SCDigest editorial staff

The News: The Wall Street Journal reports professional thieves as well as some amateurs are increasingly using high tech means, such as forged bar code labels, to steal merchandise from retailers.

The Impact: The numbers are growing, which will force retailers to take more drastic action to reduce the scale of the theft. RFID may be the best choice.

The Story: Retailers have often been reluctant to publicly discuss issues related to “shrinkage,” for fear it may spur similar activity by other criminals, but the Wall Street Journal reported last week that merchants are being pummeled by the rising and increasingly sophisticated and aggressive techniques of thieves, including bar code fraud.

The approach is actually relatively simple if a thief knows what he or she is doing. A small scanner in the store – or a piece of paper and pen for that matter – can be used to capture UPC bar code numbers from actual, low priced products. Thieves can then use readily available software and printers to produce authentic looking store bar code labels, place them over the real thing, and walk out of the store with high priced merchandise on the cheap.

How big is the problem? The journal tells of one small time thief who purchased an IPOD using this technique for $4.99, the price for a set of low end head phones. One big time operator bought $600,000 worth of Lego products over three years for perhaps 20% of the real prices.

While a few thieves have been tripped up by alert cashiers, apparently many sail right through the checkout line without a question, even when buying a $100 Lego set for $19.00.

This scam and others have been abetted by the growth of the Internet, which allows stolen merchandise to be unloaded quickly and relatively securely. Stolen goods can be easily sold now on eBay, for example – channels which didn’t exist in the past. This has raised the opportunities and interests of the criminals. It has even spawned a new, widely used term: “e-fencing.”

Retailers are trying all sorts of responses, including some who troll the Internet themselves looking for significantly off-market pricing of goods.

Clearly, EPC tags can play a roll here, as it is a more complex technology than bar code labels, and should at least initially be much harder for thieves to duplicate. Tags actually embedded in the packaging would raise the difficulty of duplication/replacement even higher.

The cost of tags, if focused on just these high prices and attractive items, would be relatively small relative to the sale price, and also it appears relative to the theft that occurs.

Is it too easy for thieves to simply replicate bar code labels to get high priced merchandise on the cheap? What can be done short of RFID to combat this issue? Does this seem like a very high ROI area for RFID? Let us know your thoughts.