ebay feature jan15 LP Magazine- ebay partners with retailers

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COVER FEATURE FROM ADVERSARY TO TRUSTED PARTNER How eBayTransformed Its Relationship with Retailers By John J. Selevitch

Transcript of ebay feature jan15 LP Magazine- ebay partners with retailers

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COVER FEATURE

FROM ADVERSARY TO

TRUSTED PARTNERHow eBay Transformed Its Relationship with Retailers

By John J. Selevitch

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TRUSTED PARTNER

It is late November 2014 in the Broward (County, Florida) Sheriff’s Office and Operation

Holiday Steals—a joint operation of retailers, credit card companies, and law enforcement—is underway. Working side-by-side with the sheriff’s department and retailers, four members of eBay’s asset protection team provide seamless support and expertise. This exceptional partnership enables law enforcement to zero in on an estimated $4.5 million to $5.5 million in stolen retail goods.

Millions in recovered goods is a tremendous accomplishment, but the amazing part of this story is the transformation of the relationship between retailers and eBay that made this operation possible. Five years ago there was a common perception among retailers that eBay was an adversary that allowed the sale of stolen goods and profited at the demise of retailers. This article explores how this transformation happened and is told

by the retail leaders and others who bore witness to this change.

The landscape was very different in 2009. Previous attempts to improve relations between eBay and retailers had proven unsuccessful in fostering a cooperative partnership. Both sides had a mutual distrust of the other’s motives. eBay was viewed as a poor partner, soft on crime, and unwilling to address organized retail crime (ORC) issues. While retailers thought eBay was reluctant to crack down on the sale of stolen goods, many on the eBay side believed that retailers accused its users in an attempt to control retail distribution channels and limit competition. Misunderstanding of each other’s motives was the linchpin in the ongoing stalemate between the parties. The battle was largely being fought in the media and the halls of Congress. It would take a significant change to break the cycle of frosty relations and

bridge the gap between eBay and retailers.

eBay made the first move and sought to hire a leader with credibility in the retail community. In April 2009 they selected Paul Jones, then the vice president of loss prevention for the Retail Industry Leaders Association (RILA), to lead their criminal law

enforcement function. In addition to his experience working with the 400 retail members of RILA, Jones brought an extensive, broad-based career in retail loss prevention, including senior positions with Federated Department Stores, Sunglass Hut/Luxottica, and Limited Brands. He would prove to be the catalyst to spark the transformation and improve retailer relations.

Evaluating the SituationJones’ first step was to evaluate the

situation. “When I joined eBay I felt it was a company that absolutely wanted to do the right thing,” said Jones, “and through the interview process it was clear that eBay has zero tolerance for crime. I was an experienced eBay seller, but felt eBay had room to improve in helping retailers with their organized crime issues.” eBay’s senior leadership provided Jones a green light to fix their relationship with retailers and attack the organized retail crime issue.

The evaluation began with key industry leaders to solicit their opinions of eBay. Working with Joe Larocca and Rhett Asher, both then executives with the National Retail Federation (NRF), Jones documented the criticisms and the issues behind them with the aspiration of developing working retailer partnerships. He agreed that eBay should be a focal point in helping retailers solve organized crime issues. The meetings led to a partnership between eBay and NRF to foster working relationships with its members.

eBay investigator Christian Hardman (right) runs reports on suspected organized retail criminals.

Paul Jones, LPC, Senior Director, Global Asset Protection, eBay

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“While others in the online space hide behind emails and do not partner, eBay

has a strong track record of helping both retailers and law enforcement.

They are a trusted partner.” – Sergeant Richard Rossman,

Broward Sheriff’s Office

TRUSTED PARTNER

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Jones proceeded to meet with dozens of retailers to take note of their concerns and personally advise them that eBay was committed to fixing the organized retail crime issues and retailer relationships. These meetings helped identify the root causes of the

problems facing eBay and the retailers as well as signaled a transformative shift in the eBay approach. The most communicated issues were “the anonymous sellers” and a general lack of transparency. Feeling confident in his grasp of the concerns and the

barriers to retailer relations, Jones was ready to develop his plan.

Jones began an internal review to evaluate what was being done on the eBay side to curb organized retail theft and if there was a more efficient way to do it. He realized quickly

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the need to focus eBay’s efforts. He consolidated two disparate teams into one new asset protection team.

This exercise identified another weakness—analytical information. Throughout the capabilities review Jones found it difficult to locate quantitative information that could be utilized to identify exceptions and address organized criminals. Jones called out the informational weakness to senior leadership and was able to secure funding for a global data analytics team. This team would provide new capabilities by assembling meaningful analytical reporting used to initiate criminal investigations and identify trends.

Building a World-Class Asset Protection Program

Now with the NRF and retail leaders on board with eBay’s new collaborative approach, a restructured asset protection team, and the support of eBay’s leadership, it was time to build a world-class asset protection program. The program needed to

foster collaborative partnership to jointly attack organized retail crime. Jones developed the following mission statement to reflect the purpose of the team:

Support eBay Inc. commerce communities by developing systems and procedures to protect our users and global assets; address risk through the prevention and reduction of criminal activity; and foster strategic relationships with retailers, law enforcement, and government.

With that mission in mind, the task of developing a world-class asset protection program began in earnest. Jones and his team engaged the eBay leadership on many different teams to solicit ideas,

incorporate successful methods, and expand capabilities. Two areas Jones sought to bolster were investigations experience and retail knowledge.

Jones recruited several experienced retail asset protection professionals to his team. John Mearls, a seasoned retailer who held senior leadership roles with leading retailers, including Lowe’s and Kmart, was added to manage the EMEA Dublin, Ireland, investigative team. Dave DiSilva, who previously held retail LP leadership roles in analytics, shortage control, and e-commerce, was added to assist with retailer relations.

Providing Retailers Meaningful Value

Jones and his team sought to find a way to deliver a meaningful value and impact on organized retail crime that

would motivate retailers to collaborate with eBay. Several asset protection investigators had been formed into a tiger team and worked directly with assigned retailers. This early effort, led by Stoney Burke, laid an effective foundation for eBay investigators to work on suspected criminal retail issues with a select number of retailers. However, to be impactful and provide meaningful value, they needed to expand the participating retailers. eBay leadership agreed with Jones, and the program dramatically increased the participating retailers.

Impactful Analytics. The initial exception reporting built by the asset protection team proved valuable in detecting criminal sellers. Jones envisioned creating a suite of reports

TRUSTED PARTNER

Retail investigators prepare their findings for Operation Holiday Steals.

John Mearls, Director, Investigations EMEA & NA, eBay

Dave DiSilva,Manager,Global AssetProtection, eBay

Stoney Burke, Senior Manager, PROACT, eBay

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“The roadmap used by eBay to help retailers address ORC problems should be adopted by other online companies. Engagement and partnership always

leads to a better solution.” – Scott Sanford,

Director of Investigations and Training, Barnes & Noble

based on the foundation of retail exception reports. Working with his team, exception reports were developed in partnership with retail partners to detect organized crime issues based on a combination of seller metrics and merchandise sold. The expanded reporting provided impactful analytics

and focused limited resources on true issues. Demonstrating the value of the reporting, Jones collaborated with internal eBay teams responsible for blocking and filtering suspicious listings to include the notable findings. The internal collaboration resulted in more effective preventive measures.

Efficiency Gains. Because the asset protection team handled thousands of law enforcement requests that consumed substantial resources, they developed an automated tool to process the requests electronically. This change delivered an efficiency gain that freed up resources to work directly with law

TRUSTED PARTNER

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enforcement on organized retail crime matters. Feeling substantive changes had been made in the effort to address organized retail crime; Jones launched a directed communications effort.

How to Work with eBay. This exercise served to communicate the new collaborative approach and encourage retailers’ collaboration. eBay’s asset protection team developed a clear message to deliver to retailers and law enforcement through national retail conferences, regional organized retail crime meetings, LP Magazine, and LinkedIn. The message was straightforward—eBay proactively partners and collaborates with retailers and law enforcement to stop organized retail crime.

Communications included specific details on how to work with eBay on organized retail crime issues. The messaging often included a successful collaboration with a retailer and or law enforcement. The communication initiative was successful and resulted in a rapid increase in collaborative retailers from ten to hundreds focused on organized criminal activity.

Current eBay Asset Protection Initiatives

Today eBay’s asset protection efforts are very different from just a few years ago. The team is

fully invested in the asset protection community though its support of the Loss Prevention Foundation, LP Magazine, and NRF’s Fusion Center.

The team continues to focus on engagement, enrollment, and taking the message to retailers at industry trade conferences, but has evolved in other areas. The asset protection team expanded its law enforcement outreach and now conducts frequent on-site training.

On-Site Law Enforcement Training. Initially the law enforcement training focused on ORC activity, but has evolved into a best-in-class approach to fighting crime on any of eBay’s business platforms. Some of the groups that have attended eBay’s training include:■ Los Angeles Police Department■ Salt Lake City Police■ Federal Bureau of Investigations■ United States Secret Service■ Los Angeles Organized Retail

Crime Association■ Secret Service Fraud Seminar in

their Brooklyn New York Office■ Polk County Organized

Retail Crime Training Global Technical Investigations

(GTI). eBay’s asset protection team added an elite group of technical investigators in 2014. This team of skilled investigators is a complimentary addition to eBay’s asset protection

team that proactively tackles issues of phishing, spoofing, cyber-crime, and carding scams. The GTI team maintains a global presence with investigators in the US; Amman, Jordan; Bucharest, Romania; and Dublin, Ireland, and conducts technical criminal investigations applying the fundamental principles and methods of the asset protection team.

LERS for Retailers. eBay now provides retailers with the ability to submit requests through their Law Enforcement e-Request System (LERS) protocol. This system allows requests to be made electronically through an eBay portal. The change improves efficiency that is used in proactive investigations.

Looking to the FutureAs the eBay asset protection team

continues to evolve, it is continually monitoring emerging issues that may impact the LP community. Following are just a couple of the more significant developments that eBay is assessing.

Chip-and-Pin Card. This technology change improves the security of credit cards when used in a physical establishment, but has an unintended effect of forcing criminal fraud to online retailers. Europe saw a 150 percent increase in online fraud as physical location fraud dropped as this technology was implemented. As the US

TRUSTED PARTNER

“NRF and eBay’s partnership to fight ORC together was a game changer for the retail industry. We have seen significant net positive results since 2009.”

– Joe Larocca, former National Retail

Federation executive

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“Paul Jones and his team are committed to the advancement of the LP industry not only though their partnerships with retailers, but also their participation and

partnership with the LP Foundation. Paul leads the Foundation’s new diversity committee, which is an issue he is passionate about.”

– Gene Smith, President, Loss Prevention Foundation

moves to chip-and-pin cards, retailers should prepare for the implications of this new technology shift and evaluate company fraud models.

Triangle Fraud Issues. This common scam takes place when a criminal seller lists items for sale on their own website, a classifieds site, or auction site. When a buyer purchases the merchandise, the fraudster purchases the item from a retailer using stolen credit card information and has the retailer ship direct to the unsuspecting buyer. Ultimately the account holder of the stolen credit card will dispute the purchase and the card company or retailer incurs the loss. This scam is gaining traction based on input from asset protection professionals around the country. It’s important to review your company’s layered approach to preventing this scam.

It Takes a Company and a Community

For eBay nothing is more important than trust. Without trust, their marketplace could not function. As such they take trust very seriously and work diligently to maintain trust in their systems and among the parties that rely on their platform.

The asset protection team collaborates with many partner groups within eBay

to ensure they maintain the most trusted site for their customers. eBay’s Global Managed Marketplaces, Brand Protection, Customer Experience, and Legal departments are all working with the asset protection team to resolve criminal retail issues. The end result is that trust is maintained for eBay users and earned from the retailers through collaborative efforts like Operation Holiday Steals.

Operation Holiday Steals Wraps Up

It’s late in the November afternoon now, and Operation Holiday Steals is wrapping up. After reviewing how eBay transformed its asset protection program, it really should not be surprising that the retailers engaged in this operation are working together with eBay investigators in close partnership. They share a better understanding of each other and have seen the collaboration work. Following are some of the final results:■ Several online and off-line fencing

operations were identified using advanced analytics from eBay.

■ Sheriff’s deputies conducted raids that resulted in shutting down multiple illegal operations.

■ One operation is still under investigation by the Secret Service, because of its international activity.

■ Over fifty arrests, many for felony offenses, were made during this successful operation.

■ It is estimated that these operations were responsible for dealing in $4.5 to $5 million in stolen retail goods.LP Magazine would like to thank

Sergeant Rich Rossman and the Broward Sheriff’s Office for their efforts and for allowing the magazine to be a part of this outstanding task force. LP Magazine was the only LP industry news team invited to participate and had a busy several days. In addition to eBay, the participating major retailers included Macy’s, Walgreens, JCPenney, Target, Home Depot, Walmart, Publix, Saks Fifth Avenue, and CVS. Credit card and financial institutions involved included Discover, American Express, and Capital One.

JOHN J. SELEVITCH is director of digital operations for LP Magazine. He has been with the magazine for over five years after an extensive career in retail loss prevention for several major retailers. Selevitch was point person on the ground in Florida for the magazine’s coverage of Operation Holiday Steals. He can be reached at 704-246-2406 or via email at [email protected].

TRUSTED PARTNER

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