Information Sharing to Combat Retail Crime

Every industry — including insurance, financial, and retail — has experienced tremendous advances largely because of the ongoing evolution of technology. Advances in technology have led to advancements in process. Unfortunately, an evolution in criminal activity has taken place as well. Fraudsters continue to beat the system and challenge insurers with fraudulent claims and schemes to take advantage of insurance loopholes. So too in the retail industry do we see new opportunities for theft and loss.

Ten years ago, we didn't hear much about organized retail crime. Of course it existed, but we didn't classify it that way. More often, we discussed a class of professional shoplifters. But then as now, one thing was common — retailers banded together in a variety of ways to prevent those and other losses. In the past, retailers in geographic pockets created a network of fax machines and call lists to share information through spreadsheets and photos. They would be "on the lookout" for certain persons or types of crime. Over the years, we began to define the terms, identify organized groups, and expand regional efforts by combining forces as an industry to combat the criminal element.

Similar efforts in the insurance industry led to the creation of ISO ClaimSearch®, a national repository of insurance claim information shared by insurers, in part, to help identify and combat insurance fraud. Information sharing has now led to a national database of retail crime to identify those individuals and groups defrauding retailers. Retail associations previously launched and supported separate initiatives such as RILA's InfoShare and NRF's REALPIN. They were ultimately brought together to create one central database known as LERPnet, the Law Enforcement Retail Partnership Network.

LERPnet is a secure national database for the reporting of retail theft and serious incidents that allows retailers to share information with each other and with law enforcement. Since its inception, LERPnet has evolved. The original concept was strong and the need even stronger, but the capabilities of the system struggled to keep up with advancements in technology and the requirements of retailers. Recognizing that the concept was solid — though in need of enhancement — retail associations, working with the FBI, banded together to take LERPnet in a different direction with a platform of enhanced features and functionality. LERPnet2.0 is the new technology designed to take the initiative to the next level, providing comprehensive reporting, advanced analytics, link analysis, geomapping, alerts, notifications, and much more.

Through the creation, development, and management of data-sharing initiatives, it has become clear that certain factors are necessary to ensure success. Summarized as the four D's of data sharing, the four most important elements are direction, definition, data, and diagnostics. (See the sidebar at the end of this article.)

LERPnet2.0 incorporates the four D's and provides new structure for the next generation in data sharing. While LERPnet2.0 has broadened and enhanced the data-share initiative for retail theft and loss, the lessons learned can be applied across multiple verticals. As a next step, we need to identify relationships between diverse organizations and share the data.

With collaboration, commitment, and dedicated resources, the future of data-share initiatives will witness countless opportunities to expand and disseminate information across numerous industries and geographic regions. And although the bad guys will continue to try to find new ways to steal from us, technological advances will bring additional capabilities and changes in process to adapt to the needs of the insurance, finance, healthcare, and retail industries to keep a step ahead of the criminal element.

The Four D's of Data Sharing

Direction
For a data-sharing initiative to be effective, it requires the direction of an active advisory board consisting primarily of individuals who represent a proper cross-section of the industry — in this case retailers. The role of the advisory board is to offer input on overall functionality of the system and the developments and enhancements needed in the technology. The retailers also determine the role of law enforcement and the level of system access by law enforcement. Most important, the board must provide direction in the definitions required for data consistency.

Definition
To ensure success, terms must be properly defined and consistently presented within the database. What is organized retail crime? What is a robbery? What is an armed robbery versus an attempted robbery? The key is not to define terms for the industry and require compliance to those terms in each member retailer's business. Instead, define the terms as they will be represented within the application. The technology must be able to adjust retailer data to ensure that information submitted to the system is distributed appropriately for subscribers to search and view.

Data
First, there must be sufficient information to build an effective data-sharing system. The participation of as many retailers as possible is of utmost importance. Without the data, there is no sharing. Data must match the correct definition and find its proper place in the database. And the types of data must be broadened to ensure the initiative is not solely dedicated to organized retail crime but also includes robbery, burglary, arson, vandalism, pharmacy theft, and other critical factors that create losses and jeopardize the safety of retail employees and customers.

Diagnostics
The term "diagnostics" as used here represents so many other terms: analytics, reporting, link analysis, and so forth. However, all these functions tie into the diagnostic engine necessary to drive a successful data-share system. It is not enough to have a repository of data for historical results or collective totals. The purpose of the initiative is to identify patterns and trends and notify retailers of suspicious activity to help them protect their brand and respond to events affecting their business and property.

Kevin McMenimen is president of Enabl-u Technologies, a division of ISO Crime Analytics.