In February 2023, The Federal Trade Commission (FTC) announced:
“Reported fraud losses are up. The Consumer Sentinel Network received 2.4 million fraud reports in 2022, down from 2.9 million in 2021. But the almost $8.8 billion in total reported losses in 2022 surpasses the $6.1 billion figure from 2021.”
As a business ethics keynote speaker, business ethics consultant and book author who speaks in front of many retail associations and corporations, I am often surprised at the lengths to which scam artists go to cheat retailers. The “holes” in the vigilance of many organizations astound me. While we believe the level of sophistication against retail fraud has so dramatically risen, retailers often frequently let down their guard and are embarrassed by the ease with which they are fooled.
Part of the problem
As a business ethics motivational speaker and business ethics consultant, I believe that part of the problem is that there has lately been so much of a focus on cyber-security (the virtual) that eyes are directed away from the physical.
As “Exhibit A” in my comments, may I present Alexandre Henrique Costa-Mota; a man who found a way to bypass the Home Depot merchandise exchange system with a scam that netted him about $300,000. He could be the tip of the iceberg. Costa-Mota scammed Home Depot stores throughout the East coast, including Connecticut, Rhode Island, Massachusetts and New York. He worked the scam from June 2021 and February 2022, amassing 370 fraudulent store credits between.
According to the Associated Press (August 3, 2023):
“Home Depot’s policy is to allow customers to return items without a receipt, but the home improvement chain has safeguards in place that are supposed to prevent people from taking advantage, including asking for identification that requires third-party verification, according to court documents.”
That is all well and good, except it is easy to obtain fake licenses with other names. The first time he tried out the scam, he used his own driver’s license once, then he simply got hold of other licenses that were fakes.
Costa-Mota used a system so ridiculously simple; it is as I previously stated, most probably being repeated with similar items in other stores around the country.
Dressed as a contractor (I suppose in jeans and work shoes), he sauntered into the stores throughout the East coast, took more of the high-priced front doors and then returned them without receipts. Except on rare occasions, he apparently never had to leave the stores!
He simply loaded the doors into lumber carts, then took them to the service department, produced a phony driver’s license and got paid in full with store credit. He was allegedly able to get something like 370 store credits for returns. Costa-Mota netted more than $300,000 simply by walking up and down a few aisles. It was, as a casual observer might way “elegant” in its uncomplicatedness.
According to the AP: “If the return was denied, he would take the doors without paying and return them at another store, prosecutors said.”
In other words, there was no penalty for trying. On a few occasions, he would not have been seen leaving several premises with expensive doors because he never had to leave.
Part of the solution
As not just Home Depot but many other “big box” stores have discovered, it is not just getting help, but having help “invested.” A worker who is underpaid and underappreciated will most likely be under-engaged. Beyond that (and I know this for a fact from confidential conversations) workers are hesitant to challenge customers because they are frequently not backed-up by management. If the likeness or information in any of Costa-Mota’s fake licenses were close enough, he got paid. To the minds of customer service, they got back their doors and he got his return. The stores are also not doing themselves favors in their designs.
Ethical buy-ins occur when good ethics are honored and not somehow forced down someone’s throat in an on-line tutorial.
Barron’s recently wrote (June 2023) of the increase is store pilferage of the big box stores. As a business ethics keynote speaker my solution is an ethical behavior one. Teach it, reinforce it, seek worker input and reward it.
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