Breaking News in the Industry: January 24, 2018

Gift Card Cloning

Lawmaker fights drug epidemic through gift card sales

Tennessee State Senator Richard Briggs filed his “Organized Retail Crime theft” bill on Monday in the hopes of combating the drug epidemic. After talking with law enforcement, he was learning people were selling stolen gift cards and using that money to buy drugs. He said groups of people will steal merchandise from a store and then return the items without a receipt to get a store valued card. Briggs said pawnshops would then buy the cards at a discount. “We had $200 million that were stolen from such large retailers such as Walmart, Lowe’s, Target,” he said. He’s looking to provide a free statewide database for law enforcement to track these sales. The Knox County Sheriff’s Office already has a similar tool but Briggs said every department does not. The downside for deputies in Knox County is that they rely on pawnshops to input the information online. Briggs plans to place more regulations on pawnshops.

“You have to collect and submit this data, you have to register with us or there will be fees and penalties,” said Briggs. “Anything we can do to control that part of this addiction, we need to do that,” said Chief Lee Tramel with the Knox County Sheriff’s Office. Chief Tramel said it’s happening every day and many times, people are stealing several times a day. The Knox County Sheriff’s Office said at least one gift card was sold more than 600 times in the last month. The Knoxville Police Department is fighting the same threat. From April to June of 2017, officers responded to 98 people who overdosed. Thirty-nine of them, nearly 40 percent, sold gift cards to pawn shops or second hand stores. [Source: WATE6 News]

Florida mom arrested for leaving child in car while shoplifting

A Florida woman was arrested after police say she left her child in a car while she shoplifted items from a market. The Miami Herald reports that 30-year-old Sarah Wilmoth was arrested Jan. 13 after police were alerted that a small child alone in an SUV at a supermarket parking lot. According to an arrest report, sheriff’s deputies broke into the car to help the crying child and called emergency medical personnel in to administer first aid. Wilmoth was located in the market. While searching her, police say they found methamphetamine laced with cocaine. In her bra, they found facial cream, clear nail polish and an air deodorizer. She was arrested for child endangerment, shoplifting and meth possession. [Source: Fox26 News]

Six charged in complex fraud involving fraudulent processing of credit card payments

Six residents of New York, were indicted by a federal grand jury in Pittsburgh and arrested on a charges of conspiracy to commit mail fraud, wire fraud, and bank fraud, United States Attorney Scott W. Brady announced. A one-count indictment, returned in December 2017, named Devan Abrams, 37, of New York, NY, Tamara Feldman, 29, of Brooklyn, NY, Azad Khizgilov, 43, of Staten Island, NY, and Roman Shaulov, age 50, of Brooklyn, NY. Separate one-count indictments named Philip Krasnikov, 31, of Brooklyn, NY and Svetlana Kapralova, 30, of Brooklyn, NY. According to the indictments presented to the court, the conspirators were involved in a complex fraud that involved fraudulently processing credit card payments. The credit card companies will not allow their products and services to be used to pay for certain precluded activities, including the on-line sales of pharmaceutical drugs and of products violating trademark infringement laws. The defendants participated in the conspiracy designed to conceal from the credit card companies the fact they used their products and services to pay for precluded activities and to subvert the internal controls the credit card companies had in place to detect and prevent this type of activity.

The fraud involved establishing shell corporations and web sites associated with the shell companies that falsely claimed that they sold products other than pharmaceutical drugs or products that violated trademark infringement laws. The conspirators then applied for merchant accounts from the credit card companies in the names of the shell corporations and the fake web sites. Once the merchant accounts were established, they were used to process payments for pharmaceutical drugs or products that violated trademark infringement laws. Additionally, the conspirators arranged for the credit card statements sent to the consumers to have the names of the shell corporations and telephone numbers. The conspirators set up a telephone bank to receive calls from customers questioning billings on their credit card statements, and the conspirators explained to the customers the true nature of the transactions in hopes of avoiding charge-backs that could cause the credit card companies to question the legitimacy of the transactions. The law provides for a maximum total sentence of 30 years in prison, a fine of $1,000,000 or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offense and the prior criminal history, if any, of the defendants.  [Source: Department of Justice]

Why marijuana retailers can’t use banks

Recreational marijuana has been legally sold in California since the start of the year. The state treasury estimates that sales in 2018 will reach $7bn. But it will not collect its fair share, because pot taxes, it turns out, must be paid in cash. This makes tax collection “a nightmare”, as the treasury has described it. The predicament of Oregon, where recreational pot became legal in 2015, is a case in point. Sellers who declare sales have had to bring tax payments in cash every month to a guarded, bulletproof site in Salem, the state capital, no matter the distance they must travel. Operating only one such “cash-transaction unit” saves the revenue department money, but it also reduces the number of sellers who declare sales. So why can’t tax payments be made electronically?

Nearly two-thirds of America’s states have legalised pot sales for certain uses, but the federal government still classifies marijuana as a “Schedule 1” drug, on a par with heroin. Banks that handle marijuana money can be charged with money laundering. Pot businesses, therefore, are on the whole stuck working with cash, which causes problems for more than just tax collection. For starters, cash operations are inefficient. To pay its staff of 200 in cash, CannaCraft, a Californian maker of marijuana products, requires four employees who would otherwise be unneeded. Businesses restricted to cash are “targets for assaults” that endanger the public, laments California’s treasury. And as firms accumulate untraceable cash, some will offer bribes for operating permits, says Fred Timpner, head of the Michigan Association of Police. He expects recent arrests for such corruption in his state to be followed by more.   [Source: The Economist]

This guy tried to shoplift from the new Amazon Go store

By now, you’ve probably heard about the Amazon Go store in Seattle, Washington. It’s a grocery store without cashiers. As in you walk in, scan your phone to “check in,” grab what you want, and leave (Amazon charges you digitally). The experimental new store may revolutionize the shopping experience. And even though it may seem super easy to take advantage of the set up, the store is actually highly monitored. In fact, one guy attempted to shoplift from the store to see what would happen.

Nick Wingfield from The New York Times visited the store to see what it was all about and noticed that the shop was lined with hundreds of cameras. These cameras help identify each product and can tell when one of them leaves the store (um, spooky). In the name of journalistic integrity, Wingfield attempted to see if he could cheat the intricate system by grabbing a four-pack of vanilla soda. Wingfield tried to obscure the product label from the cameras by wrapping the soda in a plastic bag before taking it off the shelf. And…his plan failed. While leaving the store, Wingfield got an electronic receipt from Amazon Go for his purchases — including the product he didn’t intend to purchase. So Amazon is officially one-step ahead of potential shoplifters. (And general note: shoplifting is bad guys! Don’t shoplift!). We absolutely can’t wait to see if this whole Amazon Go thing takes off. Until then, we might just need to book a trip to Seattle to grab some groceries.  [Source: Hello Giggles]

Toys “R” Us to close more than 180 stores

Toys “R” Us announced it will be closing more than 180 U.S. stores after declaring bankruptcy in September.  “The reinvention of our brands requires that we make tough decisions about our priorities and focus. To that end and following a top-to-bottom assessment of our business, we have decided to close a number of our U.S. stores,” said Chairman and CEO Dave Brandon in a letter to customers. The company plans to convert some locations to be both Toys “R” Us and Babies “R” stores.  According to CNN, the closures will need court approval.  Store closings sales are expected to begin in early February. Most store closings will be in mid-April. [Source: WATE6 News]

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