Self-Checkout Security a Balancing Act

Written by Evan Schuman
August 5th, 2004

Putting control of checkout into the hands of the consumer is nightmarishly frightening for many retail executives?including that part where the consumers figure out how much money they are going to give the retailer.

“Loss Prevention would love to have security gates and frisking” at the self-service terminals, said Dusty Lutz, the FastLane product manager for NCR Corp., who added that such requests are clearly not practical. “How much do you put into a system for security?”

Most in the self-service industry argue that the increased fears of fraud are misplaced because the scrutiny in the self-checkout area is so intense that customers wanting to steal would choose some more secluded part of the store to do it.

With weight and size tracking, video cameras and one cashier watching typically four self-service units, it’s more difficult to steal from the self-checkout than from the traditional cashier-staffed lanes.

Like all fraud-prevention efforts, the security components of a self-service setup need to be balanced with customer service. How much do you frustrate, inconvenience?or even insult?your best customers in the name of fraud prevention?

Part of that balance is the ability to set various levels of sensitivity in the scanners.

If a customer has one item that the computer thinks is too light, does it dispatch a cashier or does it wait for two light items? “We really let the retailer fine-tune the system. It’s a concept of delaying and forgiving security events,” Lutz said.

Ultimately, much of this comes down to trust and practical considerations. “I believe that the people who use this system will be trustworthy, but (consumers) need to know that the system does check them from time to time,” said Frank Riso, director of retail vertical marketing for self-service system manufacturer Symbol Technologies Inc. “If somebody really wants to steal from a store, they’ll do it.”

Some stores are also experimenting with biometric identification capabilities?Piggly Wiggly Carolina Co. has deployed a fingerprint-scanning device from Pay By Touch in four of its grocery stores?but that is intended more for accelerating the tender process than for preventing fraud. Such technology also has the potential to remove alcohol and tobacco purchases from the list of items that will cause a self-service system to require human intervention, as it would allow the system to know the age of the person with that registered fingerprint.

Greg Buzek, president of the IHL Consulting Group, said the fraud deterred most by the self-service systems is not customer fraud, but rather one employee fraud technique called “sweethearting.”

“Sweethearting is unfortunately quite common among regular cashiers who give their friends five-finger discounts by covering the UPC code of the expensive item as they pass by the scanner. Although the features of the self-checkout provide deterrents, they are designed more to eliminate the employee-aided theft rather than customer theft,” Buzek said. “If a customer is going to steal something on their own, they will do it somewhere else in the store before they come to the self-checkout area with the camera, an employee watching them and a scale to monitor their purchases.”

Buzek also makes an election-year observation: He notes that retail chains are very selectively rolling out self-service plans based on where they perceive the fraud risks to be high and low.

“All of the red states that went for Bush [in 2000]? That’s where self-service is most penetrated,” he said. “The blue states that went for Gore is where it’s least penetrated.” Why? Buzek said that companies expect less fraud in the more affluent and conservative areas than in the larger cities.


Comments are closed.


StorefrontBacktalk delivers the latest retail technology news & analysis. Join more than 60,000 retail IT leaders who subscribe to our free weekly email. Sign up today!

Most Recent Comments

Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

Our apologies. Due to legal and security copyright issues, we can't facilitate the printing of Premium Content. If you absolutely need a hard copy, please contact customer service.