Loss Prevention

Shoplifting

Shoplifting poses a serious threat to our earnings and prices, as it does with all retailers. Unlike commercial counterparts; however, dollars lost through shoplifting not only affect earnings and prices, but those lost dollars also impact on the dividends returned to your MWR / Services programs.

To combat this problem, most exchanges employ exchange detectives as a first line of defense. Some exchanges also use electronic video surveillance and electronic article surveillance systems to aid in the effort.

You also play an important role in the battle against shoplifting. According to AR 215-8 / AFJI 34-2 10, shoplifting offenses are reported to you for appropriate disciplinary action. The regulations mandate that shoplifters receive a minimum of a six-month suspension of exchange privileges.

Civil Recovery Act

On December 28, 2001, President Bush signed into law the National Defense Authorization Act for Fiscal Year 2002 (P.L.107-107). Section 335 amended 3701(b)(1)(B) of title 31, United States Code, by adding the words “including actual and administrative costs ($200.00) related to shoplifting, theft detection, and theft prevention.” The amendment allows Exchange to pursue losses and administrative costs directly relating to shoplifting, theft detection, and theft prevention as claims of the United States recoverable from the shoplifter through existing federal debt collection methods.

If the indebtedness has not been paid within 60 days of the date of the first notice to the individual, Exchange will take the following actions as appropriate:

  • Assess interest and penalties under the provisions of 31 U.S.C. 3717. Interest shall be applied at the Treasury, Tax and Loan (TT&L) rate. Penalties shall be applied at the annual rate of 6%.
  • Disclose the indebtedness to a consumer-reporting agency under the provisions of 31 U.S.C. 3711. This information will include the individual’s name, address, taxpayer identification number, amount, and history of the debt.
  • Initiate collection action of this indebtedness through salary offset as authorized by DODPM Chapter 7 for military members, or from any U.S. Government Agency, if applicable, under provisions of 5 U.S.C. 5514.
  • Initiate action to offset the amount of the debt against any disbursement of the Department of Treasury to which the individual may be entitled, to include offset against Federal income tax refunds. This action is taken pursuant to the Deficit Reduction Act, 26 U.S.C. 6402(d), and 31 U.S.C. 3720A.
  • If the service member voluntarily pays the Civil Recovery amount listed above within 60 days from the date of the first notice, his / her check cashing and Military STAR Card privileges will be reinstated provided that there are no other delinquent debts. These civil proceedings do not prevent criminal prosecution for the alleged act of shoplifting.

Employee Theft

Exchange takes employee theft seriously and works closely with local military and civilian law enforcement and judicial officials to put an end to it. Action taken against employees who steal from Exchange may vary depending on the amount stolen, degree of participation, or other factors.

We also watch for acts of dishonesty by persons working indirectly for us, like vendor representatives and concession contract employees. In addition to legal actions, we reserve the right to inform vendors and contractors that certain employees may not be satisfactory for employment in our stores.

Automated Refund Fraud Indicator System

Exchange customer-oriented refund policy sometimes spawns fraudulent refund schemes. To combat and to protect our customers’ earnings, we developed an automated system to record and track suspicious refund trends--the Automated Refund Fraud Indicator System (ARFIS). Our refund policy encourages, but does not require, customers to have their sales receipt when requesting a refund. Unfortunately, some customers and associates exploit this policy and use it as a means to turn shoplifted merchandise into cash. We have developed ARFIS to help detect these fraudulent refunds.

At most exchanges, refunds without sales slips are entered into the ARFIS database. The computer sorts the data and identifies suspicious refund trends and patterns, such as social security number variations used by the same person, different names, or addresses for the same social security number, and types of merchandise being refunded by the same person.

The information is entered in a worldwide database; so it’s possible to track people who steal merchandise at one exchange and return it to another. ARFIS has proven very successful in identifying fraudulent refunds.