LPRC - CrimeScience – The Weekly Review – Episode 96 with Dr. Read Hayes, Tom Meehan & Tony D’Onofrio

Episode Date: March 24, 2022

LPRC Research capabilities reach new heights! Governments are starting to adopt crypto! In this week’s episode, our co-hosts discuss an update on the crime waves in San Francisco, LPRC Presented at FMI, and the origins of e-commerce, smartphones, and robots are explored. Listen in to stay updated on hot topics in the industry and more! The post CrimeScience – The Weekly Review – Episode 96 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 Crime Science, the podcast. This is the latest in our weekly update series from the LPRC. I'm joined by colleagues Tony D'Onofrio and Tom Meehan, as well as our producer, Diego Rodriguez. I want to welcome everybody back. We're going to very, very, very quickly talk about the global coronavirus pandemic that we're experiencing. Looking at now the vaccines, over 5 billion humans have been vaccinated in the entire globe, 255 million and growing have now been vaccinated for the COVID-19 disease to reduce the seriousness of disease should we become infected.

have now either have some immunity response, both cellular as well as antibody response, due to natural infection and or vaccination. That's got to be helping. We're not seeing near the seriousness, evidently, according to the research that I'm reading that is being seen around the world. There are still over 120 vaccine candidates moving through phase one, two, and three trials. We're looking at some of the research for those that have been naturally infected, some increased diabetes risk. It looks like, according to some studies, we've talked over and over about some of the brain effects for those that have been infected that is still under study to better understand that. But it seems all around the world, while some areas continue, including in the United States,

to see spikes in infection rates or in hospitalizations or even fatalities, that seems to be waning overall globally. Some areas are still in the heat of battle, if you will, because of lower natural infection or vaccination rates, particularly in the vulnerable. Some countries bear in mind or where the United States probably was about a year ago or more. So we'll continue to monitor the situation just as we're monitoring the tragedy in the Ukraine with the Russian invasion, the amount of death and destruction being created right now by the Russian leadership and their military. Intelligence people is just beyond description and continues to grow in intensity and the horror that they're creating there. And so our thoughts and prayers, of course, go out to all those that are dealing with the situation that's not only devastating individual Ukrainians and groups and the entire

nation of the Ukraine, but also the nearby neighbors and beyond and continues to affect all of us and probably will forever. And we know the stakes are incredibly high when when a nation or an organization like that, that Putin and his crew have put together, have a wide array of nuclear and chemical and biological weapons. So we'll stay tuned to that tragedy as it grows. We'll switch over now to the LPRC and talk a little bit about our new team members. We've added about 30 new members in just over 90 days. We anticipate the possibility of adding 30 more corporate members over the next 90 to 180 days as well. So the LPRC is growing both in retail corporate members, retailer corporate members, as well as with our SPs or solution partner members. We're excited. So our team's growing, the operations side, the administrative side, as well as our research side.

the administrative side, as well as our research side. We've talked about Dr. Sarah McFann and the work she's doing in the violent crime area, including facilitating with the leaders and co-leaders of the Violent Crime Working Group, working on aggressive street behavior by those that happen to be homeless, understanding the harm created in the form of impediment, created in the form of impediment, impeding movement by intimidation, whether intentional or not, and by aggressiveness and theft and other acts of destructive acts. So just trying to understand using law enforcement right along, looking at mapping. We're planning some drone mapping missions coming up here. So a lot of data will be collected on the aggressive street behavior and other behaviors that result in harm. Let's call them harmful behaviors by those that happen to be homeless or that phenomenon. Starting off here in Gainesville,

because there's no shortage of issues here, but also working simultaneously with certain retailers on the West Coast, the Northeast, and elsewhere. So, Sarah's working away on that, as well as work on off-duty law enforcement, as well as private, third-party, or proprietary security guards. In fact, our new RIA program, the Research in Action Program briefs that will be coming out, they'll be anywhere from 45 to 55 of these reports coming out annually that will be short, quick summaries of the research, what the issue is, the research conducted, the results of the research, and the possible implications and how practitioners can go to work with that, whether you're devising solutions as an SP or you're an LP or AP practitioner. So we're excited. You're going to see an incredible

amount of productivity as far as report briefs and reports and content put out through our events and webinars this year like never before. We've also, we've talked about Orion San Angelo, another one of our researchers here. He's focused in the command control and intelligence, C3I area, working on SOC Lab and putting that whole program together at a level we've never seen before. We've got a huge array of partners helping us put that program together here. And we've never seen before. We've got a huge array of partners helping us put that program together here. And so it's going to include crime mapping. It's going to include all types of mapping. In fact, Esri, who is ArcGIS, ArcPro, ArcMap, they were in here this week as we continue to see more and more visitors, both retailers coming through here as

well as solution partners. But they are going to be providing us with an array of mapping tools in addition to what we're doing with people like MapLarge and CapIndex and others. But we'll have the ability to do drone-to-map, interior mapping, a very extensive and sophisticated exterior mapping to work on specific crimes, crime series, organized retail crime groups through social network analysis, crime place linkages, and that type of analysis. But just stay tuned because not only does Sarah and Orion have a lot of geospatial training using different mapping tools, especially from ESRI in this case, but a new researcher just came on board this week, James Martin, and he is a geographer. And so as a geographer criminologist with us research

scientists, he's going to provide an amazing amount of expertise on helping us get up to speed and as well as to work on very specific projects. James will also be working research and facilitating the retail fraud working group here, as well as DOG, our data analytics working group. Orion, additionally to the C3I and parts of the innovation working group here, will be working with Diego on the supply chain protection working group. They're already launched to a pretty large scale supply chain protection research programs. We're also working with Procter & Gamble on one of those programs in addition to multiple retailers. Very exciting stuff. And so please, we'd invite you, if you're a member, to get involved in the violent crime or any of these working groups that we've got here.

We've got seven of those working groups. So reach out to operations at lpresearch.org for any of that information. We'd also encourage you to subscribe to the LPRC's Connect e-newsletter. It comes out weekly. It comes out every Tuesday afternoon late. And operations at LP Research is the way to subscribe, no cost. You could be a

member or non-member and get engaged and understand. We've got a lot of big pictures, big words, but a lot of links to get heavily involved and read and understand what all's going on. Coming up as well will be the Rila open house. And we will be not only excited to present and work with Rila and have a booth space at Rila in Orlando coming up here shortly in April. We love the support and the partnership we've got with the Retail Industry Leaders Association, Lisa Labruno and team. And so we'll be there. But also as part of that, after that, we're inviting and have already got quite a few people signing up to come into the LPRC Open House 2022, April 27th and April 28th, the 27th and 28th here in Gainesville, 10 a.m. to 2. Again, operations at lpresearch.org is the place to RSVP that you and or your team would like to

come into Gainesville and do lab tours, eat and greet with us here, brainstorm with us here at the labs in Gainesville at the UF Innovate Hub on that April 27th and 28th. We just had Dr. Corey Logo and present successfully down at the Food Marketing Institute, the FMI's Asset Protection Loss Prevention meeting that they just had actually in Orlando as well yesterday on March 22nd, 2022. And so, good job down there, Corey, on that presentation. I think the impact is my last thing here is let's, I want to remind everybody that on that first week, always, always on the first week of October, we've got LPRC Impact. This, I think, is our 16th year of Impact, and it will be October 3rd through the 5th. Fantastic reception, lab tours,

really neat event on that evening, Monday evening, October 3rd. We'll have all day, amazing content on that Tuesday, October 4th. And then we'll have an unbelievable social event in the Swamp, where we take over the Champions Club. And then finally, we go half a day with some more incredible content on that Wednesday the 5th, ending on noon the 5th. So it allows people the opportunity to fly into Gainesville or travel into Gainesville all day Monday. And it gives them half a day to head back to their greener pastures on that afternoon of Wednesday the 5th. So mark your calendars, budget your time and travel if you would for LPRC Impact 2022 version, physical and person in Gainesville, Florida. So with no further ado,

I'd like to turn it over to Tony D'Orofrio. Tony, if you'd take it away. Thank you, Reid. Let me start first with an interesting article that appeared in the Wall Street Journal this week on crime trends in San Francisco. The online edition titled the articles Patty T's Plague San Francisco. These last two years have been insane. Some interesting highlights are more improbably lowlights from the article. Among the 25 largest U.S. cities, San Francisco has had the highest property crime rate in four of the most recent six years for which data is available bucking the long-term national decline in such crimes that began in the 1990s. Poverty crimes in San Francisco declined during the first year of the pandemic, but are up 13% in 2021. Burglars in the cities are at the highest levels since the mid-1990s, and there were 20,663 thefts from vehicles last year, almost 57 a day, a 39% increase from the prior year, although still below the record of 31,398 in 2017.

in 2017. Smashed storefronts are also common in the city and in fact they're so common that the city itself is then actually offering public money to pay for them. Car owners now are leaving their windows open, hour leave notes that basically say there's nothing of value inside. hour leave notes that basically say there's nothing of value inside. And then, of course, we've seen the videos of shoplifters shopping in drugstores that have gone rival and also in luxury stores. Owners of small business say the cost of security and repairs are reading into profits are very diminished by the COVID-19 pandemic. In the Castro District of the city, shops have recorded nearly 100 instances of smashed windows and doors that cost $170,000 to repair since the beginning of 2020, according to the Neighborhood Merchant Association.

Businesses have been affected in every corner of San Francisco, even traditionally low crime areas, such as the Sunset District, where commercial and residential burglaries rose 80% between 2019 and 2021. because it's the beginning of the pandemic, but these stats are disturbing. And unfortunately, they're also common in some other parts in some other cities of the United States. Again, I would encourage all of you to engage with the LPRC so we can aggressively fight this crime together. Let me switch now to my continuing series on the surprising start of your favorite retail technologies.

And this week, you actually will get an advanced peek in terms of what is in part two. In part one, I spoke about the beginning of the first supermarket, first department store, and the first use of a barcode. In part two, let me start with the first use of a barcode. In part two, let me start with the first item that was purchased online. As with other emerging technologies, one can debate the origin of e-commerce. Candidates include pizza, weed, CD, and computer parts. In my view, the first real online transaction that involved data encryption software to send a credit card securely

took place in August 1994 when a website called NetMarket that August 11th, Dan Cohn sold a CD of Sting that was called 10 Summoner's Tales to a friend for $12.48 plus shipping. Once the internet could be used for secure shopping, really the progress started. So a year later in 1995, Amazon and eBay launched their online shopping platform, soon followed by Rakuten in Japan and Alibaba in China.

A decade ago, e-commerce made up only 8% of total retail sales in the U.S. The pandemic, like everything else, has accelerated that trend and peaked in 2020. Worldwide e-commerce grew 25%. E-commerce will continue to grow double digit, crossing 6 trillion worldwide by 2023. The largest e-commerce market is China, representing 52% of total worldwide sales online, USA's second and 19%. In 2021, over 2 billion people worldwide shop online. That's equivalent to one in four. And what's interesting in that first CD that

was sold online, the Sting CD, one of the songs was Field of Gold. Amazing that since 1994 online how much field of goal is as found worldwide. The next interesting technology that I discussed in part two is a smartphone. The sprouting start of the smartphone was on August 16, 1994, when IBM released the Simon Personal Communicator to the market. Although the term smartphone didn't come into existence until a year later, Simon had a lot of the features we think about that are true of smartphones, including an address book, calendar, calculator, and notepad. It even had a touchscreen, although you needed a stylus to use it.

The price of the original Simon smartphone is not too different from an iPhone today. IBM priced Simon at $899 with a service contract that's equivalent to about $1,500 in today's dollars. The original Simon was on the market for only six months and only 50,000 units were sold. Fast forward to 2007, that's when the Apple iPhone came out. And as I've said in many of my presentation, the Apple iPhone was the third megatrend

along with Samsung and others that followed as that generation was the third mega trend that transformed retail dramatically going forward. Today, we all see our screens everywhere. In 2021, just the top five largest smartphone markets worldwide crossed over 2 billion units in total units. Finally, in this edition of technologies that are surprising from their start, I discuss robots. And robots, the word robot was

first coined by a Czech playwright Karel Capek and he managed robots being artificial and fully functional servants. The first industrial robot was Unimate, developed in the 1950s by Joseph Engelberger and George DeVoe. The original purpose of these early prototypes was to perform tasks that would harm humans. In 1959, a unit-made robot prototype was installed at General Motors under assembly line to move hot pieces of metal. The introduction of robots in manufacturing process led General Motors to become one of the most automated plants in the world.

Robots could build 110 cars per hour, more than twice as fast as any other plant on that time. Fast forward, the global market for industrial robots in 2021 was nearly $44 billion. It's expected to grow at a compound annual growth rate of 10%, reaching nearly $71 billion by 2028. In the retail industry, the robots are accelerating their invasion also. One in four retailers are currently working on robotic projects and 47% said they'll be working on in-store robotic projects in the next 18 months. The pandemic raised the profile of robotic automation in warehouse and stores. 63% of retailers say robotics increase the importance for use in warehouses and 43 percent see greater importance in stores. Again, take this opportunity to engage with LPRC to learn more how

these disruptive surprising technologies can be optimized for deployments. And with that, let me turn it over to Tom. Thank you, Reed. Thank you, Tony. And we have a lot of things to cover today, but I will go somewhat quickly through them. But I want to start kind of with the Russian-Ukrainian conflict and some of the things that we're starting to see. The White House made a very direct kind of message to utilities and infrastructure, along with several agencies, about a Russian cyber attack that is imminent. So this is not an uncredible threat. It is a critical threat. We know that we're seeing activity today of potential attacks at a larger magnitude than we did before. And I'm using the word attack broadly because I think it's important to kind of say, to treat a cyber incident as a cyber incident because ransomware and breaches and actually infrastructure attacks to limit or

impede the ability to use are all different, but all have similar concerns or constraints. This is directly related to critical infrastructure and utilities. That's where the warning came from, from the White House and the Cyber Institute of Security. There's a whole host of different organizations that are sending warnings out. And some of the basic fundamentals are is, you know, the low hanging fruit vulnerabilities. So we talk about on the podcast all the time, the importance of patching and updating your systems. Right now, what we're seeing is a tremendous amount of scans for looking for open ports, looking for vulnerabilities that have

already been assessed. So while these attacks are sophisticated, in some circumstances, they can be frauded off by just simply keeping updates there. Furthermore, in the Russian-Ukrainian conflict, while this is not hot off the press's news, it's been kind of back and forth, is Russia officially did ban Facebook and Instagram and actually categorized them as terrorist organizations. What does that mean? Well, that means that they're slowly getting closer to the North Korean type of government or dictatorship where they're limiting social media and internet access. They've already additionally, in addition to banning Facebook and Instagram, they've

already basically cut off the outside internet and have a government-run internet very similar to China and North Korea, which limits what can be shown and how it can be shown. But now they're outlawing things like Facebook and Instagram. That allows them also to hold people under a government-oppressed society accountable, meaning so if you're caught using these things, you're actually violating a law which allows them to really arrest you and throw you in jail for using social media. So I know last week when we spoke, Tor, the dark web, opened up for Twitter so that people could communicate. But this is a little bit concerning in the sense that what is the end game? You know,

what is the end game for Russia? And the CIA actually, I think as early as this morning, said that they don't know. There isn't a clear understanding of what's next, that most of the intelligence reports today say that Russia could become exiled and be very similar to North Korea, where there is no no outside influence and completely change the dynamic of what people are faced with there. So we'll continue to monitor the situation and I think we'll continue to give updates. today, whether you're in the commercial space, the utility space, the retail space, or just at home, is to make sure that you take the time to update your Macs and Windows PCs and update your cell phones. I know that sounds remedial in this circumstance, but you don't want to be low hanging fruit. And while, yes, these warnings are very focused on critical infrastructure. The reality is when these type of attacks are occurring at a mass scale,

there is absolutely a chance that consumers and regular folks as well as retailers will be caught in the mix. So switching gears a little bit away from the Russian conflict is to talk about just some general news in the tech sector. One thing that you may have read if you're seeing some of the things that are occurring is around digital currency and the U.S. government going to digital currency. And the media is really taking an interesting spin on this. Some news reports are saying headlines like experts say physical banks could be a thing of the past, as the U.S. creates a digital dollar. This is obviously something I'm heavily involved in my

full-time job here and actually do another podcast in the banking sector called The Cash News. and actually do another podcast in the banking sector called The Cash News. And some of this is media playing on what's occurring. The reality here is that multiple central banks, including the U.S. central banks, are looking at a governmental-backed digital currency. This is not cryptocurrency. This is really like a fiat currency, if you will, that's digital. And one of the things I would say is just to talk about this because this is making national news and this is definitely making world news if you're in the banking world. But this was on multiple ABC stations throughout the country about experts saying the banks, you know, physical banks could be, you know,

a thing of the past because of this digital currency. This digital currency that would be central backed, a central bank backed or a US government backed, is very similar to how a debit card works today. And what I mean by that is if you go to a store today and you use your debit card, they're digitally debiting your account and taking your money out of your account. So this is, while this is different, it's very similar to that. Unlike a cryptocurrency, which is not centrally managed, it's not backed by a bank, this is taking, for basic principle, a U.S. dollar and digitizing that U.S. dollar and allowing a means to transfer it differently. This does not mean that notes would not be printed. This does not mean that

you will no longer be able to get a physical dollar bill. What this means is that U.S., the U.S. government, and the central bank are recognizing the evolution in digital transformation and trying to prepare for it. And I actually spoke at a conference a few weeks back called the Banknote and Currency Research Conference, and I spoke about cybersecurity and risk. And a lot of the topics there, there were virtually almost every central bank in the world was attending,

was digital, you know, governmental-backed digital currency. What did it mean? And one of the, you know, the analogies that I often use is that, that debit card analogy of like, when you're using your debit card, you are essentially digitizing dollars, right? It's not the same as a credit card. So this is a space that we'll watch and we'll talk about on, podcast because it will impact retailers and it will impact all of us because it will continue to change the way we spend. It doesn't necessarily mean it's good or bad. It just means that there's a change in something that we'll need to watch.

Two other things that I want to talk about. One was just we talk about civil disturbance and disruption. One was just we talk about civil disturbance and disruption. And I'm going to talk just very, very high level because I thought it was a story that warranted us talking here. Miami Beach has actually imposed a curfew around Spring Rink because of violence. They had multiple shootings. There were a some of this. I actually saw some of this occurring in relatively real time, watching some of the social media chatter in that area and seeing there's a fight here.

This is going on, you know, and very, very interestingly is most of these events were posted based, you know, either on TikTok or Instagram in real time sometimes. So one of the fights, there was a real time video. Another video that was posted was someone after a shooting. So it just kind of should serve as a reminder of the power of what we can do today with social media and active intelligence gathering to be able to make near real-time decisions. I don't think that they're not minimizing the situation in Miami Beach, but it probably doesn't warrant us activating the fusion net because it is somewhat localized. And there's definitely some political rhetoric in this when you hear the mayor and the city officials talking about how they don't want spring break and how they've had more law enforcement out there. But at the end of the day, imposing a curfew in a major city clearly shows that something's going on. And then the question always is what does it have impact does that have on the green shop?

Or what does that mean when someone needs to shop, needs to do something and how does it impact them? So we'll continue to monitor that and give updates on that. And then the last piece, which is something I thought just was an interesting tidbit and I wrote about this once before, is, I know Tony has mentioned deep fakes and fake pictures before, but deep fakes are basically when you're using artificial intelligence and machine learning to make a video with someone else's face to replicate who they are. So me making a video and using someone else's face and putting words in their mouth, if you will. And there are some algorithms out there that play a role on it. But then there's this other piece of thing that I don't think we talk about a lot, but there's this fake picture or artificial intelligence generator to make fake profile

pictures. And basically you go in and you tell the computer what attributes you want, and it creates a photo that is unique in some fashion of creating different attributes. Well, there is actually a couple different programs out there that were not consumerly available to identify, is this a deepfake video? It's a little trickier, but is this an image that is artificially or a synthetic image? So there's actually a company called V7 Labs that have created a Google extension in Google Chrome that allows you to scan a picture and within 99.29% accuracy identify

whether it's a real person or synthetic. And you may be asking yourself, what does this have to do with me? Well, what the future probably holds for us is a whole new rash of synthetic fraud. Now, we know synthetic fraud for credit card fraud happens today where someone creates an actual credit profile.

Usually this is done by a good creditor, puts them on as a joint or a co-signer puts a synthetic social security number and actually creates a credit header and then basically when you go to collect that person doesn't exist so the you know the first creation of it when the co-signing is good a good account all the rest are not and then there's no way to actually collect. Well, adding this layer of complexity to it allows that synthetic fraud to create a photo ID to, in some cases, trick facial recognition. You now are at this next level of synthetic fraud. So it is something in our space that we should be mindful of.

I'm not sure today that there's much actionable items. But the great part that for everybody here who's sure today that there's much actionable items, but the great part that for everybody here is listening is that as we always say, as the bad guys are coming up with ways to defraud, the good guys are constantly looking at technology to, to throw that fraud off. And I think one of the things we often say is it is sometimes a game of cat and mouse, but the fact that these things are happening in real time are positive for all of us. So, no, I covered a bunch of different things, but with that, I'm going to turn it back over to Reed. All right. Awesome. Thank you so much, Tony. Thank you so much, Tom, for all that great information. I want to thank you both. I want

to thank Diego Rodriguez, our producer, Tom, our editor, and I want to mostly and most of all thank all of you, each and every one of you that listen. Always questions, comments, suggestions for the LPRC Crime Science Podcast team are always welcome at operations at lpresearch.org. Everybody stay safe and stay in touch. Thanks for listening to the Crime Science Podcast presented by the Loss Prevention lpresearch.org. Everybody stay safe and stay in touch. 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.