Why Counterfeit Pens Can't Detect Fake Money

Passing Counterfeit Money Through Retailers is a Multimillion Dollar Industry.  

Every year, millions of "fake" notes are passed over retail counters and the majority are not identified as counterfeit until they're examined by the bank.  Most often, retail associates don't know how to identify legitimate money or they rely on the simplest of all anti-counterfeiting tools; the counterfeit pen.  Unfortunately, relying on the pen alone is not going to catch anyone other than an amateur who is printing money on a laser printer. 

What Is A Counterfeit Pen?

A counterfeit pen is simply an inexpensive device that is designed to determine if a bill is genuine or counterfeit.  The  pen contains a tincture of iodine as ink which, when drawn over a legitimate bill, will remain amber or brown.  According to one manufacturer the ink will turn black if the bill is counterfeit.

How Does A Counterfeit Pen Work?

The iodine in the pen reacts with starch, which, is the primary component that makes white paper look brighter. Most commercial paper, made from wood pulp,  is brown unless bleached and starched.  If there is no starch present in the paper then the pen will indicate - by remaining amber - that the bill is legitimate.

The fallacy around this theory is that sophisticated counterfeiters will not use paper that contains starch.  Instead they will obtain or replicate paper that is made from cotton fibers like those used in U.S. currency.

How Do Counterfeiters Defeat the Pen?

One method for obtaining "legitimate" paper that will fool any counterfeit pen is to wash a small denomination bill in bleach and use the resulting paper to print a larger denomination bill.  When a counterfeit pen is swiped over one of these bills it will appear as legitimate.

Another method is to obtain actual currency paper.  While this is not usually an available option for the average counterfeiter, governments unfriendly to the United States and sophisticated large scale operations do have access to starch free cotton fiber paper.

Are There Better Alternatives?

Absolutely.  Knowing the design and security elements for large denomination bills is an effective way of identifying counterfeit money.  Better still, investing in some affordable technological solutions will not only eliminate the majority of counterfeit bills crossing your counter, it will also reduce employee error.

The best anti counterfeit device you can by for the money is an Ultra Violet counterfeit detection scanner.  Best used in highly lit point of sale locations, the UV detector identifies the ultraviolet security features present in most currencies.  Very little training is required.  By simply placing the bill in the detector, counterfeit currency is immediately identified, without the need for an employee to closely examine the bill.

UV detectors are also available in small handled pens as well as screen mounted units where space is limited.

Don't Rely On Cheap Solutions For An Expensive Problem

Relying solely on a counterfeit pen to protect your hard earned profits is like putting a band aid on a deep cut.  It may heal on the surface but it won't take care of the underlying problem.  Put a counterfeit procedure in place, train your people to identify currency security features and augment your process with accurate and affordable technology.

 

UVeritech, established in 2000, is a leader in multi-layer fraud prevention including counterfeit money detection and IDentity Authentication  solutions. UVeritech pioneered the concept of installing counterfeit fraud detection scanners at the point-of-sale. Our list of national customers includes Wells Fargo, JP-Morgan, Sears, Kohls, CVS, Macy's, SubWay, Yum! Brands, and over 1000 credit unions. For more information, call: 800.883.8822.

Intelligently Handle Your Cash Operations

Manually counting cash is one of the best ways to lose money in your retail business.

Cash handling is one of the most problematic and worrisome aspects of retail operations.  There are three areas where cash handling losses occur most often: Ringing up a sale, counting down a cash drawer and taking the deposit to the bank.  If you have been in the retail business for any length of time chances are you have experienced a discrepancy or loss from any one or all three.  While written policies and procedures for handling cash will help minimize losses, their effectiveness is limited to the ability and honesty of the employees charged with counting and depositing the stores income.  Adding intelligent cash handling technology to your process greatly reduces or eliminates mistake and opportunity.

It has been said that a dishonest person will usually act dishonestly, unless it proves too difficult. But an honest person will generally remain honest unless given an opportunity to act dishonestly (without getting caught).  This is called "situational honesty" and is a major problem for retailers.  Three self describing factors can lead an honest person to act dishonestly: Opportunity, Pressure and Rationalization.  While a business owner can do little about an employee's pressure to steal or the employee's own rationalization, he can implement intelligent cash handling technology to reduce or eliminate the opportunity.

Intelligent Cash Handling  - Video

The simplest way to reduce opportunity is install a highly visible video camera for each register in your store.  Employees should be made aware that all cash transactions are monitored and reviewed for security purposes.  This simple technological improvement in cash handling helps to reduce opportunity by reducing the possibility that an employee will rationalize that they can “get away with it.” But video cameras do little to protect you from counting errors or cash handling away from the camera (for example when the deposit is taken to the bank.  To protect yourself better, investing in an intelligent cash counter and or intelligent safes are your best investment.

Intelligent Cash Handling – Automated Cash Counting

Investing in a cash counting system that eliminates manual counting will virtually eliminate counting errors and create a written record of the amount and time the cash was counted.  The CountEasy money counter is automatically programmed for U.S. currency and is capable of accurately counting down a drawer in under a minute.  Coins as well as bills are "loaded" on to the machine and an accurate count is transferred to an electronic display as well as creating a register count receipt.

Integrating a CountEasy system is simple and considering the money saved in employee wages (manually counting can take up to an hour), money saved from reduced loss and counting errors, these systems pay for themselves quickly and haven proven to increase profits (by reducing loss).

Intelligent Cash Handling - Intelligent Cash Safes

Intelligent cash safes lift the responsibility of safe keeping cash from the employees to your financial institution or service provider by accounting for and crediting your account with the daily deposit onsite without the need for a trip to the nightly deposit box.

They work by electronically linking to your bank and crediting your account when the money is deposited into your safe.  A separate company handles the transfer from the safe to the bank eliminating employee access.  Investing in an intelligent safe virtually assures losses from bank deposit theft or mistake is eliminated.

Be smart, Be Proactive.

Instituting safe cash handling procedures coupled with intelligent cash handling technology keeps dishonest people from acting dishonestly and keeps honest people honest by limiting their opportunity to rationalize theft.

UVeritech, established in 2000, is a leader in multi-layer fraud prevention including counterfeit money detection and IDentity Authentication  solutions. UVeritech pioneered the concept of installing counterfeit fraud detection scanners at the point-of-sale. Our list of national customers includes Wells Fargo, JP-Morgan, Sears, Kohls, CVS, Macy's, SubWay, Yum! Brands, and over 1000 credit unions. For more information, call: 800.883.8822.

Ready For The New 100 Dollar Bill?

No Update From the Treasury Since June 2011

The U.S. Treasury has yet to announce a release date for the new $100 bill.  Last June they reported that the bill was indefinitely delayed due to production problems and they have not since provided an estimated release date.  The problem is due to some of the notes creasing during the printing process. 

About 1.1 billion of the new notes were printed prior to discovering the problem and not all of them were damaged.  Several solutions have been implemented, including hand sorting the clean notes from the damaged ones. However,  the U.S. Treasury must be certain that the problem is not repeated, and that the solution is "sustainable and repeatable" before releasing the new $100 bill into circulation.

Security Features of the New $100 Bill

The redesign of the new $100 bill incorporates a number of security features including 2 new advanced security features to stymie sophisticated counterfeiting efforts.

Advanced Security Features

1. New Woven 3D Security Ribbon - located to the right of Benjamin Franklin on the front of the note, this blue ribbon is literally woven, not printed, into the paper.  The ribbon depicts several liberty bells that, when the note is shifted side to side, turn into the number 100.  If the note is tilted up and down the bells/100s shift side to side and if tilted side to side the icons shift up and down.
2. Disappearing Bell in an Inkwell - To the right of the Security Ribbon is a copper colored inkwell.  If the bill is tilted side to side a green liberty bell appears in the inkwell.  The bell shifts from green to copper making it appear as if the liberty bell disappears.

Additional Security Features

1. Watermark - located in the blank space next to the portrait is a watermark image of Franklin that is visible from both sides.
2. Security Thread - Present in the old bill  this security thread, depicting the letters USA and the numerals 100, glows pink under ultra violet light.
3. Color-Shifting 100 - Found in the lower right corner of the face of the new $100 bill the numerals 100 change from copper to green as the note is tilted back and forth.
4. Advanced Intaglio (Raised) Printing - Rubbing your finger on the shoulder of Benjamin Franklin reveals a distinctive rough feeling that is more pronounced than the raised printing in the rest of the note.
5. Large 100 - Designed more for the visually impaired rather than a security feature the large type 100 on the back is easily visible.
6. Micro-printing -  Small printed words appears in 4 places: on Benjamin Franklin’s jacket collar, where the portrait watermark appears and along the golden quill and note borders.
7. Portrait and Vignette - A Benjamin is still a Benjamin and his portrait will grace the new $100 bill.  The back has been redesigned with a vignette of Independence Hall.
8. Blue Background - The New $100 bill is blue in color.  Color is easily replicated so it should not be used to determine a genuine note.
9. Fort Worth Mint indicator  - The new $100 bill is printed in Fort Worth and Washington D.C.  Only those notes printed in Fort wroth will have the letters F.W. printed next to the numeral 100 in the upper left  front side of the bill.
10. Federal Reserve Indicator and Serial Numbers - These features are familiar from previous notes.

Whenever The Treasury announces the date, they will provide at least six months lead time between the announcement and the day of issue.  This long lead time is to give business that handle cash sufficient time to become familiar with the new security features and to have technology and procedures in place to identify counterfeiting attempts. 

UVeritech, established in 2000, is a leader in multi-layer fraud prevention including counterfeit money detection and IDentity Authentication  solutions. UVeritech pioneered the concept of installing counterfeit fraud detection scanners at the point-of-sale. Our list of national customers includes Wells Fargo, JP-Morgan, Sears, Kohls, CVS, Macy's, SubWay, Yum! Brands, and over 1000 credit unions. For more information, call: 800.883.8822.

How does UV Counterfeit Money Detection Work?

The battle to prevent counterfeiting has been ongoing since the invention of currency. Roman coins were frequently made of less valuable metals, or “clipped”, meaning a small portion of the gold or silver was clipped off the coin and retained by the counterfeiter.  In 1860, Abraham Lincoln created the Secret Service as a separate operating unit under the Department of Treasury in an effort to stem a counterfeit crisis in the U.S., during which as many as 1/3 of all bills in circulation were counterfeit.

Rapid developments in technology over the last century have reshaped counterfeit security features in an attempt to make counterfeit identification easier while making production harder on counterfeiters. One method for combating counterfeits is the integration of UV fluorescent materials into the paper bills themselves. UV counterfeit currency detectors are used to detect special inks in the bills that only appear under the proper wavelength of UV light.

Successfully implementing UV security features into a national currency  is a two-fold process. The first step entails printing currency with ultraviolet inks. UV inks  specified by the U.S. Bureau of Printing and Engraving must utilize UV-fluorescent phosphors which can produce a reaction when placed under ultraviolet light, while at the same time remaining hidden (or, “covert”) when viewed under normal lighting conditions. When exposed to UV light, the UV ink changes its appearance and becomes visible to the human eye. This means that in normal lighting, the UV ink-printed security designs are not visible.  The appearance changes drastically when placed directly under a UV light, producing a fluorescent appearance that is easily visible to the human eye.

The ability to integrate UV ink into physical materials as a security feature has been widely adopted due to its ease of implementation. In addition to paper currency, UV ink is also used to secure passports, credit cards, traveler's checks, Social Security cards, and casino chips, among many other important documents. Such UV security features are valued because the materials used are highly volatile and can get corrupted quickly when inexperienced  counterfeiters use commercially available digital printers and inks to create fakes. However, more advanced, professional high-volume printers utilizing more expensive printing equipment are able to handle the intricate technological challenges inherent in printing with the volatile UV compounds.

But in order for UV ink to be an effective security feature, counterfeit currency detectors emitting UV light at the correct wavelength need to be widely available at banks and other places of commerce. Currently, a counterfeiter does not need to use UV ink to print their fake currency if they are trying to pass off the bills at a place where UV testing is not performed. 

Using a UV counterfeit currency detector has numerous advantages to a business. These devices are among the least expensive security solutions to aid in combatting counterfeit fraud. The devices are easy to use: since they are human-readable, employees need only to place a bill underneath the UV light and identify the glowing security feature to confirm that it is a valid U.S. bill.

But some businesses remain reluctant to adopt UV security screening because it relies on the transaction-level employee -- cashiers and tellers, namely -- to conduct the screening of currency. The thinking of some business managers is that, due to intentional oversights or poor training, it is possible for counterfeited bills to go undetected.  They believe that it is too difficult for the employee to accurately identify a counterfeit bill.

And while replicating the UV security features in currency is difficult, it isn't impossible, meaning that some bills that pass the security test could still be counterfeit.

Still, with a low cost and an easy training process, UV counterfeit money detection is a practical approach for most businesses, particularly small businesses that can't afford extensive security measures but are also more susceptible to counterfeiting and fraud. Through this simple security measure, you can greatly reduce the threat of fraud and protect your bottom line.

UVeritech, established in 2000, is a leader in multi-layer fraud prevention including counterfeit money detection and IDentity Authentication  solutions. UVeritech pioneered the concept of installing counterfeit fraud detection scanners at the point-of-sale. Our list of national customers includes Wells Fargo, JP-Morgan, Sears, Kohls, CVS, Macy's, SubWay, Yum! Brands, and over 1000 credit unions. For more information, call: 800.883.8822.

Counterfeit Money Detection - Are You Protected?

 

In 2009 the U.S. Treasury reported that over $400 Million in counterfeit currency was circulating in the U.S.

Counterfeit money detection is as important to your business as the product or service you are providing.  After all, considering the amount of effort, resources, time and attention that you've invested in your product or service, protecting yourself from counterfeit money should be a priority.  Whether you are considering buying counterfeit money detection equipment or investing time and energy into training your staff, counterfeit money detection procedures will only enhance your business's bottom line.

 

Is your business protected against counterfeit money?

Ask yourself these 3 questions.

1. Is my staff knowledgeable about the security features on printed money?
2. Does my business have a counterfeit money detection procedure?
3. Do I have any technical means for detecting counterfeit currency?

If you answered "no" to any of these questions you may be at risk of receiving counterfeit currency.  To reduce the risk of receiving counterfeits it's important to have a procedure in place for accepting money and training your staff to recognize the security features inherent in U.S. (and other) currency.  If your business routinely handles large sums of cash, specialized tools designed specifically for counterfeit money detection is recommended.

 

5 Security Features of U.S. Currency

The following security features are called overt features.  These are security features that are verifiable during a visual inspection of the bill.

1. Color-shifting Ink - Look at the denomination numeral in the lower-right hand corner of the face of the bill.  Tilt the angle of the bill back and forth and the ink should "shift" from grey to green.
2. Security Thread - Since 1990 U.S. currency in denominations of $5 and up have an embedded security thread running from the top to the bottom of the bill.  Different denominations have different locations of the strip.  Compare the location of the strip to genuine bills to prevent washed bills (washing is the process of printing large denomination bills over smaller, bleached out bills).
3. Watermark - The watermark is evident on all $5 to $100 bills since 1999.  IT is located next to the portrait and can be seen if held up to the light.
4. Micro Printing - Micro printing,(technically a "covert" security feature since it can not be seen with the naked eye) is the result of  extremely fine detailed carving. If practical, examining the bill with a magnifying glass will reveal several areas of micro printing on each bill.  Examples include the USA Twenty or USA 40 written on the bill in crisp, sharp lettering.
5. Intaglio Printing - This is the process of combining finely detailed carving with high pressure plates used during printing.  The high pressure plates, embed the ink into the paper causing it to "depress" the paper and giving it a distinctly "raised" feel. 

While, training your staff to look for these features, often, in a busy environment, employees often don't take the time to fully examine the currency.  Investing in some relatively inexpensive counterfeit money detection equipment could be the difference.

Counterfeit Money Detection Tools

1. Infra-Red Viewer - small and compact these are designed to detect the IR ink embedded in U.S. Currency.
2. Magnetic Ink Detector - Called MICR (Magnetic Ink Character Recognition) small handheld device designed to detect the magnetic ink character sets.  Some MICR Detector sell for less than $10.00.
3. UV Lights - Ultraviolet lights detect the "invisible" security features present in U.S. currency.  Small and relatively inexpensive.
4. Machine Readable Character Devices (MRC) - These sophisticated counterfeit money detection tools recognize certain patterns in the IR and UV ink printing.

Having a comprehensive process in place, providing adequate training for your people to recognize counterfeit currency and giving them the technology to do so is your best protection against loss.

UVeritech, established in 2000, is a leader in multi-layer fraud prevention including counterfeit money detection and IDentity Authentication  solutions. UVeritech pioneered the concept of installing counterfeit fraud detection scanners at the point-of-sale. Our list of national customers includes Wells Fargo, JP-Morgan, Sears, Kohls, CVS, Macy's, SubWay, Yum! Brands, and over 1000 credit unions. For more information, call: 800.883.8822.

Is a UV Money Detector Right for Me?

For as long as people have used paper currency, there have been attempts to counterfeit it.  In fact, the Secret Service was originally created to combat counterfeiting by Abraham Lincoln.  It's important to detect counterfeit currency before it's accepted as a payment for one simple reason.  Once the customer is gone, there's no calling them to inform them that they gave you a counterfeit bill and requesting they come back with real payment. 

Unless you've got the capability to quickly discern and reject potential fake currency as it's being presented by the customer, you're going to absorb the loss for it rather than simply asking for alternate payment.  There are lots of ways to detect counterfeit documents and money, but which one is the best?  Here we'll discuss the UV Money Detector: how it works, its advantages and disadvantages, and what it means to your bottom line.

What is a UV Money Detector?

The "UV" in UV Money Detector simply means ultraviolet; as in ultraviolet light. Ultraviolet light is a wavelength of light that is beyond the range of human eyesight, so it is invisible to our eyes.  Most sources of UV light add a visible component to the light so that users know that the light is on and where it is shining. UV light is capable of causing certain chemicals and other compounds to "fluoresce".  This is a very unique physical event where the invisible light is altered by the fluorescent compound and changed into visible light that can be seen by the human eye.

It's common practice to embed not only currency, but things like money orders and passports with security features that fluoresce under ultraviolet light.  Sometimes this security feature takes the form of a number (e.g. a serial number or the denomination of the banknote or traveler check), a picture that's normally invisible, or perhaps even a stripe or pattern that doesn't show up under normal spectrum light.  

By passing the document or currency in question under the UV Detector, these security features show up in a way that's not visible under normal viewing conditions.  It's difficult to fake this type of security feature, meaning that a potential counterfeit may look perfectly right to the naked eye, but would appear glaringly wrong when passed through the UV test.

What are the Advantages?

There are quite a few advantages to using a UV Money Detector as a preferred method of detecting counterfeit documents or currency.  UV detection is:

• Economical - In an abstract sense a UV Money Detector is just a very specific kind of light source.  That simple fact makes it one of the cheapest authenticity verification mechanisms on the market.
• Easy to Use - As long as employees are trained on what to look for, using a UV Detector is simple.  Turn it on and look for the relevant security feature(s).  Compared to other options there's nothing to install or set up.
• Pervasive - Perhaps one of the most prominent features that would make UV the best way to detect counterfeit money is that it's been around for nearly 40 years, and it's security features can be found in an incredible variety of mediums from currency to casino chips and even credit cards.

What are the Disadvantages?

Perhaps the only drawback to using UV Detection is that it requires a human being to make a decision as to the authenticity of the questioned document or currency.  It's not a machine that you can feed a dollar bill into and have it turn green if it's good and red if it's bad.  This method requires that users both know what they're looking for in a security feature as well as accurately identify potential fraudulent activity. 

This feature will required both specific training of the users, as well as attention to detail during its application in the field.  It doesn't do any good to have a device that will point out counterfeit currency if the employees using it still accept the fakes anyway.

What's the Bottom Line?

A UV Money Detector is perhaps the best way to detect counterfeit money and documents in a setting where it's applied by knowledgeable staff.  It's relatively cheap, widely used, and easy to apply.  It would make a great addition to the anti fraud efforts of most establishments.

UVeritech, established in 2000, is a leader in multi-layer fraud prevention including counterfeit money detection and IDentity Authentication  solutions. UVeritech pioneered the concept of installing counterfeit fraud detection scanners at the point-of-sale. Our list of national customers includes Wells Fargo, JP-Morgan, Sears, Kohls, CVS, Macy's, SubWay, Yum! Brands, and over 1000 credit unions. For more information, call: 800.883.8822.

The Best Way to Detect a Counterfeit Bill

The best way to detect a counterfeit bill often depends on the context, such as the type of establishment, the size of the bills it normally handles, and the number of customers waiting when the counterfeit is presented.

The fingers of cash handlers are the most widespread defense against counterfeit bills in the United States today. In the intaglio process used for United States currency, very heavy plates force inks deep into the paper fiber, giving genuine currency a texture most counterfeit bills don't have. 

That process can really be a hit-or-miss proposition, though, especially in busy establishments. Many bosses just tell their workers to quickly inspect larger bills. How well these “visible” scans work depends on the quality of the counterfeit bill presented. Easily-spotted counterfeits may still be accepted by busy employees in dim light, or when several customers are waiting for them. Counterfeit bills copied with image processing software from genuine currency do not have the texture or fine detail of a real bill. Bleached five-dollar bills printed with the image of a larger-denomination bill, on the other hand, feel genuine because their paper is genuine. These counterfeit bills can only be spotted by someone who knows what to look for. Other counterfeits rival genuine currency in quality and are very difficult for the average person to detect without special readers.

Looking for the following security features can catch many counterfeit bills:

• A watermark should appear when you hold a bill to the light. It will be the portrait printed on the bill, and will appear to its right. Watermarks are easily faked however, so this check eliminates only the crudest counterfeits. 
• The security thread, a fine plastic strip embedded in the paper, runs from the top of the bill to its bottom. Its left-right position depends on the bill. It too is seen when you hold the bill to a light, as well as printed characters along its length, saying either USA 50, USA 100, USA TWENTY, USA TEN or USA FIVE. Security threads glow when placed under an ultraviolet light -- orange for a ten, green for a twenty, yellow for a fifty and red or pink for a hundred dollar bill.
• US bills above $10 use an ink that changes color with the light, but the change can be difficult to verify in dim lighting such as you might find in bars or taxis. 
• Microprinting, very fine detail invisible to the naked eye, is beyond the capabilities of most counterfeiters. However, verifying this requires a magnifying glass, and most retailers don't want to make customers feel untrusted. 

How reasonable is it to expect your cashiers to conduct one or more of the above “visible” test to detect a counterfeit bill?

High-employee-turnover in retail stores and quick-service-restaurants means many businesses need a fast and easy solution that their cashiers can use to detect counterfeit bills. And – the cost of such a solution matters, especially to smaller businesses.

• Magnetic ink character readers are very inexpensive and easy to use, but generally only verify that magnetic ink is present. This won't detect washed counterfeit bills with magnetic ink that's wrong for the printed denomination. 
• Ultraviolet ink on the other hand is difficult to counterfeit and easily checked. Ultraviolet lights are also relatively inexpensive but still rely on a human to decide whether the bill is good.
• Infrared printing is most useful for vending machines and automated money counters. It's hard to fake but also hard for humans to verify.  

Machine readable character readers may provide a solution. The most effective readers verify a number of characteristics before declaring that a bill is genuine. Such readers are probably most appropriate for businesses that sell higher-end items like money orders or cell phones often paid for with large bills. Ultraviolet lights may be the most cost-effective solution for busy retailers who are usually paid in small bills for relatively small transactions.

UVeritech, established in 2000, is a leader in multi-layer fraud prevention including counterfeit money detection and IDentity Authentication  solutions. UVeritech pioneered the concept of installing counterfeit fraud detection scanners at the point-of-sale. Our list of national customers includes Wells Fargo, JP-Morgan, Sears, Kohls, CVS, Macy's, SubWay, Yum! Brands, and over 1000 credit unions. For more information, call: 800.883.8822.

Organized Retail Crime Prevention - Know Your Employees

At the heart of many acts of fraud lies the intentional misrepresentation of identity.  When ORC crime rings are attempting to infiltrate your company with “inside” employees, often the first, best step to take to prevent this from happening is to authenticate the ID document(s) presented by the individual.

Loss prevention begins with human resources.  Hiring criminals means bringing the organized crime ring into your own house. Preventing this from happening is a multi-stage process which must begin with authentication of identity documents.  Only after identification has been confirmed does it make sense to proceed with back-ground checks and reference-checking.

Fraud Fighter’s line of “ID Document Image Capture and Authentication” equipment is ideal for these purposes. These machines are capable of scanning driver licenses and other identifying documents, capturing high-resolution images of the ID, reading the stored information from the ID, and conducting high confidence authentication of the ID. With customization, the data read from the ID can be automatically pushed into employee records, and the images of the ID documents can be stored in encrypted files to prove adherence with Federal I-9 hiring requirements.

UVeritech, established in 2000, is a leader in multi-layer fraud prevention including counterfeit money detection and IDentity Authentication  solutions. UVeritech pioneered the concept of installing counterfeit fraud detection scanners at the point-of-sale. Our list of national customers includes Wells Fargo, JP-Morgan, Sears, Kohls, CVS, Macy's, SubWay, Yum! Brands, and over 1000 credit unions. For more information, call: 800.883.8822.

Organized Retail Theft Targetting Baby Formula

Every year, retailers lose between $15-30 billion from Organized Retail Crime (ORC).  It may sound like a problem found only in the movies, but if you’re a retailer of any sort, chances are good that you’ve been a target of this sophisticated retail theft.  In fact, the National Retail Federation reported that over 90% of retailers were targeted in 2011 alone. 

ORC is typically executed by professional theft rings having connections in multiple cities and states. Large quantities of consumer goods are stolen by various means and then sold to the public via Internet Auction Websites, pawn shops, or store-front operations.  Stolen products are also returned to the store for fraudulent refunds. 

Historically, the most commonly stolen items from grocery stores were expensive foods, like fancy meats and cheeses.  Since these foods are highly perishable, the focus of ORC thieves has shifted to something even more appalling…baby formula.

Why Baby Formula?

Approximately four million babies are born in the United States each year with an appetite specifically for powdered infant formula, which costs anywhere between $15 and $32 per can.  Considering that a baby can go through several cans a month, it’s no wonder that baby formula is a popular target of petty criminals, desperate parents, and ORC gangs.

Effects of Organized Retail Crime

Retail theft of baby formula causes problems for both retailers and consumers.  Retailers suffer staggering losses each year from stolen formula.  To stay afloat, stores typically raise prices to recover lost earnings, which passes the financial burden to the customers.

Additionally, ORC gangs often store formula in hot, filthy warehouses in conditions far exceeding safety standards.  This can alter the taste, appearance, and nutritional quality of the baby formula.  It’s also common for these criminals to change the expiration dates and other label information to cover their tracks.

If a retailer unknowingly sells baby formula funneled through an ORC warehouse, their customers may hold the retailer responsible for any adverse reactions in babies.   Lawsuits, boycotts, and damage to the company’s reputation can cause irreversible damage to the company’s good name and their bottom line.

Solutions

Many stores have resorted to locking away formula in cabinets or keeping it behind sales counters in an effort to prevent theft.  Others may simply decide against selling baby formula at all.

Here are some easy, inexpensive and far more convenient ways to combat retail theft and protect your company’s reputation:

• Visible markings are a simple, yet powerful way to reduce retail theft.  Each inventory item is labeled with a prominent marker that cannot be removed without noticeable damage to the item’s packaging.  Criminals will be unlikely to resell or return stolen goods, since most retailers and consumers are wary of items with obvious tampering.

• Invisible markings provide a stealth means to track and recover stolen products.   Most inventory seized by the police is found in mass quantities, so an invisible marker helps identify the rightful owners.  These markings can also be used to track the distribution of stolen property and can help lead to ORC members.

• Return receipt trackers are probably the most effective way to eliminate retail theft.  By implementing a few inexpensive devices; such as ultra-violet lights to detect fake IDs, fingerprint tests, specialty register inks, and driver license authentication, criminals are immediately caught in the act of theft.  The perpetrator's information will be collected and stored for use prosecution.

Employee verification using state-of-the-art technology to authenticate employee identification will stop employee collusion with ORC gangs, because retailers can avoid hiring individuals with a predisposition to commit retail theft.

UVeritech, established in 2000, is a leader in multi-layer fraud prevention including counterfeit money detection and IDentity Authentication  solutions. UVeritech pioneered the concept of installing counterfeit fraud detection scanners at the point-of-sale. Our list of national customers includes Wells Fargo, JP-Morgan, Sears, Kohls, CVS, Macy's, SubWay, Yum! Brands, and over 1000 credit unions. For more information, call: 800.883.8822.

Organized Retail Theft - a $30 Billion-per-year Problem

Most loss prevention and asset management personnel make the mistake of thinking that shrinkage only comes from outside shoplifters. However, organized retail theft is growing, resulting in estimated losses of anywhere from $15 billion to $30 billion per year for supermarkets, chain drug stores, independent pharmacies, mass merchandisers, convenience stores, and other retailers. In fact, around 90 percent of retailers have been victims of these theft rings! This isn't the work of average, petty shoplifters; on the contrary, this is the work of professional theft rings that travel across state lines to pilfer large amounts of merchandise and resell it. Even worse, these theft rings utilize employees on the inside to help steal goods right out from your nose.

To prevent organized retail theft, there are a few things you can do that all require arming yourself with knowledge - about your employees, your customers, and theft rings themselves.

1. Know your employees. Is Bobby in the stockroom a hardworking college student, or is he part of a larger organized retail theft ring? The best way to know who this prospective employee really is involves having his documents authenticated.
2. Know your customers. As much as you like them, some of your customers could be contributing to your inventory's shrinkage rate - and not just by slipping high-value inventory into their coats. Bad checks and fraudulent credit cards could be one of their tactics. Once again, you'll need to authenticate their documents with a UV counterfeit detector or image capturing product.
3. Know what gets stolen. In general, organized retail theft rings target designer clothing, handbags, lingerie, and accessories. In drugstores, mass market retailers, and grocery stores, they're looking for infant formula, over-the-counter drugs, razor blades, and high-end health and beauty aids, like scar removal cream. At electronics retailers, whatever the latest cool, exciting device is what theft rings want to resell.
4. Know what they do with the merchandise. In addition to selling stolen goods on eBay or Craigslist, theft rings will often try to return merchandise to other stores using fraudulent receipts - or no receipts at all. Here, you can test for fake receipts or fake driver's licenses, since it's unlikely that a fraudulent return will be accompanied by a real driver's license.  You can also use special ink to print your receipts that even low-level employees can detect by swiping a "decoder" pen across the receipt. If the printed message doesn't show up, the employee can't do the return.
5. Know how to tag your inventory. One truly excellent way of cutting off thieves at the pass is to tag your inventory for easy recovery. These asset tagging marks are invisible and assist law enforcement personnel in finding out where the items were stolen from - like your store.

You can keep your store safe from shrinkage by arming yourself with knowledge about these organized retail theft rings and their methods, then taking action against them. In turn, you'll see higher profitability, happier customers (because you won't have to raise your prices to counteract the cost of shrinkage), and even happier staff, because they won't worry about Bobby in the stockroom screwing up the store for the rest of them.

UVeritech, established in 2000, is a leader in multi-layer fraud prevention including counterfeit money detection and IDentity Authentication  solutions. UVeritech pioneered the concept of installing counterfeit fraud detection scanners at the point-of-sale. Our list of national customers includes Wells Fargo, JP-Morgan, Sears, Kohls, CVS, Macy's, SubWay, Yum! Brands, and over 1000 credit unions. For more information, call: 800.883.8822.