Screening for Scammers

VERC Enterprises, a New England convenience store operator, has entered a new era of loss prevention.

Managers at the chain’s 21 locations used to spend three hours a week randomly reviewing surveillance videos, hoping that if a theft had occurred they might, by chance, stumble upon it. Now, they devote just an hour (or less) per week to watching video automatically screened to show only potentially suspicious events at the point of sale.

The change came with the installation of Image Vault, a digital video recording system supplied by New Albany, Ind.-based FireKing Security Group. And, by reducing annual shrink rates by half a percentage point, the new system paid for itself in two years, says Barry Ahern, VERC’s director of operations and human resources.

Operating a traditional four-camera VCR system costs about $4,300 over five years, compared with $4,000 for the PRO Command digital video recorder (DVR) system, according to FireKing. “Our typical payout varies, but a six-month payoff on the entire complete new installation is pretty standard with our product if they previously had an antiquated system,” says Brandon Ring, the vendor’s national sales manager.

Exception alerts drive the efficiency of the Image Vault DVRs, he says, and could help any retailer smooth the surveillance process and cut losses due to theft.

Even before it installed the Image Vault system, VERC store managers viewing surveillance tape saw POS data alongside the images of cashiers punching the information into their machines. By sheer luck, a manager might happen to view footage from the exact moment an employee took the money for a carton of cigarettes, rang up the price of a single pack of smokes and pocketed the difference.

Confirming employee theft required seemingly endless rounds of rewinding and replaying the tape. Now, instead of poring over tape in a search for misdeeds, store managers can use exception alerts to watch only the relevant portions of the video.

Besides making the alerts available to store managers watching a monitor in the backroom, district managers and headquarters personnel can view the alerts from remote locations. From his office at VERC’s headquarters in Duxbury, Mass., Ahern can choose a store, an alert category (such as a cashier ringing up a no sale), date and time: The system serves up a list of every “no sale” exception from that time period for viewing on his laptop. Ahern can then click on each exception to watch video of that transaction.

FireKing advises retailers on the exceptions they should include in their surveillance, but the system provides the flexibility for retailers to add their own. VERC, for instance, required an additional exception for cashiers using the “transaction suspend” button to steal cash (pressing the “transaction suspend” and “no sale” buttons opens the cash drawer; they then pocketed the customer’s money without taking the merchandise out of inventory).

Other exceptions VERC uses to keep watch on cashiers include error corrects, voids, refunds, paid-outs, vendor check-ins and credit card sales over $100. The chain also uses exception alerts to track sales of Red Bull (due to high shrink rates) and Budweiser 30-packs, which are extremely popular and cost just under $20, making them lucrative and convenient candidates for the transaction suspend/no sale scam.

Follow the checklist
When viewing the footage, managers follow a checklist to watch out for problems that include overly long lines of customers and employees who are out of uniform, spend too much time on the phone, fail to keep busy during slow periods, neglect safety procedures or forget to check IDs for cigarettes or beer.

The vigilance pays off in three ways, Ahern says. The company apprehends and terminates “not-so-honest” employees; workers hear about those firings, realize they’re being watched and become more reluctant to steal; and managers spend less time perusing tapes and more time on the sales floor.

Besides the POS, VERC aims surveillance cameras at the entrance, the back door and various points around the store to record shoplifting. The chain estimates that 70 to 80 percent of its shrink originates with customers, which Ahern says is in line with the c-store segment average. VERC uses four or five cameras in its 1,200-sq.-ft. stores and up to 10 in its 4,000-sq.-ft. locations.

FireKing writes all of the software for its systems and has cameras built to its specifications, Ring says. Image Vault uses industrial-grade motherboards, hard drives, processors and other components and guarantees replacement hardware will remain available for three to five years.

FireKing employs 35 service technicians in major markets throughout the United States and has service partners elsewhere. It works with dealers and integrators that resell, install and service the company’s equipment.

Manager training
In the case of VERC, FireKing worked with a local technician that often helps the c-store chain install store systems, but made sure VERC employees were ready to use the system to full advantage.

“They came in and they trained all of our managers at the same time in our corporate office — the support center, as we call it,” Ahern says.

VERC downloads and retains incriminating surveillance images and keeps the rest of the tapes for 30 days. Some retailers choose to store data longer, and Image Vault recently introduced a feature that allows stores to archive images for up to three years.

“You can’t fit that much hard drive capacity into a standard DVR drive chassis,” Ring says, “so what we created was a feature in our software that allows for automatic [monthly] back-ups to an external hard drive.”