Bar-Code Scam at Wal-Mart: A Matter of Priorities

Opinion: The fact that shoplifters nabbed $1.5 million across 19 states is not a technology, people or training problem. Rather, it shows that management needs to re-evaluate its obsession with keeping the line moving.

The most well-planned and meticulously detailed crimes are often foiled by the commonplace. The thieves might map out their route precisely, coordinating it based on when various employees come and go. But security guard No. 9 gets a flat tire that morning, shows up 35 minutes late and ruins everything.

In the recent bar-code scam against Wal-Mart and others, the thieves went through considerable trouble in scanning in low-priced bar codes, printing out duplicates and then surreptitiously placing them over the correct bar codes on higher-priced items.

"I really wasnt surprised," says Chris Dorsey, CIO at the Chase-Pitkin chain of home and garden supplies. "There have been people who have duplicated receipts. [Its possible] with the right printers, the right copiers in place.

"And theres an old game called sticker-swapping, where [the thief] goes into a store and looks for packages where they can easily peel off the old sticker and put it on a different product. This is just the next evolution of sticker swapping."

To foil the plot, all that had to happen was for one cashier at any of the hundreds of victim stores—in any one of the 19 states targeted—to have looked up and seen that the item on the screen was clearly not the item in front of them.

Suffice it to say, it never happened. Not once. It was like a retail version of "A Streetcar Named Desire." This version, "A Shopping Cart Named Desire," features shoplifter Blanche DuBois declaring, "Ive always relied on the apathy of strangers."

Apathy is just about right. Some might jump to the reaction that its something much harsher, such as incompetence or stupidity. But it wasnt. The cashiers here were—for the most part—following their instructions, which is typically to move the line along as quickly as possible.

/zimages/3/28571.gifWal-Mart gave many of its suppliers an end-of-the-year gift for RFID compliance. To read more, click here.

If a cashier opts to be careful and check items visually against what the screen reports (assuming they are even looking at the screen for every item, which is a really unlikely assumption), theyll get dinged for slowing down the line.

And what happens when a bandit does slip something by them? For most retailers, if the cashier was not a knowing accomplice and did not profit from the theft (in other words, if the cashier was duped and had no criminal intent), the cashier is not disciplined. Therefore, what incentives are put in place? A huge incentive to keep the line moving, and almost none to slow it down and be more careful.

Regrettably, that approach might pragmatically be the best one. How much revenue will be lost by slowing down those lines, versus the likely losses from fraud?

Next Page: Flipping the return-on-investment equation.