Recession Woes: What People Steal

With the economy tanking, security pros see a spike in old-time thievery. And what do people steal in recessionary times? Cash, clothes, cigarettes, copper - pretty much everything. (Part three in a series: How to Manage Security in a Recession)

About this series: Smaller staff. Deflated security budgets. In-store thievery. When economic times are tough, these are the things security pros must contend with. In this ongoing series, CSOonline looks at ways to ensure the best security possible during a recession.

With online thievery all the rage these days, it's easy to forget security pros are still dealing with people who steal the old-fashioned way.

As the economy sinks under the weight of high gas prices and a busted mortgage market, security pros are seeing a spike in old-school thievery, be it employees pocketing cash from the register, customers stuffing gold watches into their coats or thieves making off with copper and other metals from industrial sites.

The trend is hardly surprising in tough economic times. But experts say it illustrates the need for companies to approach online and physical security as one big challenge instead of separate entities, and minimize losses by ensuring that staffing levels are adequate.

"It's typical for short-sighted retailers to cut staff when sales fall, but this creates opportunity for shoplifters and motivates disgruntled employees to steal," says Chris E. McGoey, a security consultant who maintains the Crime Doctor website and specializes in loss prevention strategies.

When Target is targeted

During economic downturns, opportunistic theft increases along with organized retail crime, says Brad Brekke, vice president of assets protection for the Minneapolis-based Target retail chain.

"We may see an increase in everyday necessity items being stolen, as well as popular items that are easily converted into cash," he says, declining to list the specific items.

Brekke's predecessor, King Rogers, currently head of loss prevention consultancy King Rogers International, says organized retail theft (the mob-like version, as distinct from the problem of lone shoplifters) is a constant problem whatever the economy's condition. But his experience is that the state of the economy does have an influence on how bad it is.

"Because of the 'risk vs. reward' nature of organized retail theft - less risk for stealing merchandise from a retailer than robberies or burglaries and a potential for greater monetary gain at the end of the day - it is easy for someone to gravitate toward stealing when they are down on their luck," he says. On the other hand, King adds, some consumers are less likely to buy more counterfeit or illegally diverted product during a recession because they have less cash to spend on non-essential items. Counterfeit goods tend to be more non-essential items, he says.

McGoey says shoplifting will increase when customers on the brink of dishonestly are pushed over the edge by the pressure of recession. "Sometimes the high cost of living is used as justification for generally honest people to want something for nothing," he says, adding that food, cigarettes and liquor are the big target among grocery store thieves in poor neighborhoods.

There have been several recessions in the 38 years since McGoey got into the loss prevention business, and his experience is that retailers suffer most at the hands of employees who are struggling to make ends meet. In desperation, they will steal cash and put it toward rent, the mortgage, gasoline or the drugs and alcohol they consume to cope with the hard times.

Despite McGoey's assessment, Brekke says thievery from external sources far outweighs the number of internal incidents because of the company's emphasis on employee screening, training and other controls.

To prevent shoplifting, Brekke says his team uses a mix of training and technology to go after such things as ticket switching, credit card fraud and check fraud. Often, simple customer service can go a long way in minimizing thefts.

"The simple step of approaching a customer and asking if they need help finding anything tends to inhibit criminal behavior among those who prefer to remain unseen and unheard," he says. "We also train all store team members to report anything suspicious" to the assets protection department.

Metal madness copper is a particularly tempting target because of its high value. The appetite among thieves has only gotten worse as the economy tanks, if the situation at New Jersey-based PSE&G (Public Service Electric & Gas) is any indication.

Beyond the retail environment, recession-related theft is also on the climb in and around industrial and infrastructure sites. In the best of times,

Jeffrey Herbert, PSE&G's enterprise security command center coordinator, acknowledges that copper thieves have become more brazen in recent months. They're willing to climb fences and utility poles, tearing and cutting the copper clean off of them, then selling it on the black market.

"Copper theft is one of the biggest challenges we have right now," Herbert says. "It's a problem for the whole utility industry."

In one recent case, thieves cut the copper right off a row of utility poles in southern New Jersey using what appeared to be a machete. Since copper currently sells for about $4 a pound, he expects the thievery to continue. (See also this slideshow of metal-theft and burn-site images from DTE's CSO Michael Lynch.)

To minimize that problem and others, including the risk of terrorism, PSE&G has deployed TAC's Andover Continuum system, which provides native HVAC control, access card control and digital video surveillance.

The incidents at PSE&G are similar to those suffered by Michigan utility DTE Energy. In May, DTE CSO Michael Lynch said the rate of copper theft has accelerated in the past year.

Fighting back

Whether the problem is metal theft or retail shoplifting, security experts offer the same advice: Companies should have a layered security program that mixes employee awareness and training with technology, in this case the cameras.

Above all, companies should resist the temptation to cut security staff when profits slip.

"Many businesses decide to cut back on security when times get tough, and realistically this should be a time where adequate or even increased security makes more sense," says Roger H. Schmedlen, a Michigan-based consultant specializing in physical security and loss prevention.

Copyright © 2008 IDG Communications, Inc.

7 hot cybersecurity trends (and 2 going cold)