enters the pharmacy, allows no one to go without some form of visual or verbal recognition for more than two or three minutes, circulates around the pharmacy, andremains on the selling floor (unless, of course, when doing something that cannot be done while on the floor.) Employees need to know that the manager, too, is vitally interested in constant but friendly attention to each and every shopper in the pharmacy. They must appreciate · that most shoppers love attention, while shoplifters hate it. And they should know how to spot a shoplifter (see box, p.36). A signal should also be developed to warn all employees of suspicious activity. Employee awards, and even compensation, for stopping or apprehending shoplifters have been used successfully by some pharmacies. The problem, of course, is that employees must be well trained about what constitutes a legal apprehen-
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Spotting a Shoplifter he most effective deterrent against shoplifting is t~e p~armacy employee. Constant, helpful attention to everyone who enters the pharmacy will discourage all but the hardened professional. Employees should be taught to look for telltale signs of a shoplifter, which include: • Out-of-season clothing, e.g., coats in warm weather, umbrellas on a clear day; • A bulky, unnatural look or unusual walk; • Two or three people, tightly grouped; • A shopper who picks up an item, then quickly turns away from an employee; • Examining items in a corner or taking items to other areas of the pharmacy; • Dropping items on the floor, then observing surroundings while picking the item up; • Causing a commotion, such as fainting, dramatic illness, or other disturbance; • Moving around the pharmacy, but repeatedly returning to one area; • Observing surroundings, especially pharmacy staff, more than merchandise; • Leaving the pharmacy with undue haste, especially if they return soon; • A startled look when a shopper realizes that an employee is observing him; • Groups who enter, then split into smaller groups, or all head in different directions; • Anyone removing price stickers.
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sian and must not be allowed to get overly zealous about "catching the bad guys." Employee training can often be done successfully by the manager, but other sources of help are available as well. Any Small Business Development Center will be happy to present programs on stopping the shoplifter. The Chamber of Commerce and Better Business Bureau are also resources, especially if several firms in an area request help at the same time. Some larger police departments have specialists in retail crime who help train employees.
Publicizing Measures Pharmacies need to be "high profile" about shoplifting. This means that the public has to know (1) that shoplifters caught in the pharmacy will be prosecuted, and (2) the pharmacy is not an easy target. Signs should be posted informing potential thiefs that shoplifting is a crime, that the pharmacy will prosecute, and that there are detection methods in effect. Special shoplifting warning signs should be placed near high-risk products. New security systems, apprehensions, prosecutions, and the fact that the pharmacy is very much aware of the shoplifting threat should be communicated whenever possible to 36
local media. Even a brief newspaper article describing a program to recognize and reward employees for stopping a shoplifter is an excellent way to get the word out that your pharmacy is not "easy." Some pharmacists have been successful in getting the message across at local schools. One pharmacist calls the local school when a youngster has been caught and reports the incident to the school principal, who in turn cooperates by passing the news on. Other pharmacy managers stage mock apprehensions, page security officers over the public address system (whether there is a guard or not), and even feed fictitious stories about apprehensions to civic, parent, and other groups. Whether these ploys are effective is open to debate, especially since it is generally believed that "bluffing" in the security area is quickly discovered.
Apprehending the Shoplifter Taking a suspected shoplifter into custody is a tricky business that is getting more difficult every day. To avoid a false arrest charge, the arrest must be made very carefully. An arrest that will stand up in court is even more difficult to ascertain, so much so that many managers no longer even bother to press charges. Employees must realize that a false-
arrest charge can result from words alone if the shopper reasonably thinks he cannot freely leave any interrogation. An assault charge-any physical contact without consentis another possibility if an employee is not careful. The same is true for a defamation suit, which can result from any derogatory statement made about someone in the presence of others. One expert in pharmacy security suggests the following guidelines for apprehending a shoplifter: • The person making the arrest should have witnessed the theft. • The person making the arrest should have a continuous view of the shoplifter from the time the item is taken until the arrest is made. • A witness to the entire theft is highly desirable. • The shoplifter must show an overt intention to steal. Concealment of an item is the most obvious indication. • Preferably, more than one item should have been taken. • The value of the item stolen should be at least $2. • The property must be in the shoplifter's possession when the arrest is made. • The suspect must be outside the pharmacy when the arrest is made. • The person making the arrest must identify himself and the pharmacy
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to the shoplifter. Unless all of these steps are taken, you are taking a poor risk in attempting to make an arrest. You will have to prove the person's intention to steal because it is not illegal, per se, to forget to pay for something. You will also have to be able to identify the stolen items as the pharmacy's property. A trial a ttomey will have little trouble getting the case dismissed unless you can establish the fact that the property came from the pharmacy and that you had personal knowledge that it was not paid for.
Questioning a Shoplifter The U.S. Justice Department's Law Enforcement Assistance Administration suggests the following three goals in questioning a suspected shoplifter-to get the pharmacy's property back, to get a confession, and to get the shoplifter to sign a form releasing the pharmacy and its employees from any civil liability. Questioning should be done in private. If you are a male and the shoplifter is female (or vice versa), it is a good idea to have a second person of the same sex as the shoplifter present. You should be able to name and describe the articles that were taken. (If you cannot, you are already on shaky ground.) Ask the suspect to place all the r items taken on the table or desk. Most will cooperate at this point. If they do not, you are probably dealing with a seasoned veteran and had better call for police assistance. Be sure to stay with the person until the police arrive so he cannot get rid of the stolen items.*
Prosecuting a Shoplifter Some pharmacy managers feel there is too much bad publicity associated with prosecuting shoplifters and are also aware that only about 1 shoplifter in 1,200 will ever spend any time in jail. Other managers are strongly committed to 'This area is loaded with nuances and potential problems that go well beyond the scope of this report . Additional informa tion and guidance is in the Law Enforcement Assistant Ad ministration publication Sewrity nlllf tile Small Business Retailt:r, stock number 027-000-00756-1, available from the U.S . Government Printing Office, Washington, D.C. 20402.
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prosecution. However, a study of 1,300 retail stores across the country showed that businesses which do elect to prosecute have substantially lower shoplifting losses. Three fourths of the firms with low shrinkage rates prosecute shoplifters; only about half of those with high shrinkage rates prosecute. The same results were obtained in a 1981 survey of 817 pharmacies in southern California: those that prosecute suffered substantially less shoplifting. The manager who stops short of prosecuting-except possibly when an elderly, pregnant, or contrite person is involved-has two credibility problems. The first is with the pharmacy's employees. The typical reaction is, Why should I work hard to catch these people if the manager is not going to do anything about it? The second problem is the fact that a pharmacy's reputation soon gets around. Shoplifters are deterred if two conditions are present: "they" catch people; "they" prosecute people. Being caught is of little concern to shoplifters if they know no charges will be filed. The decision is not easy, but a good security program should probably include this final step. Without prosecution, the effectiveness of any shoplifting program must depend entirely on prevention.
Bad Checks Another serious form of consumer theft is the bad check. In the main, it is an infrequent phenomenon and represents nothing more than inattention, clerical error, sloppy record keeping, or miscalculation of how long it will take for a check to clear. the bank. And, sometimes, patients know their checkbooks are empty but still need a prescription. So they write a check anyway, hoping to cover it before it gets to the bank. This form of theft is not really intentional or an actual attempt to steal. Rather, it represents a headache that most pharmacy managers learn to accept, probably because they have "been there" on occasion themselves. But a second type of bad check is
both premeditated and criminal. It is written by the bad-check artist, whose aim is to defraud the pharmacy out of merchandise and money. This type of consumer theft can get very expensive and deserves management attention. The occasional "check bouncer" can be managed with little trouble if the pharmacy establishes and then enforces a stiff bounced-check processing fee . Many pharmacies are now charging $8-12 per returned check, which usually represents only what the pharmacy's bank charges the pharmacy. Signs that announce the NSF fee should be prominently posted at all checkout areas and enforcement should be strict.
Check Policy The manager should also establish clearly defined policy regarding who may write a check, what identification is required, for what purposes a check will be accepted (merchandise, prescription items, etc.) and what type of check will be accepted. Some pharmacies now require shoppers to fill out some sort of application to apply for check cashing privileges. The information on the form is verified and the patron is then informed whether approval has been gran ted. These forms are checked whenever the shopper wishes to write a check or the pharmacy can give out some sort of identification card. Most security experts suggest the following as safe policy for a pharmacy: (1) Personal checks, made out to the pharmacy, are acceptable. Payroll, government (notoriously risky), second-party (most susceptible to fraud), blank (rarely accepted anymore), and counter (extremely risky) checks are unacceptable. (2) Checks must be imprinted with the writer's name, address, and telephone number. (More people now are having their personal checks printed with driver's license and social security numbers on them.) (3) Checks are accepted for the amount of purchase only. (4) Two forms of identification are
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required-one must be a current driver's license or Division of Motor Vehicles (DMV) identification card for non-drivers. . (5) Checks must be approved by the manager on duty. If cashiers are allowed to accept checks for purchases, it is essential that they be trained thoroughly and held accountable. No manager should assume that employees understand the intricacies of check writing and the common practices of bad-check passers. It is surprising how many people do not know the first thing about personal checks because they have no account themselves.
Check Fundamentals Employees should first be taught the fundamentals. A personal check should have the name and address of the bank printed-not stamped, handwritten, or typed-on it. The writer's name, address, and telephone number (at least) should also be printed. Checks contain a serial or sequence number in the upper righthand corner, and experience has shown that low-sequence-number checks-under #300, for instanceare returned by the bank much more frequently than higher numbers. The writer should fill in the exact amount of the check, then write the amount out in longhand below. The two should agree. No write-overs or crossou ts should be accepted. The current date should be used. A stale-dated check makes no sense and a postdated check-dated ahead-is in legal terms not a payment but a promissory note. If a pharmacy knowingly accepts a postdated check, it is, by definition, offering credit to the check writer. The writer should sign the check legibly, using the same form of his name as that printed on the check. Cashiers should carefully check the signature against both pieces of identification. Even more fundamental are the following cautions against forgeries. Check for misspelled words on the printed part of the check and for irregular type.
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Compare the bank address with the imprinted Federal Reserve District code to be sure they matchthe first two digits on the lower left of the check indicate the Federal Reserve District to which the check will be sent, and that number should be correct for your area. Bad-check passers often change the number to give them extra float time. (The FBI reports that 8 out of 10 forged checks have altered Federal Reserve District codes.)
Employees should be trained to ask themselves. ·aow many sales will we have to make up il this check is bad?• Check to see if there are perforations on at least one side of the check. All personal checking accounts are printed with perforations; forgeries often are not. The numerical codes on the bottom of bank-printed checks are printed with magnetic ink, which does not reflect light or appear shiny. Forgeries look shiny. Simply by tilting a check toward the light, it is easy to check the ink. Cashiers should look closely at the sequence numbers to be sure they are printed and not stamped. Rubbing a finger over them will usually smear a stamp because most forgers do not wait long enough for the ink to dry thoroughly.
Accepting a Check Cashiers should also be cautious about traveler's checks. Be sure they are taught how to verify them. For instance, American Express traveler's checks are designed so that the left-hand denomination on the back will smear easily when rubbed. But even more fundamentally, there is
little reason to accept them if the pharmacy's check policy is for local accounts only. Special caution is essential when a teenager is trying to write a check, or when the writer is obviously intoxicated, appears nervous, is in a hurry, or seems to be buying unusual quantities with little apparent regard for prices. Cashiers should understand, too, that bad-check writers do not pass large checksthe $25 to $35 range is most prevalent-and are often well dressed and quite personable. NSF checks are frequently associated with divorce and separation; also keep in mind that a spouse has no absolute authority to write a check on the other spouse's personal checking account. More than anything, cashiers should be instructed to take their time when accepting a check. They should never allow a check writer to rush them. If they have any doubt, they should explain that they have to get approval from a manager, walk to the rear of the pharmacy, and observe for a minute or two. The badcheck passer will not stay long. Cashiers should be responsible for obeying policy. Specific mention of adherence to all pharmacy policy should be made in their job descriptions and made an integral part of all employee evaluations. Employees should be taught to ask ' themselves: "How many sales will we have to make up if this check is bad? How many of these will it take before there is no money for bonuses or raises?" Managers might try the same query. Any bad checks that have been accepted should be discussed with all employees and serve as the basis for reinforcing procedures and policies.
Check Security There are other ways to augment · security against bad checks. The best protection is to photograph both the writer and the check, but the equipment and suppliers are expensive. Experience also shows that such equipment tends to fall into disuse ' over time. Fingerprinting directly on the back American Pharmacy Vol. NS23, No. 9, September 1983/474
of the check is effective, but many people object to messy ink. Newer fingerprinting registers which combine invisible chemicals to produce a print, but leave no stain on the fingers, are available for $200-300 and seem to have good shopper acceptance. A variety of check verification systems are also on the market. Some are based on a positive verification, where the pharmacy is given some indication that the account is fine, or on negative information, where the system will respond only if there is any adverse information in the file. Their effectiveness depends on the size and accuracy of the computer file and most have fairly high operative expenses, e.g., 50-80ft per check. One chain pharmacy found that its normal losses from bad checks were $400 per one million dollars of checks cashed, but that its new computer-assisted verification service was costing them $11,000 per million. None of these methods is a substitute 'for good procedures in the pharmacy, yet there is some evidence that pharmacy employees soon begin to rely on these aids as substitutes . When that happens, their value declines dramatically.
Quick-Change Artists Quick-change artists are a special breed of thief, and seem to have all but disappeared. Still, employees should be aware of them and how to counter their efforts. A quickchange crook relies on fast talk, confusion, and speed to dupe the cashier into giving back more change than is indicated. Their method is to ask the cashier to "break" another bill while the cashier is busily making change for the first bill given to pay for a purchase. Two precautions can quickly defeat this ploy. First, a cashier should be instructed to place any bill received across the cash register drawer until the correct change has been counted and delivered to the shopper. (This also stops the person who claims to have given a larger denomination bill to the cashier.) The second tactic is to recognize the shopper's request for additional
change, but to delay doing anything about it-including accepting the second bill-until the present transaction is completed. A simple, "Yes, I'll be happy to give you change as soon as I finish," is usually sufficient to foil any quick-change attempt.
Counterfeit Currency The U.S. Secret Service reports that counterfeiting is on the rise. Recent arrests in Southern Louisiana and Texas, uncovering a multi-million dollar counterfeiting ring which duped businesses out of several million dollars, is vivid testimony to the problem. The law states that once you accept a counterfeit bill, it is yours. To pass it on knowingly is illegal. Two actions are permissible: turning it over to the local police or to the U.S. Secret Service. Contrary to popular myth, the counterfeiter's favorite denomination is the $20 bill, though more $50s and $100s are appearing. (Another fact that few people seem to realize is that the $100 bill is the largest denomination now in circulation. It is surprising how many people get taken by accepting $500 and $1,000 bil~today, eventhoughilhasbeen ten years since they were taken out of circulation.) Some basic knowledge about U.S. currency can make the difference. There are three authorized types of currency: Federal Reserve Notes, Silver Certificates, and U.S. Notes. All are legal tender in this country. Each is printed in only one authorized color. They are: Note Federal Reserve Notes Silver Certificates U.S. Notes
Ink Color Green Blue Red
The treasury seal and the serial number of the bill should be in the same color ink and match the authorized color for the type of note. (It is surprising how many counterfeit bills do not-and how few people ever notice the difference.) The treasury seal on the right side of the front should be printed with an overlay of the written denomi-
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nation of the bill, and the ink color should be bright and clear. The dark seal to the left of the portrait has a saw-tooth border that should be sharply printed and evenly spaced. The letter within the dark seal-it should be a single, capital letter-indicates the Federal Reserve District in which the note was issued. (For instance, the capital letter "K" indicates the bill was issued from Dallas.) The first ietter of the serial number on the bill should agree with this letter, and the number should be clear and evenly spaced. American currency is printed using the "intaglio" printing method, which gives a unique three-dimensional look to the portrait on the bill. Designs on the back appear the same way. The portrait looks ·lifelike and clear. The head seems to "stand out" from the background, which in turn is printed clearly. Hair is distinguishable; eyes are sharp and alive. On a bogus bill, the portrait appears flat. Our currency is also printed on a special type of paper that contains small red and blue fibers, looking almost like threads running through the paper. These fibers are randomly distributed. Good fakes often have them, but in parallel. Unfortunately, older bills seem to lose this distinctive characteristic. The paper should not feel greasy or smooth; counterfeit bills are almost always printed on thinner, waxy paper.
An 'Easy Mark'? Stopgap measures against con. sumer theft do not work. Only a welldesigned comprehensive plan, which stays in effect year-round and is based heavily on employee awareness, training, and accountability, has any chance of reducing consumer theft to a tolerable level. Too many managers seem to accept the "shrink" as a given. Others see efforts to reduce consumer theft as a nonproductive activity. The point to remember is that every dollar taken is a dollar less in net income. And a pharmacy that develops a reputation as an easy mark is sure to suffer even greater losses. D
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onsumer theft costs the American public billions each year. It is an especially serious problem for community pharmacists because of the large number of small, expensive items they sell that are attractive to both amateur and professional shoplifters. And pharmacies are a traditional favorite with the youthful thief. But shoplifting does not even begin to describe the whole problem. Pharmacists also must contend with a resurgence of counterfeit currency, bad-check artists, and even efforts by gangs to extort money and stock from the pharmacy. These problems are just as serious and, like
shoplifting, tend to increase during periods of recession, high unem-
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ployment, and a rising cost of living. In the past two years, pharmacy has witnessed a surge in shoplifting and other forms of consumer theft, in spite of improvement in the economy. Public attitudes and the courts seem increasingly to take the side of the "poor soul" who has to steal, and there is no apparent end to the ways people steal from a pharmacy. New and less secure forms of packaging, fewer blister packages, self-service displays, and high shelves that thwart surveillance make it even easier to steal from a pharmacy. These problems, combined with management frustration, make this threat to a pharmacy one of the
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most difficult to counter. But self-education, tenacity, and a well-designed plan that centers on employee training and vigilence can reduce losses sharply. One salient factor is "outsiders": security experts claim that outsiders-mainly robbers, burglars, and shoplifters-account for about 25 % of all losses in a pharmacy, while respondents in a recent survey of chain pharmacies estimated that outsiders represent 56% of the losses. Another survey found shoplifting to be responsible for 82% of external losses. Yet with a well-executed plan, it is possible to reduce these kinds of losses from the current average of 2V2% of total revenues to 1% or even less.
The Shoplifting Threat A pharmacy's most prevalentand possibly most aggravating-security problem is shoplifting. It is also a pharmacy's second most expensive security problem, right behind employee theft. One chain of 35 pharmacies apprehended 3,800 shoplifters andrecovered more than $20,000 of merchandise in a six-month period as a result of a well-designed security plan. The head of security for that company estimated that probably ten times as much was saved, because successful shoplifters usually return for more, and word-ofmouth about "easy" (and not so easy) targets spreads rapidly among professional shoplifters. Shoplifters take stock without paying for it, change or switch price stickers, and exchange package caps when the price sticker is located on the top of a package. There are dozens of techniques, ranging from the "grab and run" hoodlum to the geriatric thief who feigns mental confusion when asked to pay for the prescription that "fell" into a purse or pocket. The real artisans-mostly the hardcore professionals-use "booster boxes" (which have false bottoms), "palming," covering one item with another, "hooker belts" (designed to hang many items inside a coat), '
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umbrellas, coats with large pockets sewn on the inside, newspapers, and even baby carriages to carry out their work. The pros often work in pairs; they quickly hand off items to protect one another against arrest once they have left the pharmacy, and to increase the chances of a false-arrest suit. Depending on the source consulted, shoplifters are: evenly divided between men and women; 75% women; mostly teens and young adults; mostly teen boys aged 17 or younger; or usually elderly. The statistics are so contradictory that the only plausible observation is that everyone steals from a pharmacy! A survey in Florida found that the elderly are increasingly caught for shoplifting violations. They seem to prefer prescription products, internal nonprescription analgesics, and diabetic supplies. When confronted, they often act confused and quickly offer to pay for anything that was inadvertantly placed in their purse or pocket. Under these conditions, there is little that can be done because of possible bad publicity-who wants to have a 70-year-old arrested?-and the fact that the court probably would not do anything, anyway.
Crime of Opportunity According to a survey done in southern California, the average number of items taken by each individual is 2.6, with a retail value of $8.12. Adults average $10 per incident, while juveniles are caught with an average of $5.64 worth of merchandise on them. Young females make off with $7.81 worth of stock, while young boys get only $4.16 on each trip. The most active times are: 3-6 p.m. (35% of the apprehensions), noon3 p.m. (29.3% ), and 6-9 p.m. (20. 9% ). December is the busiest month for the shoplifter (10.4% ), with September the slowest (6.6% ). Friday, Saturday, and Sunday are the top three days of the week for shoplifting, representing almost half of all incidents. Except for the elderly, most shoplifters are after cosmetics, personal
care items such as panty hose, nonprescription drugs, candy, gum, food, magazines, consumer electronic items (calculators, radios, and stereos), cameras, records and tapes, and so on. Most pharmacy shoplifters-possibly as high as 90%-are amateurs, and there is a strong belief among experts that shoplifting is more a crime of opportunity than the result of a well-executed plan. Supporting this conclusion is the fact that it seems to involve all age groups and both sexes, and is reasonably constant by time, day of the week, and month.
Countering the Threat The shoplifting threat is not easily dealt with. Experienced security analysts warn that nothing works for very long and that all security programs tend to lose their effectiveness unless managers maintain a constant emphasis on them. As a first rule, no pharmacy today should be using marking crayons to price products. All prices should be printed in ink on non-peel, self-destructing price stickers (with thick paper and heavy glue). Employees should be taught to place the price sticker on the front of each package, preferably below the package cap to discourage switching. One advantage of the newer optical scan cash registers is that they virtually eliminate price changing and switching. It is a good idea in large pharmacies to collect all packages that shoppers bring in from outside and to staple shut all outgoing packages. Often, suppliers offer a choice in packaging. If so, ask for blister packs. Further, all display cases should be locked. Recording tapes and records should be stored inside displays that do not allow shoppers to remove them, or an employee station should be set up in the area to maintain tight surveillance. Expensive consumer electronic products are prime targets for the shoplifter, especially the professional. These should be locked in display cases or chained. Some pharmacies use magnetized cards that set off a sensor and alarm if
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someone attempts to carry an item containing the card outside without a clerk demagnetizing or removing the card.
Pharmacy Layouts Much can be done by changing the pharmacy's layout. Displays and gondolas should be lowered to about 48", certainly no higher than 52". Long runs of gondolas should be broken up with cross aisles to encourage employee and shopper circulation. One thing a shoplifter wants is seclusion. If everyone can circulate freely, it reduces the chances for success. High-risk items should be moved closer to employee stations. The front of the pharmacy should be kept clear so cashiers can clearly see who is entering and leaving the pharmacy. Turnstyles still work, but many pharmacies have eliminated them due to servicing problems. It is a good idea to raise all employee stations several inches off the floor to improve surveillance; employees can observe shoppers more easily, discouraging would-be robbers. However, observation posts that use one-way mirrors are costly to install and tend to end up as white elephants. The only justification for installing observation mirrors occurs in instances where an employee normally works in an office that adjoins the selling floor. In such cases, a one-way mirror would be ' helpful in discouraging shoplifters and robbers. Closed-circuit cameras are of two types: fake and real. Phony cameras can be spotted easily and are not worth the investment. Real cameras tend to be quite effective-for about 30-50 days. After that, they blend into the background and no one, including employees, pays much attention to them. The same pattern tends to hold true for convex mirrors that are installed over aisles and in corners. They cost much less than cameras, but also lose their effectiveness over time. Guards are a preferred tactic in many chain pharmacies. There is
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controversy over whether a guard in uniform or in plain clothes is more effective. Some feel the uniform deters shoplifters, while others think it acts only as a challenge. There is agreement, however, that two guards, one in uniform and one wearing street clothes, are highly effective. The problem is cost. Most pharmacies cannot afford to hire welltrained guards for long enough to make the effort pay off.
Training Employees Everyone seems to agree that employee training and vigilance are the key elements in an effective shoplifting prevention program. Employees should be shown what effect shoplifting has on the pharmacy, and hence their jobs and wages. The loss of a $10 item represents the net income on $333 worth of revenue for a pharmacy with a 3% net income. Employees should know that the manager will take shoplifting losses into account when annual reviews are done and that raises are dependent on whether the pharmacy achieves an adequate income.
Job descriptions and periodic employee reviews should include an assessment of whether the employee greets and recognizes everyone who enters the pharmacy, allows no one to go without some form of visual or verbal recognition for more than two or three minutes, circulates around the pharmacy, andremains on the selling floor (unless, of course, when doing something that cannot be done while on the floor.) Employees need to know that the manager, too, is vitally interested in constant but friendly attention to each and every shopper in the pharmacy. They must appreciate · that most shoppers love attention, while shoplifters hate it. And they should know how to spot a shoplifter (see box, p.36). A signal should also be developed to warn all employees of suspicious activity. Employee awards, and even compensation, for stopping or apprehending shoplifters have been used successfully by some pharmacies. The problem, of course, is that employees must be well trained about what constitutes a legal apprehen-
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Spotting a Shoplifter he most effective deterrent against shoplifting is t~e p~armacy employee. Constant, helpful attention to everyone who enters the pharmacy will discourage all but the hardened professional. Employees should be taught to look for telltale signs of a shoplifter, which include: • Out-of-season clothing, e.g., coats in warm weather, umbrellas on a clear day; • A bulky, unnatural look or unusual walk; • Two or three people, tightly grouped; • A shopper who picks up an item, then quickly turns away from an employee; • Examining items in a corner or taking items to other areas of the pharmacy; • Dropping items on the floor, then observing surroundings while picking the item up; • Causing a commotion, such as fainting, dramatic illness, or other disturbance; • Moving around the pharmacy, but repeatedly returning to one area; • Observing surroundings, especially pharmacy staff, more than merchandise; • Leaving the pharmacy with undue haste, especially if they return soon; • A startled look when a shopper realizes that an employee is observing him; • Groups who enter, then split into smaller groups, or all head in different directions; • Anyone removing price stickers.
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sian and must not be allowed to get overly zealous about "catching the bad guys." Employee training can often be done successfully by the manager, but other sources of help are available as well. Any Small Business Development Center will be happy to present programs on stopping the shoplifter. The Chamber of Commerce and Better Business Bureau are also resources, especially if several firms in an area request help at the same time. Some larger police departments have specialists in retail crime who help train employees.
Publicizing Measures Pharmacies need to be "high profile" about shoplifting. This means that the public has to know (1) that shoplifters caught in the pharmacy will be prosecuted, and (2) the pharmacy is not an easy target. Signs should be posted informing potential thiefs that shoplifting is a crime, that the pharmacy will prosecute, and that there are detection methods in effect. Special shoplifting warning signs should be placed near high-risk products. New security systems, apprehensions, prosecutions, and the fact that the pharmacy is very much aware of the shoplifting threat should be communicated whenever possible to 36
local media. Even a brief newspaper article describing a program to recognize and reward employees for stopping a shoplifter is an excellent way to get the word out that your pharmacy is not "easy." Some pharmacists have been successful in getting the message across at local schools. One pharmacist calls the local school when a youngster has been caught and reports the incident to the school principal, who in turn cooperates by passing the news on. Other pharmacy managers stage mock apprehensions, page security officers over the public address system (whether there is a guard or not), and even feed fictitious stories about apprehensions to civic, parent, and other groups. Whether these ploys are effective is open to debate, especially since it is generally believed that "bluffing" in the security area is quickly discovered.
Apprehending the Shoplifter Taking a suspected shoplifter into custody is a tricky business that is getting more difficult every day. To avoid a false arrest charge, the arrest must be made very carefully. An arrest that will stand up in court is even more difficult to ascertain, so much so that many managers no longer even bother to press charges. Employees must realize that a false-
arrest charge can result from words alone if the shopper reasonably thinks he cannot freely leave any interrogation. An assault charge-any physical contact without consentis another possibility if an employee is not careful. The same is true for a defamation suit, which can result from any derogatory statement made about someone in the presence of others. One expert in pharmacy security suggests the following guidelines for apprehending a shoplifter: • The person making the arrest should have witnessed the theft. • The person making the arrest should have a continuous view of the shoplifter from the time the item is taken until the arrest is made. • A witness to the entire theft is highly desirable. • The shoplifter must show an overt intention to steal. Concealment of an item is the most obvious indication. • Preferably, more than one item should have been taken. • The value of the item stolen should be at least $2. • The property must be in the shoplifter's possession when the arrest is made. • The suspect must be outside the pharmacy when the arrest is made. • The person making the arrest must identify himself and the pharmacy
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to the shoplifter. Unless all of these steps are taken, you are taking a poor risk in attempting to make an arrest. You will have to prove the person's intention to steal because it is not illegal, per se, to forget to pay for something. You will also have to be able to identify the stolen items as the pharmacy's property. A trial a ttomey will have little trouble getting the case dismissed unless you can establish the fact that the property came from the pharmacy and that you had personal knowledge that it was not paid for.
Questioning a Shoplifter The U.S. Justice Department's Law Enforcement Assistance Administration suggests the following three goals in questioning a suspected shoplifter-to get the pharmacy's property back, to get a confession, and to get the shoplifter to sign a form releasing the pharmacy and its employees from any civil liability. Questioning should be done in private. If you are a male and the shoplifter is female (or vice versa), it is a good idea to have a second person of the same sex as the shoplifter present. You should be able to name and describe the articles that were taken. (If you cannot, you are already on shaky ground.) Ask the suspect to place all the r items taken on the table or desk. Most will cooperate at this point. If they do not, you are probably dealing with a seasoned veteran and had better call for police assistance. Be sure to stay with the person until the police arrive so he cannot get rid of the stolen items.*
Prosecuting a Shoplifter Some pharmacy managers feel there is too much bad publicity associated with prosecuting shoplifters and are also aware that only about 1 shoplifter in 1,200 will ever spend any time in jail. Other managers are strongly committed to 'This area is loaded with nuances and potential problems that go well beyond the scope of this report . Additional informa tion and guidance is in the Law Enforcement Assistant Ad ministration publication Sewrity nlllf tile Small Business Retailt:r, stock number 027-000-00756-1, available from the U.S . Government Printing Office, Washington, D.C. 20402.
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prosecution. However, a study of 1,300 retail stores across the country showed that businesses which do elect to prosecute have substantially lower shoplifting losses. Three fourths of the firms with low shrinkage rates prosecute shoplifters; only about half of those with high shrinkage rates prosecute. The same results were obtained in a 1981 survey of 817 pharmacies in southern California: those that prosecute suffered substantially less shoplifting. The manager who stops short of prosecuting-except possibly when an elderly, pregnant, or contrite person is involved-has two credibility problems. The first is with the pharmacy's employees. The typical reaction is, Why should I work hard to catch these people if the manager is not going to do anything about it? The second problem is the fact that a pharmacy's reputation soon gets around. Shoplifters are deterred if two conditions are present: "they" catch people; "they" prosecute people. Being caught is of little concern to shoplifters if they know no charges will be filed. The decision is not easy, but a good security program should probably include this final step. Without prosecution, the effectiveness of any shoplifting program must depend entirely on prevention.
Bad Checks Another serious form of consumer theft is the bad check. In the main, it is an infrequent phenomenon and represents nothing more than inattention, clerical error, sloppy record keeping, or miscalculation of how long it will take for a check to clear. the bank. And, sometimes, patients know their checkbooks are empty but still need a prescription. So they write a check anyway, hoping to cover it before it gets to the bank. This form of theft is not really intentional or an actual attempt to steal. Rather, it represents a headache that most pharmacy managers learn to accept, probably because they have "been there" on occasion themselves. But a second type of bad check is
both premeditated and criminal. It is written by the bad-check artist, whose aim is to defraud the pharmacy out of merchandise and money. This type of consumer theft can get very expensive and deserves management attention. The occasional "check bouncer" can be managed with little trouble if the pharmacy establishes and then enforces a stiff bounced-check processing fee . Many pharmacies are now charging $8-12 per returned check, which usually represents only what the pharmacy's bank charges the pharmacy. Signs that announce the NSF fee should be prominently posted at all checkout areas and enforcement should be strict.
Check Policy The manager should also establish clearly defined policy regarding who may write a check, what identification is required, for what purposes a check will be accepted (merchandise, prescription items, etc.) and what type of check will be accepted. Some pharmacies now require shoppers to fill out some sort of application to apply for check cashing privileges. The information on the form is verified and the patron is then informed whether approval has been gran ted. These forms are checked whenever the shopper wishes to write a check or the pharmacy can give out some sort of identification card. Most security experts suggest the following as safe policy for a pharmacy: (1) Personal checks, made out to the pharmacy, are acceptable. Payroll, government (notoriously risky), second-party (most susceptible to fraud), blank (rarely accepted anymore), and counter (extremely risky) checks are unacceptable. (2) Checks must be imprinted with the writer's name, address, and telephone number. (More people now are having their personal checks printed with driver's license and social security numbers on them.) (3) Checks are accepted for the amount of purchase only. (4) Two forms of identification are
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required-one must be a current driver's license or Division of Motor Vehicles (DMV) identification card for non-drivers. . (5) Checks must be approved by the manager on duty. If cashiers are allowed to accept checks for purchases, it is essential that they be trained thoroughly and held accountable. No manager should assume that employees understand the intricacies of check writing and the common practices of bad-check passers. It is surprising how many people do not know the first thing about personal checks because they have no account themselves.
Check Fundamentals Employees should first be taught the fundamentals. A personal check should have the name and address of the bank printed-not stamped, handwritten, or typed-on it. The writer's name, address, and telephone number (at least) should also be printed. Checks contain a serial or sequence number in the upper righthand corner, and experience has shown that low-sequence-number checks-under #300, for instanceare returned by the bank much more frequently than higher numbers. The writer should fill in the exact amount of the check, then write the amount out in longhand below. The two should agree. No write-overs or crossou ts should be accepted. The current date should be used. A stale-dated check makes no sense and a postdated check-dated ahead-is in legal terms not a payment but a promissory note. If a pharmacy knowingly accepts a postdated check, it is, by definition, offering credit to the check writer. The writer should sign the check legibly, using the same form of his name as that printed on the check. Cashiers should carefully check the signature against both pieces of identification. Even more fundamental are the following cautions against forgeries. Check for misspelled words on the printed part of the check and for irregular type.
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Compare the bank address with the imprinted Federal Reserve District code to be sure they matchthe first two digits on the lower left of the check indicate the Federal Reserve District to which the check will be sent, and that number should be correct for your area. Bad-check passers often change the number to give them extra float time. (The FBI reports that 8 out of 10 forged checks have altered Federal Reserve District codes.)
Employees should be trained to ask themselves. ·aow many sales will we have to make up il this check is bad?• Check to see if there are perforations on at least one side of the check. All personal checking accounts are printed with perforations; forgeries often are not. The numerical codes on the bottom of bank-printed checks are printed with magnetic ink, which does not reflect light or appear shiny. Forgeries look shiny. Simply by tilting a check toward the light, it is easy to check the ink. Cashiers should look closely at the sequence numbers to be sure they are printed and not stamped. Rubbing a finger over them will usually smear a stamp because most forgers do not wait long enough for the ink to dry thoroughly.
Accepting a Check Cashiers should also be cautious about traveler's checks. Be sure they are taught how to verify them. For instance, American Express traveler's checks are designed so that the left-hand denomination on the back will smear easily when rubbed. But even more fundamentally, there is
little reason to accept them if the pharmacy's check policy is for local accounts only. Special caution is essential when a teenager is trying to write a check, or when the writer is obviously intoxicated, appears nervous, is in a hurry, or seems to be buying unusual quantities with little apparent regard for prices. Cashiers should understand, too, that bad-check writers do not pass large checksthe $25 to $35 range is most prevalent-and are often well dressed and quite personable. NSF checks are frequently associated with divorce and separation; also keep in mind that a spouse has no absolute authority to write a check on the other spouse's personal checking account. More than anything, cashiers should be instructed to take their time when accepting a check. They should never allow a check writer to rush them. If they have any doubt, they should explain that they have to get approval from a manager, walk to the rear of the pharmacy, and observe for a minute or two. The badcheck passer will not stay long. Cashiers should be responsible for obeying policy. Specific mention of adherence to all pharmacy policy should be made in their job descriptions and made an integral part of all employee evaluations. Employees should be taught to ask ' themselves: "How many sales will we have to make up if this check is bad? How many of these will it take before there is no money for bonuses or raises?" Managers might try the same query. Any bad checks that have been accepted should be discussed with all employees and serve as the basis for reinforcing procedures and policies.
Check Security There are other ways to augment · security against bad checks. The best protection is to photograph both the writer and the check, but the equipment and suppliers are expensive. Experience also shows that such equipment tends to fall into disuse ' over time. Fingerprinting directly on the back American Pharmacy Vol. NS23, No. 9, September 1983/474
of the check is effective, but many people object to messy ink. Newer fingerprinting registers which combine invisible chemicals to produce a print, but leave no stain on the fingers, are available for $200-300 and seem to have good shopper acceptance. A variety of check verification systems are also on the market. Some are based on a positive verification, where the pharmacy is given some indication that the account is fine, or on negative information, where the system will respond only if there is any adverse information in the file. Their effectiveness depends on the size and accuracy of the computer file and most have fairly high operative expenses, e.g., 50-80ft per check. One chain pharmacy found that its normal losses from bad checks were $400 per one million dollars of checks cashed, but that its new computer-assisted verification service was costing them $11,000 per million. None of these methods is a substitute 'for good procedures in the pharmacy, yet there is some evidence that pharmacy employees soon begin to rely on these aids as substitutes . When that happens, their value declines dramatically.
Quick-Change Artists Quick-change artists are a special breed of thief, and seem to have all but disappeared. Still, employees should be aware of them and how to counter their efforts. A quickchange crook relies on fast talk, confusion, and speed to dupe the cashier into giving back more change than is indicated. Their method is to ask the cashier to "break" another bill while the cashier is busily making change for the first bill given to pay for a purchase. Two precautions can quickly defeat this ploy. First, a cashier should be instructed to place any bill received across the cash register drawer until the correct change has been counted and delivered to the shopper. (This also stops the person who claims to have given a larger denomination bill to the cashier.) The second tactic is to recognize the shopper's request for additional
change, but to delay doing anything about it-including accepting the second bill-until the present transaction is completed. A simple, "Yes, I'll be happy to give you change as soon as I finish," is usually sufficient to foil any quick-change attempt.
Counterfeit Currency The U.S. Secret Service reports that counterfeiting is on the rise. Recent arrests in Southern Louisiana and Texas, uncovering a multi-million dollar counterfeiting ring which duped businesses out of several million dollars, is vivid testimony to the problem. The law states that once you accept a counterfeit bill, it is yours. To pass it on knowingly is illegal. Two actions are permissible: turning it over to the local police or to the U.S. Secret Service. Contrary to popular myth, the counterfeiter's favorite denomination is the $20 bill, though more $50s and $100s are appearing. (Another fact that few people seem to realize is that the $100 bill is the largest denomination now in circulation. It is surprising how many people get taken by accepting $500 and $1,000 bil~today, eventhoughilhasbeen ten years since they were taken out of circulation.) Some basic knowledge about U.S. currency can make the difference. There are three authorized types of currency: Federal Reserve Notes, Silver Certificates, and U.S. Notes. All are legal tender in this country. Each is printed in only one authorized color. They are: Note Federal Reserve Notes Silver Certificates U.S. Notes
Ink Color Green Blue Red
The treasury seal and the serial number of the bill should be in the same color ink and match the authorized color for the type of note. (It is surprising how many counterfeit bills do not-and how few people ever notice the difference.) The treasury seal on the right side of the front should be printed with an overlay of the written denomi-
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nation of the bill, and the ink color should be bright and clear. The dark seal to the left of the portrait has a saw-tooth border that should be sharply printed and evenly spaced. The letter within the dark seal-it should be a single, capital letter-indicates the Federal Reserve District in which the note was issued. (For instance, the capital letter "K" indicates the bill was issued from Dallas.) The first ietter of the serial number on the bill should agree with this letter, and the number should be clear and evenly spaced. American currency is printed using the "intaglio" printing method, which gives a unique three-dimensional look to the portrait on the bill. Designs on the back appear the same way. The portrait looks ·lifelike and clear. The head seems to "stand out" from the background, which in turn is printed clearly. Hair is distinguishable; eyes are sharp and alive. On a bogus bill, the portrait appears flat. Our currency is also printed on a special type of paper that contains small red and blue fibers, looking almost like threads running through the paper. These fibers are randomly distributed. Good fakes often have them, but in parallel. Unfortunately, older bills seem to lose this distinctive characteristic. The paper should not feel greasy or smooth; counterfeit bills are almost always printed on thinner, waxy paper.
An 'Easy Mark'? Stopgap measures against con. sumer theft do not work. Only a welldesigned comprehensive plan, which stays in effect year-round and is based heavily on employee awareness, training, and accountability, has any chance of reducing consumer theft to a tolerable level. Too many managers seem to accept the "shrink" as a given. Others see efforts to reduce consumer theft as a nonproductive activity. The point to remember is that every dollar taken is a dollar less in net income. And a pharmacy that develops a reputation as an easy mark is sure to suffer even greater losses. D
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