LPRC - CrimeScience – The Weekly Review – Episode 146 with Dr. Read Hayes, Tom Meehan & Tony D’Onofrio

Episode Date: May 4, 2023

Welcome to another episode of CrimeScience! This week, Dr. Hayes introduces some of the team and discusses resources for our members while Tom and Tony cover the latest retailer shrink study in Australia, 2023 Retailer Information Technology and its impact on loss prevention, ChatGPT, balloons over Hawaii, and more. Listen in to stay updated on hot topics in the industry and more! The post CrimeScience – The Weekly Review – Episode 146 with Dr. Read Hayes, Tom Meehan & Tony D’Onofrio appeared first on Loss Prevention Research Council.

Hi, everyone, and welcome to Crime Science. In this podcast, we explore the science of crime and the practical application of this science for loss prevention and asset protection practitioners as well as other professionals. Welcome, everybody, to another episode of Crime Science Podcast. This is the latest in our weekly update series, and I'm joined by co-hosts Tony D'Onofrio and Tom Meehan, our producers Diego Rodriguez and Wilson Gavarino. And today we're going to talk a little bit about what's going on in the world of LPAP, particularly in retail and security and beyond. And so I'll start with this week, the RELA Retail Industry Leaders Association's annual asset protection conference has taken place now. It's taking place in Denver,

Colorado area, and a whole great lineup of speakers, a lot of participation. This will be the first time I haven't gone in probably 20, 25 years due to other travel and extensive writing and things I'm involved in right now for research and grants. And so, but we've got a full team going there with Diego, J.C. Atkinson, one of our research scientists, Chad McIntosh, our COO, Brian Hayes, our CFO, involved in being there. And we always, always appreciate RELA providing us a place to park and talk with their members, our members, the industry at large.

And the feedback I've gotten so far has been amazing as far as the interactions with particularly retail LPAP professionals. Many, many, many are our members since we have 76 retail corporate members in all their divisions at LPRC, but also many non-members. And those that are prospective members that are very interested in learning about our research, our events, our working groups, our labs, and beyond. So we wanted to thank Rila again for allowing that engagement. We wanted to thank Rila again for allowing that engagement. Such amazing people. The things that they do for the community, is a multi-decade veteran of loss prevention asset protection in the retail area, with stints, of course, dating back into the mid to late 70s, but top leadership positions at the Home Depot, at Macy's, at Polo Ralph Lauren, and, of course, finishing up his career for several years as the

vice president of asset protection at Bloomingdale's. And so Chad helps us coordinate and execute the multitude of things that you do day in and day out, as well as the big things like our big events, our knowledge center, and HR, and legal, and licensing, and regulation, and all the myriad things that happen with the team, including Diego Rodriguez, who is our science to practice coordinator. And he helps us as a manager of that effort bring everything that we're working on and that others are working on to the practitioner in the field in the corporate offices around the U.S. and around the globe. And so when we've got research, we need that translated into practice. And so on our website, through our social media postings,

on our, of course, our knowledge center that's full of hundreds of research reports and briefs, hundreds of interviews with active criminal offenders, with all the recorded events and sessions from events, webinars that we've done, as well as live webinars that we put out there now. Diego helps us do all that. We also put out RIAs to our members, research and action briefs, again, describing what the issue is, what we did to learn more, and what we found and what that means so that the practitioner can go to work in their strategic planning, their operational design, and of course, with their tactical design and execution. But just the day-to-day out things that you need to do to get better

at reducing theft and fraud and violence, all the losses that we get in this disruption. So that is just a little bit about what Diego Rodriguez does. Wilson Gabarino helps us coordinate and engage weekly, daily with our retailer members at all the strata. Who are our members? Who are the leaders there? Who's our champion that represents that organization that knows about us, gets their organization involved in our working groups, coming and participating in our events, getting involved in projects that we're doing, research projects, providing data or site access or interviews or surveys that we might do with them. So that's what Wilson's trying to do all day, every day. Tom Keel, the same thing with the solution partners or SPs, the members here that are working hard day in and day out to provide the tools, whether it's technologies or services to the retailers to, again, better control theft, fraud, and violence.

So Tom's working to engage with them and help them understand how LPRC works and where they can get involved and how the retailers are engaged across the LPRC, what working groups are in, who's involved, what are those working groups working on, and what are the sponsorship opportunities, what are ways that they can have their technologies displayed in our online, only one in the world, the online solution directory. They can post up to five of their solutions with links and displays, and they can have video clips also displaying their technologies in one of our six labs or outside in the Foursquare Block Safer Places lab area, and so on. So that's really what Tom Keel works on. So with Wilson and Tom working to engage with members, get them into the gym and on the machines and fully exploiting all the opportunities here,

leveraging the relationships that they can build here year round. LPRC is very unique and distinctive in that way and that our working groups, that our events continue around the clock and around the year calendar to make sure that everybody's getting what they need. Also, to help facilitate both retailers and solution partners or manufacturers like P&G, for example, as well, that are members or communities. We have cities that come in, municipalities. We have counties or federal government people that come in, certainly law enforcement executives and practitioners at all scales and levels that come into our labs. We have Kim Revere who works a way at facilitating those visits and making sure that the visits that we set objectives, what does that retailer or that solution partner want

to accomplish? Who do they want to talk to? What do they want to see? What do they want to know about so they can get better and they can get better at leveraging LPRC to get there? She also helps us coordinate the events that we have, starting off with kickoff to Ignite and including Integrate this year with our summits, and of course with the big one, Impact, the first week in October. So making sure that those are special events, special visits for our members is a key part of what Kim works on. We've also got Brian Haidt. Brian helps us to coordinate our financial, uh, execution, making sure that we're, that we're invoicing and getting the, the resources in that we need to operate through our membership, through sponsorships, uh, and, and so forth. And then helping us stay coordinated in that area, make sure we can make good informed decisions as we add or build our team or add and build our lab spaces, travel, purchase the items

that we might need to execute our mission of supporting our members as they strive to work together to reduce, again, theft, fraud, violence. So he also helps us do special projects, build things, brochures, interactive ways to invite and display what we're up to to our members graphically. So that's a little bit about our operations team. And so what we'll do is next time we'll talk a little bit about our research team going forward. But right now we are highly focused at the macro, at the meso, and at the micro level at trying to understand and affect offender decisions, crime events, reduce those, and the harm that come from those crime events, the injury from victimization. So we're working on grand levels where we're setting up three areas in Gainesville. We'll talk more in depth, and we've mentioned this before, the Safer Places Lab, the Safer

Places Lab East side, the Safer Places Lab West side, and then there's a potential for us to add another field test site in Gainesville that is an open-air shopping center environment, quite large at the regional scale. So what we're doing to better understand how to know about and affect decisions and outcomes, in other words, convince the bad guy to make better choices, not to come our way or not to do as much harm as they wanted to. We're working at that scale. And think about how do we help retailers that have more than one store, which is all of them that have multiple stores, how do we help those stores better communicate and inform between their own stores? their own stores. If somebody came to one site, can we earlier know that they might be headed toward or arriving at another one of their sites for early warning? The same thing between chains. Can one store or chain inform another what might be heading their way or entering their area?

Again, as well as finally, the third part of that that is can one or both of those chains coordinate with their law enforcement partners? How do we develop those and execute those protocols technologically within legal bounds and other concerns that people might have? Our team was doing site visits this week, for example, in stores and evaluating some product protection technologies, not just how well they could work, but how well are they working, but really critically, how much is execution or lack of execution of the technology or spotty execution or compliance affecting that. So a whole lot going on here, but we will update more going forward. Let me go ahead and turn it over, if I might, to Tony. And Tony D'Onofrio, let us know what's going on. Thank you, Reid, for all those great updates. And hello to our audience. I'm actually south of Rome visiting family in Italy for the next few weeks. And so let me start this week with some interesting data on the fast rise of chat GPT, which has been in the news a lot. And this information is from rankingroyals.com.

As they stated, the conversational AI chatbot is highlighted as a record moment in the history of technology. Chat GPT has become one of the year's most ubiquitous buzzwords. Within five days of its release to the public in November 2022, Chat GPT has amassed a user base. Are you ready for this? Five days, over one million people. And if you compare this, and let's compare this to other popular online services, it took Netflix to reach that same million three and a half years, Airbnb two and a half years, Twitter two years, Facebook 10 months, Twitter, two years. Facebook, 10 months. Spotify, five months. And Instagram, two and a half months. It's worth recalling that Bill Gates called Chet GPT a Gutenberg world changing moment.

And there's a lot of discussion even with Elon Musk in terms of what all this stuff is doing with AI, including chat GPT. But it's amazing that in just five days, 1 million people signed on. And in my view, the impact of what it can do is just getting started. Switching topics, let me summarize the latest retail technology study from RIS News, which was just published. This study focuses on IT investments in retail stores, many of which support loss prevention solutions. 74% of USA retailers said they will increase or maintain their IT technology budget compared to the lofty 84% last year. I figured that last year that was boosted by the pent-up demand unleashed after the pandemic ended. that while the percentage of retailers who pending increase or maintain the current IT budget levels has dropped year on year, the size of the IT budget as a share of the overall budget has increased to 14% in 2023 from last year's 12%.

When retailers were asked for the one word that would describe the current state of the retail industry, overwhelmingly that shows the world evolving, and related terms changing, dynamic, advancing, and fluid. The takeaway from this insight is that this is an uncertain environment and retailers need to build resilient systems and business model that can quickly adapt to change. The top five technologies strategies for retailers for the

next 18 months are improving network and IT security, new payment tech and capabilities, new payment tech and capabilities, advanced analytic tools and capabilities, recruiting and retaining frontline employees, and advancing mobile commerce for consumers. The top challenges over the next five years for retailers are employee engagements and wages, retiring legacy systems, upgrading store bandwidth and infrastructure, and then change management along with resistance to change and application integration, which is interesting because that's come up a lot in terms of integrating things at the loss prevention research council. And as we also just completed the Law Prevention Retail Council Supply Chain

Summit, from a technology point of view, the top three investments for supply chain technology for 2023 are real-time inventory visibility, fulfillment, and returns management. 40% of retailers are currently upgrading or will upgrade their digital devices, which include things like signage kiosks, over the next 24 months. 29% of retailers plan to implement checkout and payments on customers' devices, such as smartphones, in the next 24 months. in the next 24 months. 67% of respondents have no plans to implement grab-and-go or cashierless checkout.

The top three retail growth technologies over the next three years are artificial intelligence and machine learning, personalization and precision marketing, and optimizing e-commerce. Again, multiple of these technologies that I just mentioned, there are information technologies or IT priorities, both help and also, by the way, add risk to loss prevention, and we will discuss this more in future podcasts.

But for example, larger network bandwidths, which are on the IT priority this year, allow for video to be centralized and managed, which is a good thing for loss prevention. soon more Amazon Go type stores, but we will see consumers checking out on their devices, which for loss prevention will add risk. So we need to monitor these because it really involves how loss prevention responds. And finally, let me end this week by going to Australia and speak to the latest retail shrink information that was recently published by Griffith

University and was summarized by In Queensland. The retail sector in Australia and New Zealand lost about $4.3 billion last year to theft, a 28% increase from four years ago when the study was last done. Customer storm more than half of the total while employees took about a quarter. Staff tended to also take the most expensive items. The impact of robbery, however, was lower and there appeared to be a shift away from armed robbery. Customer theft on average was worth about $415

while employee theft averaged $1,200. Retailers reported an increase in customer aggression and violent incidents during the height of COVID-19, and since verbal abuse and violence without insurance like to go unreported, the increase is likely higher than official statistics suggest. higher than official statistics suggest. The type of items most targeted for theft include things such as fresh meat, makeup, sports-related clothing, batteries, and connection devices. I guess I'm not surprised that Australia is matching places like United States, Canada, and the UK in terms of the patterns of retail crime. But I am surprised also by their concern of violence, increased violence. And also, I know there are members of the Lost Preventory Council from Australia.

So it's good to keep an eye and to work together to address these kind of challenges together going forward. And with that, let me turn it over to Tom. Well, thank you, Tony. And thank you, Reid. and a lot going on. I know that this is being taped the week of Riva, so I know some folks are out and about. I'm actually at a different conference and was speaking about cybersecurity risks and sustainability. So this is definitely conference season, but I hope everybody is enjoying themselves and staying safe

another balloon so I don't know it hasn't made a lot of news it's been in the news but there was earlier this week there was a balloon or unidentified flying object off the coast of Hawaii the U.S. government has been tracking this and says that the balloon has not flown over any classified or national security risks areas so that we are just monitoring it. The origin of the balloon is unknown. The type of balloon is unknown and what the payload is is unknown. The balloon is currently at the time of this recording um drifting towards mexico so this kind of you know if you think about this this kind of goes to when we're talking about geopolitical we were hot and heavy talking a lot about these balloons shots

and balloons down and now the question is how often does this happen what are these balloons as we talked about here on the podcast that that at any given time, there could be thousands of balloons in the air for weather and scientific observation. So very, very interesting time for sure here. But I also think it's something that we want to keep an eye on here. We'll let everyone know what, if anything, occurs that affects any of our listener base. And we'll just, as always, keep you up to speed. In the news, Iran seized a second oil tanker in a week. The U.S. Navy released some video and unclassified it to show it going on. some video and unclassified it to show it going on. This continues to just kind of talk about the geopolitical state and what is going on outside the United States and what it means for all of

us or what it potentially can mean for all of us. I think when we think about geopolitical risk and what it means for the listeners here, one of the key takeaways is we don't necessarily know what the supply chain implication is on this. Certainly, there are implications on the cost of oil and far-reaching supply chain pieces here. But this is just something to monitor and keep a close eye on. Things like this happen all the time. I think it's important to state that. monitor and keep a close eye on. Things like this happen all the time. I think it's important to state that. It's just I think we're getting that information traveling much, much faster. Today at the time of this taping, the Federal Reserve is expected to raise interest rates once

again. The market has been fairly volatile because of that. And with some of the banking crises that have been going on, last week, First Republic, the bank was seized by the FDIC and Chase has taken over. That bank won the bid. So lots and lots of news in the economic state. And we all have to be mindful of what the potential is for us. That doesn't necessarily mean that anything will happen, but I think there's some definite, definite things that we want to be aware of. Switching gears a little bit into cyber risk, Apple issued its first rapid security response update.

This is a new kind of update process. So a lot of times patches are done on a scheduled basis. Apple introduced the rapid security response after iOS 16 and Mac OS. It moves some of the system files that are likely to be more frequent updates in a different web kit. So basically what it means for us is that they can update security fixes much much quicker, address flaws quicker. Very good news for us and I think we all you know we all probably are used to hearing this but if there is an update on your phone on your laptop put that update in.

Trust me, kind of the age-old anthems of when I do an update, my battery doesn't work and so on and so forth will be far, far less of a risk than a challenge, much less of a challenge than a risk with a security issue. risk with a security issue i think that you know there are certainly uh risks when you do an update but when there's a vulnerability you have a known risk that you need to address uh in law enforcement or law news the new york bail reform act was amended and and so you have a a little bit of a change in new york when i would say this is a change for the better prior to this change York when I would say this is a change for the better. Prior to this change, there was very limited applications of bail in New York State, and the judges did not have the discretion to change that rule. With the new confines of the the law so in the past when this bail reform act went in it basically said if you didn't do these if you weren't suspected of these crimes there was no bail and there was

no alternative option so you could not a judge could not use discretion now you you've going back to there's still very restrictive bail rules but a judge could not use discretion. Now you've going back to there's still very restrictive bail rules but a judge can use discretion if they believe that the person has a threat of violence or risk to society. So that's a big big win because this was even just politically a very charged situation. Now you have the situation where judges can make the choice based on discretion. When that was taken away, you had arguably just a list of crimes that judges had no recourse from bail. So I am not sure what this means for outside of New York State. Up until recently, New York and New Jersey had some of the most restrictive bail reform. It's very close to bail elimination laws that were out. I think that this change in the New York law is more aligned with the New Jersey law, which really allows judges to make good, sound decisions based on their discretion.

So definitely a space to watch. There are other states that are looking at this very closely and trying to measure the scientific data or the data itself to see what the impact is. So I do believe we will continue to see this trend occurring. You know, I know that there were parts of Illinois this was occurring in but there are several other states that are looking at this so I think the data is anecdotally looks like there's an impact but the data is somewhat inconclusive if the actual bail reform affects the crime so there's a lot more data that comes out there.

Prior to this, there were a lot of studies done to show that there wasn't a correlation with bail and people going to court. That was where it was driven this heavily. This law took effect in New York a couple of years ago now. And we're now at the point where we've seen some challenges where this discretion has come in. Switching gears a little bit, and this will be the last kind of topic I talk about, is generative AI. And so ChatGPT has become more of a household name, but it is a generative AI. And so I equate it to Xerox or Kleenex, where Xerox is a brand, a copying machine is a copying machine, Kleenex is a brand, and a tissue is a tissue. OpenAI is the parent

company of ChatGPT, which is owned or funded 49% by Microsoft, but they are not the only game in town. There are actually many, many generative AI companies and platforms. And just to name a couple, you have a company called Orthopod, which is the competitor of OpenAI. A lot of OpenAI folks left that. Their version of ChatGPT is called Claude. You also have Google, which is their version as Spark.

And then you have a meta version. So you have multiple, multiple versions out there of chat and what is going on here is that this is the buzz right now. It's a hot, hot topic. There's a lot of information out there about the risks of these generative AI engines and the risk for misinformation, the risk for people misusing them. But I wanted to kind of point a couple things that I think we're going to see in the very near future. of a Wall Street tech journalist going out and actually using a service to replicate and train with her voice as well as a deep fake with the video.

And her findings were that the video was not necessarily there yet, that it was very easy for people to determine that the video was in fact AI. It seemed robotic. Her family noticed it right away. Other people had said something seemed off about it. But on the latter, with the audio service that she used, her very, very close family identified that something wasn't right when they were having a conversation, but she was able to do some bank authentication now luckily as a tech reporter would she really went into the details here where she was able to get into her account but was not able to make any changes without other verifiable information but the voice the ai voice authentication was able to fool a computer into using what, up until recently,

was an extremely, extremely accurate method of authentication. What does this mean? I mean, what this really means, and folks like Reid, myself, and Tony on a podcast, is that someone could take our voice, just by recording this, train a model to potentially spread misinformation. It could be for social engineering or industrial espionage. So we're really opening up the Pandora's box of what's next. The good part about this is that there could be some mundane automated things that AI would really be helpful for. For me, for someone that spends a tremendous amount

of time on the phone, a tremendous amount of time at conferences and video conferences and speaking, I can see, much like this reporter said, some benefits of mundane tasks of calling for appointments to verify and things of that nature that don't require a lot of action. So I'm calling to ensure that service is going to occur at my house. You know, someone's going to come do work or dinner reservations or things of that nature. There's some real value in. But I think some of those things are already exist. The bottom line here is there is a need for regulation. Actually, this week, the White House announced that the vice president would be meeting with

some of the larger generative AI companies to talk about how do we safeguard this? How do we make it safe? And I think one of the challenges with AI is that safety is not necessarily clearly defined. You have a group of people that are concerned with computers taking over. You have a group of people that are concerned with misinformation. You have a group of people that are concerned with data poisoning, the ability for a foreign government or a bad actor to go in and poison the data to create generative AI. And then you have copyright infringement. And right now, as we speak, you have a massive writer's strike around some of the writing units for TV shows and movies because they're trying to protect

AI script writing. So this is a rapidly evolving situation. I see a lot of really great positive use cases, but I also see the potential for misappropriation or misuse. So I think this is something we'll have to continue to monitor, and we will definitely hear, continue to talk about it. I know Tony talked about it today as well. I do think it's here to stay. I do think that we're in an evolutionary phase where we're going to see some huge, huge benefits, but I also think that there's risk associated with those benefits. And with that, I will turn it back over to Reid. All right. Well, thanks so much, Tom. Amazing information again. You get in the weeds, plus you get the big picture. I always take notes and learn a lot each week. And Tony, I want to thank you for all

your insights and input as well. Good stuff. And we're glad you're back safe and sound. And I want to thank Diego. I want to thank Wilson for their editing and coordination and deployment here. And I want to thank you all. So everybody stay safe, stay in touch. Thanks for listening to the Crime Science Podcast, presented by the Loss Prevention Research Council. If you enjoyed today's episode, you can find more crime science episodes and valuable information at lpresearch.org. The content provided in the Crime Science Podcast is for informational purposes only, and is not a substitute for legal, financial, or other advice. Views expressed by guests of the Crime Science Podcast are those of the authors

and do not reflect the opinions or positions of the Loss Prevention Research Council.