LPRC - CrimeScience – The Weekly Review – Episode 90 with Dr. Read Hayes, Tom Meehan & Tony D’Onofrio

Episode Date: February 3, 2022

LPRC IGNITE is coming up on Feb 15th to the 16th! COVID-19 could be a Catalyst for Tech Advancement! In this week’s episode, our co-hosts discuss UF changing COVID-19’s Designation, Global Risks for 2022 and Beyond, New LPRC Team Members Coming Soon, Over $1.5 million of fake vaccine cards sold by nurses, and a new Shoplift fee is coming out in Denver. Listen in to stay updated on hot topics in the industry and more! The post CrimeScience – The Weekly Review – Episode 90 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. We would like to thank Bosch for making this episode possible. Take advantage of the advanced video capabilities offered by Bosch to help reduce your shrink risk. Integrate video recordings with point-of-s sale data for visual verification of transactions and exception reporting. Use video analytics for immediate notification of important AP related events and leverage analytics metadata for fast forensic searches for evidence and to

improve merchandising and operations. Learn more about extending your video system beyond simple surveillance in zones one through four of LPRC's zones of influence by visiting Bosch online at boschsecurity.com. Welcome everybody to another episode of LPRC's Crime Science podcast. Today, our latest episode in the weekly update series, joined by my colleagues Tony D'Onofrio, Tom Vian, and our producer Diego Rodriguez. And we're going to kind of take a quick look around the world at some of the things that seem the most important for all of us that are working in this very, very interesting, but very critical space called loss prevention, asset protection and the retail community primarily. So we'll start off taking a little bit of a look here at the what's going on with the ongoing pandemic.

And I could tell you that we got an interesting email, all staff and faculty and students at the University of Florida on Friday, where the university, based on all from a world class epidemic epidemiology institute that we've got here, the Emerging Pathogens Institute, announced at the University Effective Friday. We're now treating the disease as endemic and no longer a pandemic as far as this community was concerned. And this is a very neutral to left community. So this is not a political decision. This is a science base is what they were telling us, the evidence that they were seeing both here in the Gainesville, North Central Florida area, as well as around the world. And so they immediately discontinued all the routine testing. I would get tested every week and so on. Now, what remains in place,

you can get a test at the Student Health Center. It's not going to be easy, but you can get it, and they recommend other places if you really wanted to get tested. If you feel sick, stay home. They do expect, but not mandate, never have mandated, but expect masks to be worn in all enclosed areas. So just a big change here, looking at the infection rates, looking at the seriousness of the disease that UF Health is dealing with, which is a ultra modern, sprawling medical complex. And so they really have their bead, a bead on what's going on infectious disease-wise, as well as how that's affecting other things that are going on health-wise

in the community. So big news, at least for us here in Gainesville. And so part and parcel of all this, we were anyway going to go ahead and look at having LPRC Ignite as a physical event with some of the sessions being virtual due to some of our members that just are not permitted yet to travel or there was some inconvenient conflict with travel. And then we had to make the decision decision were we going to move back just to accommodate more or not and it turned out that it's now it sounded like the best thing for us to do was to maintain the uh february 15th and 16th dates with the um so that's what we're doing with 2022 version of the lprc kickoff i think we've got about now 30 people registered. This is not a numbers game with this. This is our leadership gathering. We have our board of advisors. We have our LPRC Innovate Advisory Panel, which is also mission critical here for us. And then we have our

working group leaders that are all the ones that are tabbed to come in. And part of what we do, of course, are deep dives into all parts of our operations, research and innovation at the LPRC, where we are, where we've been last year, where we're headed, and looking for advice and counsel, laying out the strategy, the plan, the process that our team has put together.

That will all continue. We also have a two-hour strategy at ignite we always have strategy at impact as well we've got two world-class faculty from the university of florida's warrington college of business from their entrepreneur and entrepreneurship and innovation institute those two faculty will be leading that group of number ones twos and threes the leaders that we've got here in town through a really exciting exercise on strategic forecasting strategic planning within how to better support but really just talking and letting everybody talk for within two hours, we'll have one hour of content, leaving us to have a lot of dialogue with a lot of leaders. So we're very, very excited about it.

We're going to have an event, a social event up in the Champions Club in the Swamp Stadium. Those of you that have come to LPRC Impact will remember we always have that social event in recent years up in that Champions Club. So we're excited about all the possibilities, the labs, the tours, things we'll be doing. I think are going to, to put it bluntly, blow some people away with the new capabilities and things that are happening here at the LPRC. I think looking ahead,

we're looking at a SOC and summit conference or summit here at the University of Florida too. Date to be determined, we'll put that out. But in this case, we will be looking at an array of indoor and outdoor sensors that are here, that are elsewhere. We'll have some technical folks, engineer types from IoT, you know, Internet of Things and AI IoT. But we're going to have a very focused agenda looking at security operation centers or command centers and how to pull together all the disparate sensors and action tools that we've got, how to make sense of them, how to integrate them at each aiming point through the five zones and then how to integrate across that and how this all supports safer places and better commerce. So stay tuned with more information

on the LPRC SOC and sensor summit S3 that will be coming up. We have plans right now that we're working on with the ISCPO since we are working together now, both on a gathering but also on integration within the monthly LPRC supply chain protection working group. So Diego, who's our producer, also facilitates that pretty amazing working group and all that they get done. So we'll have some more details on that. Working with Basha and one of our new research scientists, Dr. Sarah McFann, we're doing some, are preparing to get some heavy-duty planning done on the LPRC Violent Crime Working Group Summit, as well as, of course, the strategy and process of that working group. LPRC members will note that all of our working group calls now that take place on

Microsoft Teams, that we will be having polling and other features in there to allow even more participation and engagement for all members of the working groups. Working groups are open to all of our LPRC members. It's a family membership to the gym here called LPRC. And so all of our retailers and solution partner members are encouraged to get their people into any and all the working groups that make the most sense for them strategically and tactically. Planning the product protection working group mission

as well as their summit. So Dr. Corey Lowe and that group of stellar leaders there. You'll see the same thing now with innovation working group and that's at Saucon's sensor summit. So those of you that are in or think about joining that group, you'll see a huge play there. Esri, the world leader in mapping,

in mapping software and all the mapping tools, including AI reinforced tools, just joined the LPRC. Orion, another one of our new research team members, joined yesterday. Actually, today's his first official day, but he was there in the labs. Pretty excited yesterday. Sitting down and doing the planning with Esri and other members of the Innovation Working Group on this world-class mapping process. We already have also a real-world case study, a series of armed robberies taking place currently in South Florida of one of our members' chains. So mapping all of that, retailers, stores, other similar stores, some dissimilar stores or other targets,

and then looking spatially and temporally how these are moving, looking at all types of patterns. So we're not only going to do 3D drone mapping of the LPRC and the University of Florida Safer Places Lab, which is going to be pretty amazing. We'll get that done in about 60 days here or less, going to be pretty amazing. We'll get that done in about 60 days here or less, but now integrating this real-world use case. So, I'm just touching on just a little tiny bit of what all is happening. We mentioned before the LPRC kickoff in New York City hosted, in this case, by Axis at their experience center in Manhattan. We laid out the 2022 draft research plan, and that's, of course, going to be fleshed out, refined during the form of servers and gpus um but things are happening here and uh a good problem but we're just trying to find places for all of our team new team members to sit and be the most productive that they can um since we're heavy on lab space

and short on office space um but we're making it happen. They're assembling desks yesterday, all of us. So let me do this. I'm not going to talk as much about Omicron and the Omicron variant and some of the things that are going on, the vaccines, but we know that there are now several billion humans around the world that have been vaccinated and hundreds of millions of Americans. So that seems to be progressing. We know that there are 75 preclinical vaccine candidates additionally happening in that type of preclinical research, and that we see 110 in clinical, human clinical trials right now. So all types of help in the way, more and more therapeutics for those of us that do contract disease that we can take

immediately or if it does progress. So some of that help is on the way. More and more home tests that are even more and more accurate are being distributed. So those that feel bad can take that action. So N95 and other, KN95 and other more effective masks have been gone, you know, in mass production has caught up, and so you see those being distributed everywhere for tight, constricted places. So, with no further ado, if I might go over to Tony D'Onofrio. Tony, if you could take it away. Thank you very much, Reed, and good update, and I'm looking forward to Ignite. I think it will be another great continuation. I'm really pleased with what happened in New York. Congratulations on all those attendees. And my thank you to Access also for hosting, but that

sounds like a very exciting start. And I'm sorry I missed it, but we had representation there. So let me jump this week actually first to the World Economic Forum and Visual Capitalist, who provided a summary of the latest global risks and also for this year and for 2022 and beyond. In the just published report, a majority of global leaders feel worried or concerned about the outlook for the world, and only 3.7% feel optimistic, which shocked me that there'd be that low of a percentage. When it comes to short-term threats, which are defined as those happening in the next two years, respondents identify societal risks such as the erosion of social cohesion and livelihood crises as the most immediate risk to the world.

These societal risks have worsened since the start of COVID-19. According to the respondents, one problem triggered by the pandemic is rising inequality both worldwide and within countries. Many developed economies managed to adapt as office workers pivoted to remote and hybrid work, though many industries such as hospitality still face significant headwinds. Easy access to vaccines has helped developed countries mitigate the worst effects of the outbreaks. Regions with low access to vaccines have not been so fortunate, and the economic

divide could become more apparent as the pandemic stretches on. When it comes to the midterm, which are defined as those things in the next two to five years, similar risks to the short-term are prevalent and really were identified by the respondents. The present issues caused by COVID mean that many key government and decision makers are struggling to prioritize long-term planning and no longer have the capacity to help out with global issues. Respondents also worry that rising debt have triggered a crisis. The debt-to-GDP ratio globally spiked by 13 percentage points in 2020, a figure that will almost certainly continue to rise in the near future. For the long term, which is anything in five to 10 years from now, response identified climate change as the biggest threat to humanity. Climate inaction essentially, as usual, could lead to a global GDP loss of 4 to 18 percent

with various impact across different regions. So that's a little bit of a view in terms of short, medium, and long-term risks that we face globally going forward. Interesting to me specifically to LPRC was an article that a friend sent to me, switching topics on shoplifting losses. It's an article that appeared in the denverchannel.com, and it was titled, Downtown Business Owner to Charge 1% Fee to Recover Shoplifting Losses. In summary, this business owner said that shoplifting in his stores had gotten so bad and he's having to charge customer fee to make up the cost. He called it the Denver crime spike fee, which equals to a 100% transaction fee for all items that are purchased

in his stores. Since 2019, he says shoplifting at his downtown stores have tripled. And he said that's about six figures. And for a small business, that is meaningful. It impacts our employees. And more importantly, it's not going to impact our shoppers. So it's interesting how the spikes in crime are not just with the flash rods, how the spikes in crime are not just with the flash rods, but also in shoplifting and how retailers are reacting. And finally, this week, let me focus on a new report just published U.S. retailers. For every $1 billion in sales, the average retailer incurs $166 million in merchandise returns. For every $100 in return merchandise accepted, retailers lose $10.30 to return fraud and receipt returns that are hidden costs equal to behavior such as shoplifting, collusion, wardrobing, and more.

In 2021, consumers, as I said, returned $761 billion, which is 16.6% of total retail sales. 61 billion, which is 16.6% of total retail sales. Of those, and that's a big number, 78.4 billion were fraudulent. For the holidays, consumers returned $158 billion, or roughly nearly 18% of sales. Of those returns, 17 billion were fraudulent. Online returns totaled 17 billion were fraudulent. Online returns totaled 218 billion, which was nearly 20 percent, actually nearly 21 percent of total online sales, and 23.2 billion of online returns were fraudulent. The top three return experienced by retailers, and these were interesting, wardrobing, which is one of my favorite where you buy stuff such as clothes, you try it on, actually you use it, and then you return it. So that's number one.

The second is return of shoplifted or stolen merchandise. Number three is employed return fraud and or collusion with external sources. And tied with number three is returned of merchandise purchased on fraudulent or stolen tenders. What are some of the return costs or what does return cost really cost? First of all, a return is a lost sale. Crash profits and margin percentages are reduced. Returns increase labor costs due to inspection and restocking time. Returns cause markdowns out of stocks and logistics. Expenses to increase and returns cannot be resold. So in closing, this is really good data that we need to keep in mind here at the LPRC as we work to come back multiple of the items discussed in this week's update. And with that, let me turn it over to Tom.

Oh, thank you, Reed, and thank you, Tony. And just a couple updates here, and again, some of them will be updates from previous conversations that we've had here on the podcast. One, this did make national news, but certainly in the Northeast, it made more news than other places. But two nurses from New York were arrested for selling about $1.5 million worth of fake COVID vaccination cards. And I know we've been following the fake COVID vaccination card from the beginning. been following the fake COVID vaccination card from the beginning. Really, really, I think, you know, 90 some odd weeks ago, we talked about that. Once the vaccination started rolling, this was happening. But now you have two nurses that were arrested. The interesting part, and the story has a little bit of a twist to it, is that one of the nurses' husbands is actually a police officer. So I think there's more to come on the story and unfolds whether or not he'll be implicated at all is left open still.

But when you think about one and a half million dollars to individuals selling that many that many fake vaccination cards and they actually kept a ledger so interestingly enough when um we talk about uh we talk about these things all the time uh you know criminals aren't always smart about the way they activate especially do things especially when they get um comfortable but they had a handwritten ledger and so uh a lot of the major news publications actually had a photo of that handwrittenwritten letter explaining how much they were making, what they were doing, what they were charging. Adults were $220 and $85 for kids. So think through that. So $220 per card for an adult and $85. They actually said they seized $900,000 in cash in one of the two's home. So I think there will definitely be more stories like this surfacing.

But as we talk about vaccination requirements, the need for some folks to get a fake vaccination card is there. It also kind of shows the level, if you think about two individuals being able to sell this many, the level of people out there that are willing to purchase a vaccination card. I think we often talk about the people selling it and don't really talk about the purchaser of it. And this is a quasi kind of example of like e-fencing. You have to address both sides of the fence here in order to solve the issue, because as long as there's a buyer, there'll be people selling. So this is a tough one, but I think we'll definitely, as we continue to go further along and have more electronic verification available, which I think has come a long way, this will subside or transition into an electronic problem where people are trying to emulate or replicate

cards there. We talked very, very briefly last week about tax scams, and I think it's a stark reminder that they continue to come out. One thing that just came out last week after we did the taping is the deepfake. So if you're not familiar with a deepfake, generally it refers to a video where someone is using artificial intelligence and machine learning to emulate and replace a head on a video to make it look like someone else. There's also deep fake audio. So one of the warnings that came out is to limit the conversation if someone calls in. So don't have banter with a fraudster on the phone because they could be trying to replicate your voice.

Sounds pretty crazy, but a lot of times we engage in folks on the phone, even if we recognize that it is a scam. But the kind of advice is to just end the call. Don't continue to keep talking. Don't verify you are who you say you are. Things of that nature to try to avoid that. Good thing here is that while this is definitely the future that's coming, the voice verification is generally used in the financial sector and not necessarily widely adopted through the IRS. So I think we'll continue to see the bad guys kind of doing what we're doing here, right? We'll read, started the conversation talking about innovate and AI solve. And as we're continuing to try to come up with better mousetraps, for lack of better words, unfortunately, the nefarious actors are

spending that same amount of time trying to find ways around what we're doing. Education and awareness is the key when it comes to some of these kind of tax pieces. So while it's repetitive, I think it's a stark reminder for all of us that if you do get a phone call that you're not expecting, that you just, I would recommend ignoring it and then reaching back out directly to a verified source. On the COVID front, just because I think it's a really cool techie type conversation, Reid talked about testing. Although this is in the very, very early stages, there is a wearable device and actually a phone app that is being tested right now to early indication of COVID. There is actually a couple of companies that are coming out and working through that.

I would be misinforming you if I could tell you the specifics because this is very new. I would be misinforming you if I could tell you the specifics because this is very new. I do know that Smart Lamp, which is one of the apps, I've seen similar technologies to check body temperature and pulse by the extreme color changes in your skin.

If everybody's not aware today that's listening, you can actually get a fairly accurate pulse reading using your cell phone camera, both with your finger or even looking at your face. And what it does is it uses a very, very detailed image and an advanced algorithm to look at slight color changes that the human eye would not detect. So very exciting to see the technology push to the limit. And I think one of the really great things, if you can take something great out of COVID, is that it will advance dramatically some of the vaccination efforts related to cancer and HIV. And it also will advance some of the wearable technologies that were focused on other ailments to help really escalate or move at a much faster rate because of the pandemic that I

think is turning to an endemic. So it's definitely exciting stuff when you think of that. Just a quick update on kind of the Russia-Ukraine conflict. There's been, while I'll say their reports, they're not necessarily firmly substantiated yet that the Department of Homeland Security and really a couple other three-letter organizations have made a very bold statement publicly that they believe Russia will launch fairly sophisticated cyber attacks against critical American infrastructure. So U.S. intelligence agencies are bracing for that. There is no real specificity to that. We did talk a little bit about before last week. We did when the cybersecurity and infrastructure security agency sent out the alert. We mentioned it on the podcast briefly. But as the tensions rise in the Ukraine and Russia, there is a lot of information to support that Russia may take a stance of cyber attacks against the U.S. Traditionally, and I'm making a general statement, what you find from that region is that they are not necessarily nation-state. they're not necessarily always

nation state attacks. There are some nefarious actors in that region that really are very sophisticated and take an attack for financial gain, as we saw with the colonial pipeline and some of the other things that occurred, Revel and JBS, the beef plant last year. Those were not believed to be Russian-backed, although there is a belief that Russia would have known. So we'll watch this space as the podcast and kind of continue to give updates because we do think that there will be an impact here. And then we'll also watch the global supply chain space and the impact that the Ukraine conflict could have on that. And I mentioned again briefly last week, but a lot of the goods that travel from China to Europe do have to go just north of the Ukraine, but they also have to go through

Russia. In addition to the ports in the Ukraine and actually the ports throughout Central and Eastern Europe, actually really all of that area, there's a question of what will occur in the future. The Chinese Navy has been pretty consistently in that region in the water, but the Russian Navy has extremely increased its fleet in that area. So we'll keep a pulse on it because it could have an impact on us. So we know that with all of the things that occurred in the last 24 months, supply chain has been a challenge. And the domino effect is obviously a concern of what will occur if this does happen. There are a fair amount of goods that are manufactured in that region. And certainly, China does supply a lot of them. And then I'll end the conversation with a recent report on

ransomware. And retail was in the top three most attacked verticals in ransomware. So I think we've talked about that a couple of different times. There's two different reports that really came out recently. It's important to note that we don't know the sample size of these reports. So when I read reports, I'm always looking to see how big of a pool of sample size that they used. But both of these reports, one actually says that retail was, you know, accounted for the top three. Another report says that there are 50% that are unclassified, and then there are five categories, and the other consent retail was in both of those categories. And it kind of makes sense when we think about it, when we talk about it with ransomware. Ransomware is generally,

and this is, again, not always the case, but most of the time sent, there's an email sent that's a phishing email and it gets someone to execute code or on a USB drive or a file. There are a whole bunch of different ways that it happens. And then what happens is malicious code is on your system and encrypts your files. And then, you know, basically creates a ransom, whether an electronic note that says you have to pay this. We know that there were several corporate entities and even some government and both local and state government facilities that had significant attacks last year. So this is a major threat. And the landscape for retail is large, right? So this is a major threat. And the landscape for retail is large, right? If you think about the number of people that have emails, the number of people that have access to machines, to send a text message to an individual to validate, hey, send something.

I wasn't expecting it. I know that sounds silly, but it really is one of the ways to protect it. And I think today, much like we talk about mass fatigue, there is cyber incident fatigue. fatigue. There is cyber incident fatigue. And what ends up happening in these scenarios is I think we sometimes allow ourselves to say, well, we might get attacked. So I'm going to maybe cut a corner or do something differently because it's inevitable. And what I encourage everybody to do here on the call and on the podcast is just to stay vigilant in what you're doing, making sure that you're looking at emails from where they come from, because a ransomware attack is not only costly, but extremely disruptive to any business, any academic institution, really anybody, including personal folks, because there's an emotional tie of I can't get my things back.

There's a time and there's a financial piece. And with that, I'll turn it back over to Reed. All right. Thanks so much, Tom. And thank you, Tony, for so many great insights. Again, as always, if you're interested in learning more about how to become engaged or get your team engaged for their individual professional development, for your problem solving as a team, as an enterprise. We're always at LPRC, and we are lpresearch.org. Reach out, please, to operations at lpresearch.org. We always want to hear your questions, your comments, your ideas, your suggestions. So everybody stay safe out there and stay in touch. Thanks, everybody. 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.