By Jason L. Atkinson - GCertInvestgn&Intell (ECU), GCertFraudInvestign (CSU), DipSec&RiskMgt, DipBus
"Different leg action; same dog"
Introduction:
Don't you mean: "same dog; different leg action"!
Well, I guess that depends on whether the dog is the investigation and risk management action/s, or whether the dog is the insurance or retail sector. Further clarification of this construct is required. For the purposes of this ensuing discussion - leg action is what it means, an action. Therefore, logical deduction would suggest that because investigation and risk management are reactive and proactive undertakings, they are action processes in either dog. So, dog must be the retail sector or the insurance sector, thus, the maxim - different leg action same dog.
Now I do not implicitly mean to imply that either the retail or the insurance sectors are 'dogs'; at least not in the law enforcement context - 'roll over and rat out', or in a social context - not 'dobbing on your mates'. I essentially mean that for all intents and purposes, both industries are the same when it comes to addressing criminality, particularly fraud, hence, the term 'dog'. Thus, the intent and purpose of this discussion is to demonstrate the ineffectual response to criminality endemic in both sectors, which is arguably a practice of condoning criminality.
The basis of the discussion derives from the author's personal experience in both sectors, and the observations made during that time. Whilst some may disagree with the comments to follow, and whilst the comments might be construed as overtly subjective, any investigator that has a reasonable amount of experience in either sector will understand the prevailing argument. The discussion will first commence with the insurance dog, and then consider the retail dog.
Discussion:
Insurance dog:
Factual investigator Joe Bloggs has been investigating insurance claims for a number of years. He/she understands the idiosyncrasies of workers compensation insurance (for the purposes of this discussion), and undertakes the process of investigation for the objective of establishing statutory and/or common law liability. After all, this is what the insurance company requires him / her to do. The insurance company (claims officer) will make an informed business decision on liability from the report. As an experienced investigator, well read and qualified in the area, he/she is also aware that workers' compensation fraud is rife, therefore, he/she is mindful of this fact during the investigation process.
Joe Bloggs interviews the Claimant, the Claimant's supervisor and two witnesses who supposedly witnessed the injury occur. However, it turns out that the witnesses did not witness the alleged mechanism of injury per se and provided an account of post alleged injury conversation had between them (witnesses) and the Claimant. Of course, the report of injury was made to the supervisor on Monday mid morning. Moreover, the Claimant's statement indicates that he does enjoy team sports on the weekend. At this stage, the Claimant is totally incapacitated and surveillance has not been beneficial, because of course, the Claimant has had a prior workers' compensation claim a few years before, thus, is surveillance aware.
At this stage of the discussion, it is evident to the experienced investigator that something is amiss. The mechanism of injury is not consistent with the extent and severity of injury, but the investigator cannot comment on this because he is not a bio-mechanist or similar. The point is; the fraud indicators are singing loudly. The investigator submits his report, because he is only to assess liability, yet the investigator knows that in the absence of any clear surveillance footage, the Claimant should be re-interviewed and the re-interview process escalated to a non-confrontational accusatory interview, with the aim of having the Claimant withdraw the claim based on the evidence obtained to date, or further factual information obtained and the case developed and then confront the Claimant.
Whilst the above two paragraphs do not paint the perfect scenario for a fraudulent workers' compensation case, the author has no doubt whatsoever that, many an investigator has seen this situation. On occasions, the insurance company will allocate further surveillance hours, but oftentimes, this does not produce any significant footage of the Claimant undertaking activity that he says he cannot do. The factual investigator briefs the claims officer by phone (as we do) and suggests that the facts in issue be put to the Claimant in a re-interview, which is not taken up. After all, the employer has paid a massive premium (money; profit for the underwriter) and it will cost even more money to defend the claim through arbitration. The insurance company determines that it is not 'cost effective'. It is easier to pay the dodgy workers' compensation Claimant out, or accept the claim, despite significant evidence that such claim is 'more probable than not'; not work related. Yet there is not quite enough evidence to completely deny the claim.
This action is akin to condoning fraud - but it does not matter because we will increase the employer's premium next year and continue to pass the cost of insurance fraud on. This happens many times and we are all paying for it. This is the 'insurance dog', tail wagging vigorously, because the dog is happy that the premium/s is still coming in despite sending the wrong message that somehow fraud is acceptable. Now, there are different breeds of dog within the wider insurance dog. We have the CTP dog, the General Insurance dog, Public Liability dog, Income Protection dog et al. And, all their tales are wagging vigorously.
Retail dog:
Joe Bloggs is a Loss Prevention Investigator. He has been working in the retail loss prevention/asset protection area for just on twelve months. It was a change because the insurance dog had become quite bewildering. The loss prevention investigator is principally concerned with the investigation of internal theft and fraud, administrative compliance auditing and risk management undertakings. One of the most common cases is that of cash or merchandise theft by staff. After all, an estimated 55 to 60 percent of retail criminality is attributable to internal threats. The balance is due to shoplifting and external fraud (credit card, refund fraud et al) and administrative error (incorrect procedures).
The loss prevention investigator works from outside in, unlike insurance investigation. The investigator develops the case through analysis of exception reports, interrogation of internal data bases in terms of inventory control and most importantly CCTV footage. Like the insurance investigator, the loss prevention operative will interview relevant persons, and when the appropriate evidence has been obtained, he/she will then interview the suspect to obtain some form of admission - hopefully a full confession. The results will typically be termination and prosecution, providing the evidence supports such action.
The retail dog however, sees the loss prevention function as a pure cost department. It does not embrace the loss prevention department as a profit centre by controlling and reducing shrinkage by proactive and reactive measures, thus, a token budget is allocated to the loss prevention function, and capital expenditure on decent equipment is paltry, for example, cheap and nasty CCTV systems. Whilst some retail dogs do invest appropriately in loss prevention and do realize a return on investment, for the most part, such does not exist. The retail dog does speak though about loss prevention, and must be seen to be 'doing something', because shareholders and corporate governance requirements mandate that the retail dog do so.
Calls for tenders are instigated and the cheapest supplier of security systems (CCTV in this instance) is awarded because it's cheap. No, if at all minimal consideration is given to quality, because better quality costs more money. As long as we are being seen to 'do something' then that is okay. We don't require new employees to undergo a police clearance check because that costs money too. Therefore, we inevitably recruit some people with a propensity to commit crime given the massive opportunities that big box retailers particularly present. Because retail dogs largely don't communicate with each other, the retail assistant, who used to work for one-retail dog and was terminated for theft, was able to get a job with another retail dog in the same centre - amazing really!
So the loss prevention investigator, who also doubles up as a physical security specialist, is asked to reduce shrinkage from 2.0 percent of retail sales to around 1.0 percent. He does this by having to investigate and mitigate risk with a one spanner fits all nuts and bolts approach. "Here is a 9 inch crescent, now pull that motor apart and get it out will ya". Luvya work retail dog. Also, we can't engage covert operatives to work in stores, nor can we spend money on a uniformed guard presence during late night and weekend trade, because sales are down and we don't want to spend money. However, we'll ask our front end casual staff - all of 15 and 16 years old, to become our loss prevention bag checking specialists. It does not matter that the customer tells them to 'F' off, because all we really need to do is actually be seen to be 'doing something'. After all, 15 and 16 year old staff are cheap to employ, are in abundance and can be readily replaced. They don't cost us too much money compared to the older more confident person, who can handle people generally better, and are more able to implement fundamental loss prevention initiatives.
Now the costs associated with retail crime - we'll simply pass that onto the consumer. We can tolerate a higher than necessary shrinkage rate, as long as we keep sales budgets going and reduce costs by not spending money on combating retail criminality. We are happy to condone theft and fraud, because to spend too much money on loss prevention will reduce our profits. However, we had better keep our paltry loss prevention department going, and will give them a spanner to do the job - at least that's something.
Conclusion:
This brief discussion has presented the leg actions required of investigators applicable to two different dogs. The investigator working for either dog is required to produce champagne from beer. They generally accept it because to do so otherwise would mean no employ. However, can we continue to accept increasing costs due to these different dog breeds accepting criminality, as part of doing business in the name of profit retention and/or creation? The irony of this situation is that, when we view the condoning of theft / fraud, as a normal part of doing business, then the situation is really akin to 'same dog different leg action'. Both dogs are happy to pass the cost of criminality on to the consuming public, and on the face of it, do not seem totally committed to controlling and reducing theft / fraud. You may agree or disagree, and that is fine. However, have a look at the financial cost of both insurance fraud and retail crime to the Australian economy before you reach a final decision to disagree.
Jason L. Atkinson
email: Jason.Atkinson@westcoasttafe.wa.edu.au