LP Magazine

JUL-AUG 2017

LP magazine publishes articles for loss prevention, asset protection, and retail professionals covering shrinkage, investigations, shoplifting, internal theft, fraud, technology, best practices, and career development.

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PRODUCT PROTECTION J oe, a would-be thief, couldn't believe his luck. Here was a store willing to hand him a brand new state-of-the-art smartphone with no credit check and a few dollars down. And just two doors away was another retail store—this one advertising that it paid top dollar for smartphones. The criminal wheels in his mind turned. "Easiest money I'll ever make," he thought. But in the real-world version of this scenario—and it did happen—"Joe" was rebuffed when he tried to turn his rent-to-own cell phone into quick cash. Rent-A-Center had registered the phone's unique identifiers on a blacklist of sorts, so the companion retailer knew not to process the transaction. This was phase one of a security strategy that Rent-A-Center's asset protection team devised to protect its rented mobile devices. In short order, the device protection plan the department employed reduced losses by over 50 percent and saved Rent-A-Center millions of dollars. The Rent-to-Own Model The primary loss prevention challenge faced by Rent-A-Center is obvious—and built in to its founding business model. Started as Mr. T's TV Rental in the 1960s, the concept was the brainchild of Ernie Talley, who wanted to give hardworking customers who lacked cash and credit a way to rent merchandise with an option to own it. The company's rent-to-own model gives people who lack cash and credit immediate access to top brands and products. "We're not retail; we're rent-to-own, so our transactions start where most end," explained Brian Peacock, CCIP, director of asset protection for Rent-A-Center's US operations. "When you make your first weekly payment of $30, you can be walking out with a $2,000 TV with no credit check." It's a model where some measure of loss is clearly unavoidable—and where the ability to control the amount of loss is critical to business success. From its founding as Rent-A-Center (RAC) in 1986, the company has grown from sixteen stores to approximately 2,600 stores in the United States, Mexico, Canada, and Puerto Rico; employs nearly 21,000 people; and is a leader in an industry that is nearing $7 billion annually. The company earned its reputation by helping people furnish their homes with rent-to-own furniture, appliances, and electronics, but has expanded into computers and mobile devices. It's in this category that the company started to see problematic losses. "When we entered the mobile space, there was a much higher risk of transaction fraud, and the mobile category saw high losses," said Peacock. Not every customer chooses to follow the rent-to-own agreement to its conclusion. Some individuals, for example, decide that they can't afford it, and others decide they want to upgrade. These cases are no problem for RAC; customers simply bring the item back for a return or an exchange. However, in some cases, customers stop making payments, which typically sparks the company's recovery process. "It depends on what state and what jurisdiction the transaction was in, but typically we would pursue it through our legal department," explained Peacock. "So as long as we did our work on the front end, we could file against Brian Peacock Remaining Value Dollars Past Due Total Past Due Dollars During Roll-Out of DPP on Smartphones, 2015* 30-59 Days Past Due 60 Days Past Due 1/3 1/17 1/30 2/14 2/28 3/14 3/28 4/11 4/25 5/9 5/13 6/6 6/20 7/4 7/18 8/1 *Graph lines reflect the drop in past-due dollars as more smartphones had device protection installed 16 JULY–AUGUST 2017 | LOSSPREVENTIONMEDIA.COM

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