Attention, Shoppers: Police State Ahead!

Business Week has a warning for all of you who have ever pilfered a little something when the store owner wasn't looking:

There are 6 million video cameras mounted in stores across the U.S., according to market researcher J.P. Freeman Co. Their unblinking eyes are everywhere, watching exits and peering down aisles. You already knew that. But you probably had no idea how smart some of these cameras are getting.

The interesting article, ominously entitled, "Attention, Shoplifters," describes many of the new advances coming online now in surveillance technology and how they are being used to prevent theft in stores across the country. It goes without saying (although I will say it since it is so rarely actually said) that many times theft is justifiable and even necessary.

Hell, even the police do it, so it can't be all that bad, can it? Consider, for a moment, the case of Boynton Beach police officers Lt. Richard Root and Nancy Aspenleiter, who caused a stir just yesterday. From the Palm Beach Post today:

City Manager Kurt Bressner's decision to suspend, rather than fire, a city police lieutenant accused of mishandling more than $22,000 in Fraternal Order of Police money has outraged the city's police officers.

Angry e-mails began pouring in Friday after Bressner overruled Police Chief Matt Immler's recommendation that Lt. Richard Root be fired after criminal and internal affairs investigations found that he and former Boynton Beach officer Nancy Aspenleiter mismanaged the FOP lodge's finances. The accusations included keeping $10,000 in public donations meant for widows and orphans of the Sept. 11 attacks and using $10,000 meant for a motorcycle raffle winner to pay down the mortgage on the lodge.

Of course, when the police do it, they usually have a whole system of fellow officers and politicians to back them up. Thus, City Manager Bressner claimed that Officer Immler did not deserve theft charges - or to be fired - even though "he did agree with police investigators that Root committed perjury, violated fund solicitation laws, failed to keep records, failed to turn over raffle money, failed to register with the state to solicit money, made untruthful statements and demonstrated conduct unbecoming an officer." In other words, he stole. So, theft happens all the time - and not just the kind that rich people make legal, like the stock market or paychecks. And people get away with it all the time, too.

And, it should also be pointed out that police treat people they accuse of theft quite differently than they expect to be treated themselves. Just a few days ago, two police officers chased down and shot a man accused of shoplifting from a Shopper's Food Warehouse in Capitol Heights, Maryland.

Returning to the Business Week article, then, we are treated to quite an interesting look into the world of the private security apparatus quickly making unregulated space (which is not necessarily the same as private or public space) obsolete in our daily lives, as the number of places not actively or passively monitored by an authority of one kind or another in this country steadily shrinks towards zero.

Some Macy's (FD ), CVS (CVS ), and Babies 'R' Us stores have installed a system called the Video Investigator, whose advanced surveillance software can compare a shopper's movements between video images and recognize unusual activity. Remove 10 items from a shelf at once, for instance, or open a case that's normally kept closed and locked, and the system alerts guards sitting in a back room -- or pacing the sales floor -- with a chime or flashing screen. The system can predict where a shoplifter is likely to hide (at the ends of aisles, behind floor displays). A search function spots sudden movement that might indicate a large spill, prompting workers to clean up before it leads to a slip-and-fall accident and a costly lawsuit. And if someone opens a back door at 2 a.m., the system will record who sneaked in and link it with snapshots of the previous and next persons to use the door. Alerts, complete with images, can be sent to handheld devices, keeping retailers informed 24/7, says Jumbi Edulbehram, vice-president for strategic marketing at IntelliVid Corp., a Cambridge (Mass.) firm that makes the Video Investigator system.

As the technology gets more and more powerful and cheaper, it spreads into more and more products, becoming more and more ubiquitous.

Even the lowly shopping cart has been recruited in the war on retail crime. A surprisingly common -- and simple -- scam is the "push out," in which thieves load up carts and just dash out of the store. The solution: Gatekeeper Systems Inc. (GKR), in Irvine, Calif., invented an electric-fence technology for carts. The system, called GS2, uses radio frequency identification (RFID) chips, which are embedded in cart wheels, and antennas around the periphery of the store that broadcast signals to the chips. When a cart approaches the store boundary, its wheels lock up. They can be unlocked only by an employee who activates a remote-control device. "[Thieves] can't push the cart," says Brett Osterfeld, Gatekeeper's vice-president for sales and marketing. "They'd have to pick it up and walk with it." Target Corp. (TGT ) and several smaller chains have signed on.

Those handy rungs underneath the cart are great for hauling bulky items like diapers, pet food, and beer. The problem for retailers is that shoppers often "forget" to pay for the goods. The answer? Seven grocery chains, including Pathmark Stores (PTMK ) and Giant Eagle, recently began testing LaneHawk, a system by Evolution Robotics Retail Inc. that uses visual pattern recognition to spot hidden packages. Cameras mounted in cashier stands about six inches off the ground scrutinize the bottom racks of passing carts. If an item matches an image in a database, the system computes the price of the product and adds it to the customer's bill. "It's like biometrics for packages," says Alec Hudnut, CEO of Evolution Robotics Retail.

Many criminals aren't stupid, of course, so the name of the game for surveillance experts is making their wares all but invisible. Some of the most powerful sensor systems are being embedded right under your nose. Take those beige plastic discs that retailers snap onto clothes and accessories, called electronic article surveillance (EAS) tags. Now they're being made as small, and nearly as thin, as a toothpick. DVD manufacturers stick disposable versions on product packages before shipping to retailers. J. Crew Group Inc. (JCG ) sews the devices right into clothing labels, telling shoppers to remove deactivated units before washing.

Soon stores may replace EAS tags altogether with RFID tags that offer a more precise and inconspicuous way of tracking items on a sales floor. The tags, which come in different shapes, many smaller than postage stamps, communicate with a handheld device, telling workers the exact location of a given item. Retail giants like Wal-Mart (WMT ) and Target are big advocates of RFID technology, but for now use them mostly to monitor inventory.

Retailers hope to keep an eye on you in as many ways as possible, because, while they want your money, they don't trust you.

But, it's not just the shoppers that retailers don't trust - it's also the employees. I have spent a lot of time on this blog pointing out that this technology is very clearly being directed as a class war tool at the point of production (or retail, as it were). Technologies like RFID and surveillance cameras are intended to control workers as much as shoppers - perhaps more. As we all know, perhaps the best place to steal is from work. Theft is one way a worker who is treated unfairly gets even - or one up - on a boss who, by her very nature, is extracting more in profit from each worker than she is paying out for labor in the form of wages and benefits (if you're lucky enough to get them).

No part of a store churns out more data than cash registers. This is also where employee theft is most likely to pop up. New types of transaction-monitoring software pull information from registers into a central database and look for unusual patterns. An excess of manually entered credit-card numbers could be a sign that employees are stealing customers' information. Returns of the same type of sweater 10 times in a row at one register, for instance, could indicate that an employee is processing fake returns for a friend or being conned into making fraudulent returns. Retailers decide what to track and how often, and set parameters for alerts. Often the feedback points to problems other than dishonesty. "It might be a hardware issue or a sign that an employee needs more training," says Cheryl Blake, a vice-president at Aspect Loss Prevention, which works with Children's Place Retail Stores Inc. (PLCE ) and Ross Stores Inc. (ROST ) "Whatever it is, the transactions will stick out and tip off management to investigate."

Collecting tons of information only helps, though, if you're able to sift through it and figure out what it's telling you. Already, U.S. retailers record an estimated 1,000 years of video every day, according to IntelliVid. "Rather than have someone watch and review TV for hours on end, retailers are utilizing intelligence behind the video screen," says Joe LaRocca, vice-president for loss prevention at the National Retail Federation trade group. That's why stores also are investing in technologies that can communicate with each other. RFID systems, for instance, can cue up video cameras to check out an aisle where they have detected suspicious activity, catching suspects on tape before they get out of the store. "Retailers can pull data from all these systems, look at them together and connect the dots," says Rob Garf, a research director at AMR Research.

The newest retail data-mining programs also sync up with video to permit a more comprehensive look at activity at cash registers. With the press of a button, managers can highlight irregular register transactions on their computers and pull up corresponding video. This could enable them to catch cashiers who cut deals for their friends or pocket cash refunds themselves. It could also curtail fraudulent returns by tracking the route customers take to the customer service desk -- do they head straight there or meander through the store, picking up their "return" merchandise along the way?

In addition, such technology, as with the spill-recognizing camera above, increasingly is spreading beyond merely monitoring employee behavior into actively managing and directing workers on the job. This is the case, for instance, with the new "Hyperactive Bob" fast-food management system now coming into use in some fast food establishments. Capable of monitoring the parking lot with advanced cameras, identifying the number of customers in cars and predicting the quantities and types of food to be produced based on averages and other statistics, Hyperactive Bob actually gives orders to employees. "I've been a manager for 28 years. It's the most impressive thing I've ever seen," said one McDonald's manager.

When's the last time your manager ever said something like that about anything that was good for you?