LPRC - Episode 3 – The Opioid Crisis

Episode Date: February 22, 2018

The post Episode 3 – The Opioid Crisis appeared first on Loss Prevention Research Council.

Hi everyone, welcome back to Crime Science. With this podcast, we'll explore helpful topics about preventing crime and loss, the science that's the driving force behind these processes, and we'll also hear about and discuss real-life examples from loss prevention and asset protection practitioners and other crime prevention professionals. Back with us today is co-host Dr. Reid Hayes, Director of the Loss Prevention Research Council, co-host Tom Meehan, Chief Strategy Officer at ControlTech,

and our featured guest today to add to the discussion on the opioid crisis is Ben Dugan of CVS Health. All right, well, welcome everybody to another episode. We really try and look at the science of crime prevention, but a big part of that is not just working with current criminological theory, behavioral theories on opportunity and crime, as well as rigorous evidence and so forth, evidence-based practice. But we always want to work with and stay very, very much in touch with those of you on the front lines, the practitioners, if you will, in law enforcement, in loss prevention, asset protection, that are out there detecting, deterring, that are apprehending offenders, that are working cases against offenders,

whether they work for us and or against us from inside or out. And so one of those practitioners and what we like to call pracademics is with us today, Ben Dugan of CVS. And Ben and I and our team go back quite a ways as far as really working together to much better and more deeply understand the dynamics of organized retail crime, originally called ORT. And really, our team worked with LP Magazine and Rela over 15 years ago to sort of recast ORT to ORC because of the

components of fraud and violence and other things beyond conventional theft by boosters. conventional theft by boosters. And so with nothing more to say, I'm going to turn it over to my co-host Tom Meehan of Control Tech. Tom, let me let you take it away from here on an intro and some initial thoughts. Thanks, Reid. Thanks, Ben, for joining us. Today, I'm up in New Jersey, and I see that Ben is in the lab with you in Florida. So hopefully next time we'll all be sitting together. And I'm really excited today to talk about some of the current trends in organized retail crime and some of the things that are occurring with the unfortunate opioid epidemic in America. You know, the opioid crisis has been with us for a while. We know that intravenous drug abusers filled the ranks of boosters, front-line boosters of all levels for years and years and years.

We've probably not seen opioid use from all different sources explode in the way that it really has over the last three to five years and doesn't seem to be abating. And I know that there's a lot going on with that strategically from a governmental and political standpoint, from a medical standpoint, and other centers for disease control and their counterparts around the world are working on strategies and action plans and executing and implementing those as well. But obviously, there's a huge spillover to this day

in what we're dealing with in the retail environment. In this case, theft and fraud, either fueled by, in part, driven by, or it somehow involves opioids. Our guest today, Ben Dugan, not only cutting edge as far as organized retail crime, strategic and tactical investigations in that area. But tying in a little bit about the discussion, primarily, Tom, between you and Ben, if you will. So Ben, I'm going to go first to you, if I might, and let you cover some of the trends. What are you seeing? What are you hearing? And what does that mean for what we need to do to get better at? Thanks, Reid. I appreciate the opportunity to be here today. You're absolutely right. There's always been a relationship between specifically external theft and illegal narcotics.

But this opioid epidemic, specifically, as you mentioned, in the last three years, has really exploded, specifically when it comes to refund fraud and gift card fraud. comes to refund fraud and gift card fraud. Looking back at the NRF survey from 2014, most retailers were reporting about $3.8 billion in losses in refund fraud. Today, that's about a 300% increase to between $9 and $17 billion. So there's been a 300% increase in just reported refund fraud and gift card fraud. And coincidentally, I don't think there's been a 300% increase in just reported refund fraud and gift card fraud. And coincidentally, I don't think there's been a 300% increase in drug overdoses, specifically in the suburbs. And I think that's where the trend really is going. inner cities traditionally and is now spread out into non-traditional areas of the state to cities and communities where we do business in the suburbs where we're not used to seeing

this kind of activity. So a lot of the stores that are located out in the suburbs outside the inner city are having to deal with something that they have never had to deal with before and that is unfortunately people that have been afflicted with this addiction and are targeting our stores in those neighborhoods, which we've never seen before. Interesting perspective. Tom, you know, you've got a lot of experience in different retail formats. What's some of the background, some of the things you can share with the group as far as the issue itself and maybe some of the implications there?

as far as the issue itself and maybe some of the implications there. So, you know, my background being was outside of the drug industry, but we, in some markets, we had higher degrees of abuse. And unfortunately, in my, we've had several instances in my past of overdoses in stores where people died in bathrooms, and in some really affluent markets, by the way, too. So one of the things that, you know, for in the 20 years, and I was in retail, the first few years, I worked for a home improvement retailer, and I had some really tough markets and some tough stores. When I finished out the last 13 years in Bloomingdale's, we were fortunate and had stores in some great markets, but in very affluent areas, yet we still saw instances of drug overdoses in stores. My experience with shoplifters that were addicts or had a problem is that there was a higher propensity for violence. That was something that we saw often when we ran through it.

And, you know, I have a question really for Ben too, because, you know, I always have wondered how in your experience, Ben, what do you see the difference in an offender, an opiate offender versus, you know, a traditional ORC offender? And, you know, what are some of the differences you saw? From my seat, I can say that there was a higher propensity for violence, but that was where it started and ended. So what are some of the things that you've seen? Well, you're absolutely right about the propensity for violence. And a lot of these guys actually have a needle or syringe on them or drugs on their person at the time they're committing the offense, which also escalates their concern about being apprehended and the need to escape.

The first thing that I will tell you, though, the difference really in the last three years between an opioid-addicted offender and a traditional ORC offender is their goals are different. The offender's goals are completely different.. The offender's goals are completely different. The opioid offender's goal is to just get enough money to get the fix that he needs. The immediate gratification of getting the drugs that he needs to cure his addiction is quite different than a professional organized retail crime thief who's going to steal a whole lot more money. He makes a living doing this. They're more professional. They're more skilled. They don't have to be violent because they'll just go on to the next door where they won't be challenged. So each of

them have their own specific concerns. I think the old traditional ORC guys, which is also on the uptick, do a lot more financial harm. But I do agree with you that the local opioid addicted offender, although it's less money, creates a much greater risk to store employees. You know, Tom, I was going to add in, you know, there's been some pretty good scientific research lately on the opioid use, the role that it plays as far as an individual's aggressive behavior and that it can amplify that behavior. And in some cases, some of the psychiatric research is showing that people are going to lash out, be more violent for obvious reasons that you would think, but they're sleep deprived. They've obviously got some dietary issues, but they become more aggressive for a

lot of pharmacological reasons. Some we understand. Some I think they're still trying to get a handle on. But that's just another peripheral part. As far as also trying to settle debts and things like that, they've got somebody on their back to pay them. They owe somebody money. Now they're going to come in your store and commit an armed robbery to get those same drugs or to get something they can convert to cash.

So there are just so many angles that we're seeing as far as violence and opioid use. Thanks, Reid. The other question, Reid, I think you teed this off really well, and is the original thought of organized retail theft and the transition to organized retail crime. Ben, do you think that there is a clear linkage between organized retail crime and the opioid abuse? Are they one and the same? Are they separated? Because often when you think of the news media and what you hear, you don't really hear that relationship as much. And I wanted to get your opinion on it and then certainly would love to share some feedback and thoughts on what my opinion is. I do think they're all should be considered organized retail theft or organized retail crime offenders. They both want to try to steal or translate goods or convert goods

to money. Their goals may be different, but that is really how we define them and how we've defined them through the years. So I think they're the same that way. I think you approach them a lot differently. I think they're very different and at totally different levels for different reasons. But I do think it's all part of the same essential converting goods to cash or converting goods for exchange for drugs. So I know in traditional, and I use the word traditional because I'm trying to kind of delineate a little bit here, but when I think of organized retail time, I think of it as all-encompassing.

I think of that it's – so I completely agree. I guess some of the questions that I know some of the LPRC members have and I'm sure our listeners have is, that I know some of the LPRC members have and I'm sure our listeners have, is what are some of the ORC schemes that you're seeing that are a little, maybe they're not different, but you're seeing some differences when it relates specifically to ORC and opioid offenders? Traditional ORC hasn't changed much. They're better at it. There's more people. They use better

distraction techniques. They understand the physical security things that are in place. They make pretty rational decisions about not trying to compromise product protection. They know they have more of a strategic way they approach a store and what stores that they select. So I don't think that has changed a lot. I think they've evolved along with the retailers. I think some of the reasons, some of the things we put in place for the convenience of our customers, in other words, allowing pretty liberal refund policies, allowing people to return product without a receipt,

allowing them to return it at a different store, product without a receipt, allowing them to return it at a different store. These things are all that the local opioid offender takes advantage of. They understand that you don't want to inconvenience the customer. And one offender that I interviewed said, I can pretty much overcome anything or any control that the store puts in place. Eventually, I will find a way around it. So just because they're addicted doesn't mean they're stupid. They do figure out how to get a way around stuff and I think the opioid people are creative

and they understand what our challenges are as far as alienating a customer and they'll do everything they can to take advantage of whatever we put in place. That said, there's some good things that do work. You know, there are some hard maxes that people put in there that only allow a certain amount of returns in a certain amount of time. Tracking refunds is also a very, very valuable tool. Some things that can be done at the front of the store as far as identifying a refunded product as it enters the store

to make sure that no one just goes over to the shelf and picks something up and returns it. So I don't think the schemes have gotten terribly elaborate. I just think that they understand us better than they ever have in the past. And I think that they're coming from a whole different place than ORC offenders were 10 years ago. Let me ask you something, if I could, Ben. Many of us saw the recent CNBC special where they looked at opioids, the tie-in to retail crime, specifically return fraud, and you just mentioned that, and of course gift cards and how they parlay their theft into gift cards and they parlay that into or convert that into cash and that into drugs. So anything you can elaborate

on and maybe what are some of the things we can do or the retailer can do to pick up on the situation sooner, collect what they need to deter and help law enforcement detain these people? deter and help law enforcement detain these people? One of the things that you can count on is that they're predictable. They are going to be probably the same network of stores at the same time of day every day unless they're sick or in the hospital or in jail. They have to do it. It's just the way they fuel their addiction. So being so predictable, you can kind of get out ahead of it, especially if you're tracking the transactions at the point of sale. You can almost identify people ahead of time and try to take some preventative steps before it even gets that far. Obviously, protecting our product is always going to be first and foremost. But if we can use predictive analytics and maybe identify some of the people sooner as they of the actual refunds that the store is processing,

and how much do you want to tweak your refund policy to address essentially a smaller amount of fraud. But if we're tracking, if we're getting out ahead of it and tracking or identifying individuals that are habitually conducting refunds, and that information can get to the investigative end of your company or to law enforcement, then they can do what they need to do to conduct those investigations to shut down the criminal activity, not only at the booster level, but at where the cards are being sold and redeemed. So there's a lot we can do if we kind of get out in front of it and use predictive analytics to identify people, both on the preventative side and the investigative side.

Do you see some of your traditional ORC guys, the folks that are really operating as an enterprise that are stealing goods to sell defense, do you see those folks recruiting addicts to help almost in the fashion of using them as a mule? Is that something that you're seeing out in the wild? I've heard some chatter about it both throughout the LPRC and folks in the industry that I know that they have seen some of the younger addicts coming into markets and taking things like Tide and things like, and razors and actually, you know, not really, not really understanding what's happening with it, just getting paid to give it to someone. Are you seeing that at all? Oh, absolutely. And I think that's what's really fueling the crisis and the epidemic because, you know, in my job I get to interview a lot of these subjects when they're apprehended at the store or arrested.

And all of them are recruited through the heroin business. They meet each other in the heroin circles and recruit each other that way. And, yes, they don't understand the whole picture and what they're doing and how it affects and how much money we're really talking about. They really can't see past what they're trying to get accomplished for that day. But yes, the recruitment end of it is significant. And I think not necessarily recruiting people to be part of a criminal organization. They recruit people just to steal for themselves. In other words, they educate them on how to commit the theft. So maybe it's not technically recruiting them, but they're educating them,

hey, listen, this is how I get money to fuel my addiction. This is where you can take your gift cards to sell it. And all that information is being shared more now than ever. As the heroin community grows, so does the scam. Great. That's a really interesting point. So I think you alluded to some of this before, and I have probably a lot of questions related to this. But are there some best practices in how you would investigate this type of organized retail crime that you're seeing throughout the industry that differs from what a current investigation would look like? I think you investigate basically the same way. I think that the offenders that are opioid

addicted, unfortunately, are much more predictable. So I think as far as predicting their movements, it's become actually easier because we know that we can pretty much depend on that they're going to be out there in the street every day doing what they need to do to get the money that they need every day. So in that case, it's made it easier on us. The problem is that there's a lot more of them. The quantity has tripled. So there's a 300% increase. You've got 300% more guys you're looking for.

It becomes very, very difficult to identify who the major players are. So that's where I think an analytics department can share information, putting things in place at the point of sale. So exception-based reporting can identify people for the investigators to share with law enforcement so they can really get out there and get the larger offenders off the street. So I guess you mentioned interviews. And in my past, I had the opportunity to interview thousands of folks. And I'm always curious when I think about doing investigations that related to cybercrime, the interview, while the process and structure stayed the same, I did have to take a different approach. Do you find that when you're interviewing a traditional ORC subject versus someone that is an opioid abuser that you have to do things differently?

I think you have to be sensitive to it. I think you have to be sensitive to it. Like you said, after you do a lot of interviews, you develop your own style and how you approach those interviews. And I think you need to be sensitive to what someone's priorities are when you're interviewing, which I don't think has changed. You find out what's important to them, what you think is going to trigger them to give you the information that you're looking for. So I don't think that's changed. I think you have to be sensitive to the fact that they may be hurting or suffering from a drug dependency and be able to use that in your interview to make sure they understand that you understand and you're able to extract the information that you're looking for.

I think you're short-sighted if you don't understand that. That's great. That's a great feedback too. I'm always intrigued by the interview process and completely agree with professional styles and personal styles and was just curious what you were finding. My next question is really related, you know, again, to the opioid piece. I know in organized retail crime, the level of recidivism is higher. So your repeat offender is higher. With your opioid abusers, are you seeing a difference in recidivism or repeat, you know, catch and release? Or is it, you know, kind of the same as what you would expect with a traditional ORC or habitual offender? That's actually a great question.

a traditional ORC or habitual offender? That's actually a great question. From what I have seen, there's a little bit more lag time with offenders based on their background. So a first-time or first-couple-time offender with a very relatively new heroin user, the courts will offer them options, perhaps rehab, some different things that they can do to avoid prosecution. And I think that that allows us some lag time where they try to get themselves clean, they try to get the help that they need, and they try to stay out of jail because they don't like it, you know, once they're there. The hardened criminals have been to jail. It doesn't bother them. There's a network with their fence set up to bail them out as fast as they're arrested.

And most of the time they're talking to their fence as they're getting bailed out of jail and they go right back to work. So totally different mindset between a professional ORC thief and an opioid addicted kind of relatively amateur ORC participant. So I guess this kind of leads into the last question a little bit, Ben. You started to answer it.

or the areas of the country where you see, you know, diversion type programs in the court for first time offenders? Are there other programs that are working better than others? I know in that there's a lot of news media about opioid abuse and different programs. And I'm curious from your feedback and what you're seeing and hearing, are there particular programs that seem to work better? Not so much interested in getting the specifics of markets, because I know there's a lot of politics in different markets, and there's a whole bunch of things that play a role in that. But really, are programs that offer continuing education and real rehabilitation, working better than programs that are diversions that are traditional diversion, where it's how you have to behave for six months and because it's your first time, you know, that type of thing.

Are you seeing anything where there's a better result or is it just a situation where there's, you know, not really something that's working real well? Another great question. Another great question. I think my experience over the last couple of years is I've seen more success in areas that are really attacking the problem from kind of a multifaceted approach. There are some good health departments out there in some of the major cities that have done some direct research and drawn correlations between 85, 90% of the people that overdose from heroin also sold gift cards in the last two weeks. They draw those conclusions for us. But I will tell you, as far as success goes, we're dealing with a public health crisis. And as retailers, our stores are merged into the fabric of these neighborhoods and communities where we do business and where our families live and work and go to school.

And when those communities are struggling, it affects us, you know. when private industry teams up with law enforcement, health departments, judges, you know, everyone kind of pitches in as a community. I've seen some successes in certain pockets of the country. The problem is I don't think it's happening fast enough. I think that, you know, education's coming, stories are coming out there. So I think we're getting there. And as Reid mentioned, there's a lot of people involved in developing strategies and action plans. I think that's all good news. But I think for the next foreseeable future, retailers are going to have to weather the storm and take certain steps to protect themselves. You know, Tom, I was going to add,

we were with a major retailer the other day that has pharmacies as well. And we heard from their pharmacist and she came over to our team as we were in the store doing an audit, if you will, as part of research and said, you know, I just want to let you all know something that's going on here. here. It's gotten to the point because of this situation where I have people coming up with fake scripts, stolen scripts, trying to pass this or that off at the counter, but it's taken on a new dynamic. One, she's had to find a better way to display her and her other pharmacists and techs certificates that are supposed to be prominently displayed due to state and federal laws in a way that their names aren't readily known because she's now having people approach and say, look, are you sure you want to decline this fill-in-the-blank name? Or, hey, you're the one that drives that silver fill-in-the-blank as far as a type of car, or I saw you on the street, I know where you live,

and so on. So I think you mentioned something very important, Ben, that this is affecting so many people in so many different ways. But any thoughts on that as we work to protect our store teams, our customers, and ourselves as we deal with this situation. You're absolutely right. These are desperate people on certain days. We've talked to scientists at your Impact Conference last year that guys that robbed pharmacies said they would have done it for one pill. You know, committed an armed robbery for one pill if that would have took. So yeah, desperate. Yeah, it's a little scary. And I think that understanding the problem is going to be the first step, understanding who you're

dealing with. I don't think there's going to be a, there's a short term answer to it, obviously. But I think we have to be part of the solution. I think retails, you know, we're part of the community. We're part of, like I said, the fabric of those communities. And I think we need to do what we can to make sure we understand and do what we can to partner with whoever we need to partner with to help these folks and see if we can't keep everybody safe. No, I think to build on that too, Ben, our violent crime working group here at LPRC, multiple, multiple retail chains work together with our team and others. But this anti-robbery innovation chain, we're calling it, we innovate through our lab and local stores, name brand stores, and up into very, very difficult communities to get

better. But what we're seeing is what you kind of described. You've got a person coming in to rob the pharmacy, for instance. Their brain is literally saying, I'm dying. I'm dying. I've got to have that pill or a couple pills or whatever. So we're having to look at different new versions of time relief safes. And how do you execute some of these technologies, some of these techniques, tactics, so that they're consistent, they protect everybody in that building. But in a longer term, that offender is not likely to come there and commit that violent crime, because they know they're not going to get what they want or it's going to take a long time to get what they want is an example of what I think tactically we're working on while the government and health care,

mental health workers, faith-based, community-based initiatives are being better designed, redesigned, and start to be implemented. Ben, I really appreciate you taking the time and answering all of our questions. It always is great to have an actual expert that's out in the field and using the methods applied to help. But I know the listeners appreciate it. I know I certainly do. The LPRC and Reed does. So thank you so much for coming out.

I'm sorry I couldn't be down in beautiful Florida with you guys today sitting at the table, but hopefully we'll all get to sit together again. I'll turn it over to Reid for any last comments. I too, Tom, want to thank Ben for his agreeing to work with us on this to illuminate us, our listening audience. We've got a long road to hoe, but as we really work to make our people and places safer, clearly opioid crisis is not something that's just hyped, not something we're just hearing about right now, but is something that's been here a while, continues to worsen. It's directly affecting pretty much everybody that we deal with day in and

day out in our businesses and what we're trying to do. And I think hopefully that there's something in this podcast that will help everybody out. We hope you'll stay tuned. Look forward to our next episode. And from Gainesville, Florida, thank you very much. Thank you.