Sniffing out the serial trail

     According to the Beloit College Mindset list for the '06 class entering college, it's been at least 20 years since cash registers in major stores actually "rang" up a sale. Today, instead of a drawer bell ringing, registers across the United States have upgraded to a less audible and more covert point-of-sale climax: since the turn of the century, a company has been helping businesses track certain products through a serial-number scanning trail to combat fraud involving retail products.

     Now that company is offering law enforcement free access to the nine-plus years of accumulated product lifecycle information through a new database service called SIRAS P.I.

Tracking product

     Originally developed for Nintendo in the '90s to track gaming system sales and prevent fraudulent returns, the SIRAS database has evolved into a helpful tool for various entities throughout the vertical product lifecycle. Peter Junger, president of SIRAS, a wholly owned subsidiary of Nintendo of America Inc., says the database has been collecting transaction information on products — mostly electronics, but also appliances, sporting goods and various others — since at least 1999. But the database also contains some transactions from well before then, when Nintendo was originally tracking products for its own records. In the SIRAS database, hundreds of millions of merchandise item histories mingle from companies like Sony Computer Entertainment America Inc., Philip, Panasonic, and retail chains like Toys "R" Us, Circuit City and Best Buy, to name a few. The system tracks items through the sales lifecycle, keeping a comprehensive history on the item to help law enforcement officials identify stolen merchandise, report suspicious items and catch thieves.

     "Right now … all of the major retailers make use of it to some extent," Junger explains. "For instance, you have some retailers who pretty much register all of their items ... like Wal-Mart and Target. And some other retailers only perhaps … make use of it for their video game category or only those items which are prone to high theft."

     Det. Richard Milburn is all too familiar with the challenges in recouping lifted items. Milburn has been with the Mesa (Arizona) Police Department for 20 years, and has spent the last 10 as a detective in the recovered property pawn unit where he often comes across stolen merchandise, which he says is most frequently high-priced electronics.

     "Property crime investigators [are] so frustrated because the demand to solve these crimes is so high, and their solving rate ... is very low," says Milburn, who is also the seven-year president of the Arizona Pawn/Property Recovery Law Enforcement Personnel Association Inc. (APPRLEPAI), an investigative pawn property crime group.

Expanding the swimming pool

     The service that SIRAS offers, SIRAS Product Information (P.I.), is available free to law enforcement. Through the database, law enforcement can determine the status of an item and deduct meaningful information from general transaction data.

     For example, Junger, who has been with Nintendo for 14 years, explains that officers working with pawn shops can locate original point-of-sale data on items with unique serial numbers. Should an officer find three brand-new television sets in a shop and run the serial numbers in the database, either via phone or the Internet, and find the TVs were sold at the same store at the same time only hours before having been logged at the resale shop, detectives can deduce there may be something fishy taking place: Why would someone purchase three brand-new TVs and immediately take them to a resale shop? Milburn says reselling, like in the aforementioned scenario, can be linked to a criminal act, such as use of stolen credit cards to purchase merchandise, or could foreshadow a fraudulent stolen credit card report, where the purchaser is actually the card holder, but liquidates the property and reports it stolen to credit card companies.

     However, SIRAS P.I. assists law enforcement in other ways, too. Milburn says in many recovered property cases, the information missing is where the property should be. Using an item's serial number, SIRAS P.I. can show an officer the last transaction logged for the product. For example, if a DVD player is scanned in at Wal-Mart, but does not have a point-of-sale transaction, investigators may wonder how it got out of the store. Officers could then follow-up at the Wal-Mart location with more questions.

     "SIRAS gives us another avenue of tracking products," Milburn says. "One of the biggest challenges we have is most victims don't know all of what they're missing. [SIRAS] adds an avenue to track whether this item has been sold or ... whereabouts it should be. You can tell by looking at it that the item is probably stolen, because it's brand new and in a pawn shop or in the storage locker, depending on the circumstances. How do you find where it belongs? Well, SIRAS gives you an avenue to help do that."

     Milburn likens SIRAS P.I. to the stolen property records in the FBI's National Crime Information Center (NCIC). Much like NCIC, SIRAS information can't solve cases on its own; but it can give investigators additional leads or avenues to follow if they hit a wall.

     "NCIC is a very useful tool, but it's a very, very small swimming pool of the ocean of stolen stuff that's out there because people can't identify it," Milburn says. "SIRAS helps expand that swimming pool. A detective cannot just base the information straight out of SIRAS or NCIC as their whole case. It's a tool just like your squad car, just like your pen." However, unlike squad cars and pens, the SIRAS service is free to law enforcement and authorized retail security officials. All that is required to access the database is a computer with Internet access or a cellular phone.

     Because SIRAS P.I. is an extension of SIRAS, the data collected has already been paid for by retailers and manufacturers who use the service to track merchandise. Junger says SIRAS bears the cost of developing and maintaining the system, and its clients — retailers, suppliers and manufacturers — benefit when law enforcement is able to mine serial number data to report, track down and recover stolen items. Thus, making the database available to law enforcement is advantageous for all parties, and SIRAS expects to get more business because of it.

     Dustin Ares, senior account manager for asset protection at SIRAS, says law enforcement has been responding positively to the technology.

     "We often hear that we are filling a void that's been there an awfully long time," Ares says. "The common theme I hear is that SIRAS actually creates a stronger victim and gives them some sort of thread to follow to define not only the victim, but what charges to press in the case."

     Mesa PD piloted the technology for several months beginning in 2007, and the searchable database has already helped track suspicious items. Milburn explains an instance where an individual was selling brand-new gaming products — still in the box — for much less than they were worth to local Mesa pawn shops. Three transactions in the area took place curiously quickly. Through SIRAS P.I. Milburn and his team were able to identify that the products had been purchased at a neighborhood Best Buy. Working backward, Milburn checked with Best Buy and pulled up the transactions corresponding to the products. He was able to determine the credit card holder who purchased the gaming products was the same individual who was pawning them. Milburn explains that in that instance, the man pawning the new merchandise was likely using his credit card to get easy cash, but the incident proved the value of SIRAS as an avenue to trace a product's history quickly. Milburn was also able to document that the card holder, purchaser and pawner were the same man, so should he attempt a fraudulent report claiming his card had been stolen, he would easily be caught. Junger says SIRAS has finished its pilot with Mesa and has added 84 agencies around the country and four in Canada.

     Both Milburn and Junger stress that SIRAS P.I. is not a panacea for property crime challenges. SIRAS is happy to extend its data for law enforcement use, which benefits the manufacturing, retail and law enforcement communities, but it cannot replace an investigator's work.

Preventing hoodwinks

     In addition to deception and scheming by criminals in the retail and pawn industries, SIRAS has also helped whittle out some bad employees. Junger describes an incident where a retail employee had committed two retail deceptions, including a brick-in-the-box-type of return and serial number tampering. SIRAS P.I. was contacted when an old DVD model showed up at the manufacturer, returned by the retail store, in a new model's box. After working backward through the serial number's log, SIRAS was able to determine the new DVD player had been sold, and the serial number record had been accessed three times over a period of days. On the third access, the item was returned to the store for a full refund. SIRAS uncovered that an employee who was familiar with SIRAS's serial tracking had bought the new player, used a hair dryer to remove the new serial number and attach it to an old player, and returned that player for the full amount. Because the store had video surveillance and SIRAS had the dates and times of access, sale and return, the shady employee was found and fired. In this instance, even though the employee knew SIRAS was tracking products, he was still unable to hoodwink it.

     In addition to fraudulent returns, in certain situations SIRAS can also guard against counterfeit receipts, sweetheart returns (where a clerk and consumer are in cahoots to commit myriad retail fraud), identify product renting (when consumers purchase a product, such as a power tool for specific use and return it when finished), brick-in-the-box returns and counterfeit serial numbers or tampering.

     Junger says because storage is cheap, SIRAS hosts data from Nintendo's records going back to 1993, and from other companies beginning in 1999, and has no intention to purge it.

EBay and other challenges

     SIRAS has currently been in use by law enforcement for approximately 11 months, and the company is working to correct some limitations. One element of the database that SIRAS is coordinating with law enforcement is a renovation in the language used to code products.

     "We're not in [law enforcement], so we need to rely on industry professionals who do this for a living to tell us what kind of language is meaningful and useful to a detective," Junger explains.

     "We're refining those things and also we're working with retailers on the same type of terminology [because] 'stolen' is a pretty serious term. Most retailers prefer that they use the word 'missing.' "

     Another challenge in property recovery is online shopping and auctions. Most pawn shops throughout the nation are required to report an item's identifying information, such as serial numbers, but online auction houses are not. Junger says until companies such as eBay, a widely popular online shopping and auction host, voluntarily capture serial numbers or are mandated to do so accurately, SIRAS assists retailers in undercover stings where the retailer or SIRAS purchases suspicious items online and, once received, investigates the product serial number for suspicious activity. For example, if an eBay member has 10 auctions for brand-new MP3 players.

     "We actually go online and buy certain items so we can get the serial number and information from the owner, and then we investigate and work together with our manufacturer clients, retailer investigators and law enforcement," Junger says. He says this is especially relevant with expensive and popular electronics such as iPods and video game systems.

     "You have to ask yourself: Why would someone have 10 iPods that they want to sell brand new?"

     There is massive potential for data growth as more police officers, retailers and manufacturers get involved. Each day, more transactions are logged and stored by SIRAS, which could lead investigators down a previously undiscovered or unsubstantiated path. "SIRAS is a tool that, as it gets more successful, I just think it's going to be very strong," Milburn says.

     In the future, Junger hopes to help track product life cycles of virtually anything with a unique ID number. Recently, Junger has been in contact with insurance, credit card and power tool companies that have expressed interest in the product-tracking service.

     Overall, SIRAS could connect all entities of the process to make it a closed-loop system, simultaneously saving the retail and credit industries money by preventing fraudulent transactions as well as giving law enforcement a tool to help solve more crimes.

     With cash registers silently ringing up product info into SIRAS, the database can continue to help law enforcement wring fraudsters out of the retail equation. And wouldn't it be a relief if a couple decades down the road, Beloit College's Mindset List were reflecting on that?

     Editor's note: To get registered for SIRAS P.I., e-mail siraspi@siras.com or call (425) 497-3300.

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