$1.5 Million Bar-code Scheme Bilks Wal-Mart Stores

nomrniceguy writes "Two couples have been charged in a price-switching scheme that allegedly defrauded Wal-Mart stores in 19 states of $1.5 million over the last decade. Authorities said the scheme involved using a home computer to produce UPC bar codes for cheaper products and slipping them over the real codes on high-priced items. The suspects then allegedly sold the merchandise, or returned it for refunds or store gift cards that also were sold."

Re:Doesn't add up

[stickystyle]

Have you been to a WalMart?
The people that work there are not like in the commericals, they are just scaning you product, waiting till it's there chance to die.

Re:Doesn't add up

[tmbg37]

The article said the the couple purchased items during busy periods, so probably the checkout clerk either didn't notice/didn't want to hold up the line. It's also likely that the employees just didn't care enough to make a fuss about it.

Re:Doesn't add up

[trevdak]

Having worked in a Wal-Mart for one summer, I can assure you that I not only didn't pay attention to the register display thing, but I would've welcomed some excitement of someone actually stealing from the store. Then again, for there to be any excitement I'd either have to be an accomplice or actually bust them. Hmmm.

Worst job I've ever had.

I never noticed anyone stealing so Wal Mart don't sue me when you read this.

Re:Doesn't add up

[robslimo]

Hmmm, I think I see a weakness in the 'self checkout' concept. How the heck do you prevent the UPC abuse there? I guess they will have to rely the old security cams to spot folks sticking labels on boxes.

BTW, kudos to the submitter for providing a link to the light-weight (printable) version of the article.

idiots + crime = caught

[FuturePastNow]

returned it for refunds or store gift cards that also were sold

That's how they got caught. This was actually a fairly original idea; if they'd used it very sparingly, and only kept the items for themselves, they most likely would never have been caught at it. Most criminals' undoing is in not knowing when to stop.

Re:Is it that simple to make UPC codes?

[Frostalicious]

One would assume it would be pretty hard for your Joe Sixpack to go out and just print these things willy-nilly.

All you need is a barcode printer and some software which are publicly available for a few hundred dollars, like from these guys [idautomation.com]. Get a UPC number off a pack of chewing gum and put the sticker on a mountain bike. The hard part is finding a checker who won't notice. I can't figure out that one.

Use similar items

[jamesbulman]

This works if you put new barcodes on for similar (but cheaper) items. For example, stick the barcode for a Sony ultra-cheapo DVD player on a Sony top-of-the-range DVD player. No checkout assistant is going to notice/care.

done in by greed

[circletimessquare]

it's hard to stop using a drug, from quitting a winning streak at the casino, from selling a rising stock, or from successfully bilking walmart of over hundreds of thousands of dollars over the span of a decade

the greatest enemy to a criminal or anybody on a power trip is himself

kid's play

[thetzar]

I did this when I was about 8 years old; swapped the price tag for one thing that I could afford (that was like $1) over another which I wanted (which was like $5). The sales drone didn't notice, but the guilt was enough to keep me from doing it again.

Fancier bells and whistles, but this is the same thing. It'll be interesting to see how they pulled off bilking one of the defining features of UPC codes which I didn't have to deal with: When scanned, the register should display a description of the product. The answer was probably lazy/unmotivated register drones. Some things never change.

Re:Is it that simple to make UPC codes?

[cmallinson]

Get a UPC number off a pack of chewing gum and put the sticker on a mountain bike. The hard part is finding a checker who won't notice. I can't figure out that one.

I think the cashier would notice you paying for the plasma TV with a $5 bill. That's what differentiates dumb criminals, and the ones you don't usually find out about. You don't swap the code from a $1 item with 1 $3000 item. You take the sticker off a 17 inch lcd, and put it on a 19 inch one. I wouldn't even put the sticker on there permanently. It just has to be the first sticker the cashier sees. Once it's scanned, get rid of the evidence. Walmart is the perfect place to do this. They sell everything, and pay their people nothing, so the cashier will likely not have a clue what you are doing.

Re:Doesn't add up

[ErikZ]

When you pay your workers as little as possible, they don't give a damn.

Re:Doesn't add up

[eclectro]

It's also likely that the employees just didn't care enough to make a fuss about it.

I don't think that it is a question of caring.

You must remember that Walmart has a HUGE inventory and for all purposes impossible for any single checkout clerk to be aware of price fluctuations. Couple this with the fact that Walmart awards clerks who are very fast at checking out, and it is apparent that by time the thieves made it to the checkout line it was too late already.

The article mentions that they were well travelled covering stores in multiple states, and that there were other retailers beside Walmart involved. So it was a pretty complex and effective scam, never giving any one clerk a chance to recognize them.

It must suck for them to be spending New Years (and likely a few more) in jail.

Re:Doesn't add up

[jesdynf]

How the heck do you prevent the UPC abuse there?

By not using UPCs -- Wal-Mart's pushing for RFID tags in all God's merchandise. That'd make self-checkout both faster and more difficult to defeat.

Although... with a portable software RFID reader and tag broadcaster, and a soft canvas tote bag lined with copper mesh, you might be able to scam it after all.

Yeah -- a Faraday cage with a reader on the inside and a multiple-channel transmitter on the other. (Hardwired together. I know.) Stick a recycle/globe logo on the bag's surface, so it's a hippie shopping bag.

Items are dropped into the bag and their code is stored. The bag transmits either that item code or a previously scanned code of a similar but cheaper item. Field user interface is dead simple.

If they use and trust RFID for self-checkout, wait until things are /very/ busy, grab a bunch of items that turn into much smaller items in your tote, wave it at the stand, pay in cash, and saunter on out the most crowded door. Flash the receipt at the harried greeter on your way out.

Primary weakness is either visual inspections by /sharp-eyed/ and diligent greeters or trained professionals who recognize aberrant behavior and have the leeway to follow it up.

Honestly, though, these people deserved to be caught. They found $10K in stolen goods? They used an /informant/ to track 'em down? Waaaaaaaaay too big a footprint. Bound to happen. Bringing in friends and making it a /business/ and -- you just know they had to brag about it. Mention it to people.

Dumbasses.

Re:Self-checkout fraud possible

[Anonymous Coward]

You just buy a 2GB sandisk CF card and mark it as a 64MB card

or buy some PS2 games and mark them as bargain games

etc

There are more than a few identical weight products that would allow you to get around that, not to mention the fact that all the weight systems I've seen are awkward and don't handle bulky items. If you had something large and/or oddly shaped, they just clear it without even looking at what it is.

Re:Doesn't add up

[zakezuke]

Wal Mart is the king in data tracking. They are the people who know that pop tart sales go up after a hurricane. I would find it hard to believe that someone could forge a walmart reciept as each one has it's own unique code which is associated with the specific transaction. Even if it's just a stick of gum or some rolaids they keep track of it all. I would think it would be hard to forge.

It makes me wonder why anyone would try to rip off walmart.

Why bother?

[Nine Tenths of The W]

$1.5m over 10 years between 4 people=$37500 a year. Call it 80% of that, $30000, as stolen goods never retail for full value, and you have to wonder why they bothered, given that this must have been close to a full time occupation. They'd have done much better to sell the means rather than the goods.

Re:Is it that simple to make UPC codes?

[xchino]

"All you need is a barcode printer "

No barcode printer necessary. A regular run of the mill printer will print barcodes just fine. I did this a few years ago when I was archiving my media collection, some of the items didn't have a UPC printed on the case or media so I had to print my own. If I was able to print with an old canon bubbljet and read with a cheap (free actually) CueCat [wikipedia.org]
then I'm sure they could do the same.

"some software which are publicly available for a few hundred dollars"

There are several barcode generators available online for free. There is even a database of UPC's available here [upcdatabase.com], which is fairly extensive, I tried picking random things with barcodes up once, and it recognized almost all of them.

"The hard part is finding a checker who won't notice. I can't figure out that one."

If you've been to a walmart recently you've probably notice they now have self check out lines, you just scan your items, it calcualtes your charge and you can pay with cash or credit. I can see very easily how you could get away with it.

I found it interesting that I could actually read barcodes directly off my screen, though it often took a few swipes. But it goes to show that barcode readers aren't really that finicky about reading barcodes.

In the same direction....

[raehl]

Wal-Mart says that if I present an item to the cashier, and I have done something so that the price scans lower than the posted price, I'm guilty of stealing from wal-mart....

Then if I present an item to the cashier, and it scans a price higher than the posted price, is Wal-Mart guilty of stealing from me?

Doesn't seem like they should be able to have it both ways. How is swapping bar codes to get a lower price any different than "accidentally" entering a higher price for a particular barcode into the database?

Re:Shady, but probably legal

[Nurgled]

By replacing the barcode, you are not saying "I will pay $5 for this microwave oven", you are saying "This microwave oven is a bottle of soda".

I suppose the same argument could apply -- the customer service representative agrees that the oven is a bottle of soda -- but you can't argue that you are offering a lower price for the item because barcodes identify what an item is and not how much an item costs.

Re:Doesn't add up

[Splab]

Speaking of morons - you wasted at least half an hour, or more likely an hour complaining. Dont know how much you make, but at my sallary you could have bought that dvd 5 times...

Re:Doesn't add up

[16K Ram Pack]

There's a couple of major stores I know in the UK that don't like to give returns. And you know what? Once people experience an obstructive refund policy, they'll think twice about giving you any money again.

So, for the sake of 1 refund of 1 product, you can lose years of business, as well as people telling all their friends what a bunch of bastards you are.

Friends of mine have switched all their games shopping because one time a game failed to work, even though the computer met the spec. Rather than the store giving a refund out of grace, they argued like mad that "look, it works fine on our machine" and refused. Rather than pursue legal channels or spend time escalating it, they just have chosen to shop elsewhere now.

Re:In the same direction....

[fish waffle]

How is swapping bar codes to get a lower price any different than "accidentally" entering a higher price for a particular barcode into the database?

Aristotle described the core of the distinction long ago: intention. If you as a customer swap barcodes in a store your goal is clearly (usually) to sneak a higher price item for a lower price. You are misrepresenting the transaction to get take advantage of someone/thing else. If some retailer makes an error in pricing they are not necessarily intentionally misrepresenting the transaction; they are still acting in "good faith."

Of course some retailers have intentionally done database/bar-code tricks to the disadvantage of consumers, and that would be theft (i vaguely recall at least one court case a few years ago though i don't remember the retailer or specifics and google isn't helping).

Re:Shady, but probably legal

[dk.r*nger]

The pricing on the goods can be constituted as an offer. On accepting the offer, a contract is entered. The new pricing (bar code) can be viewed as a counter-offer. If the cashier accepts, the counter-offer is accepted and a contract is entered, making it a legal sale.

No. A barcode isn't just a price, but a code representing an item, which in the cashregister is linked to a price.

If you put the barcode from a pack of chewinggum on a mountainbike, the barcode still represents the offering of gum at $0.77, and that is the offer the contract is concerning. The fact that you are carrying a $300 bike out of the store is just theft.

At Home Depot, the cashiers just don't care

[Powercntrl]

A few months ago I was buying the parts to put together an entire irrigation system from Home Depot. Had the whole deal in two carts, one full of PVC fittings/heads/etc., the other full of pipes.

The cashier just looked at the entire mess of items with disgust and ended up tossing every part into a bag regardless of whether or not it scanned on the first try. For what was supposed to be $300 - $350 in parts, I ended up paying around $180 for.

If you don't pay your employees enough to care, you're gonna have losses. :-P

Re:Retailers use this for competitive pricing...

[Anonymous Coward]

a reasonably smart register would ring that up as 'DO NOT SELL' rather than $42.95.

Walmart doesn't care

[tentimestwenty]

So one group made 1.5 million from switching UPCs. That's a drop in the ocean compared to Walmart's overall sales. Think of what it would cost to hire employees who cared, just to catch the rare occurrence of something like this. Totally a no brainer, you just keep doing what you're doing.

Somehow I'm not surprised at quite a few responses

[YukiKotetsu]

At first, I was just disgusted at these people who decide to scam the system the best they can and for as much as they can. When I saw they'd be getting 8-whatever years for this, I felt a little better.

Then I see people posting on tips how to do this more efficiently, how they have done it at Home Despot, Best Buy, and so on, and I wonder...

Are these the same people that think downloading movies and music is just fine? How are you justifying this, since every thief I know has some way to justify it.

They charge too much, therefore it is right of you to systematically lower the price via a UPC swap?

You couldn't afford it, therefore it is right of you to systematically lower the price via a UPC swap?

You wouldn't have bought it at such a high price, it is right of you to systematically lower the price via a UPC swap?

So, by stealing an item for a lower price, you're driving up the price of the rest of their inventory. You can now justify their high prices by requiring them to set the prices higher to account for loss, the loss you have created. Nice job.

Everyone has some kind of justification, I bet these criminals had some as well. They did not want to work, found the system easy to exploit, and wanted free money... what better reason is there really? Sure, they are "innocent until proven guilty" I suppose.

I'm not sure if it's the lack of morals, or just the lack of brainpower that causes such things. Self-justification of stealing is still just stealing and it makes me sick.

Re:Doesn't add up

[graikor]

I'd think, with all the bad press that Walmart has gotten for how it treats its employees, you'd be aware that a Walmart cashier would probably make significantly less than $10 for five minute's work - which would equate to $120/hour...

Realistically, $10/hour seems to be a little high...

Re:Shady, but probably legal

[Senior Frac]

By replacing the barcode, you are not saying "I will pay $5 for this microwave oven", you are saying "This microwave oven is a bottle of soda".

A smart [read: not greedy] thief would do their homework first and put an $80 microwave barcode on a $120 microwave model. The text that displays would be very brief, displaying Microwave Oven or something similar, and would not trigger suspicion with an attentive cashier.

Social observation shows that this type of self-restraint is rarely found among criminals. Greed takes over quickly.

Re:Someone tried this with me once... kind of.

[Anonymous Coward]

It goes to show that if you don't pay for good training up front, you'll pay for it later.

In this case, it's more of a business decision. At Walmart, there's a high turnover rate for cashiers and it'll probably cost them more than $1.5M to try and train the cashiers for this type of thing. Notice I said "try" because not all Walmart cashiers will be able to retain the training.

At REI, they're probably more careful with their hiring and retain their staff for longer periods. So in the long term, it costs them less to train this staff properly than it would to let a few unscrupolous shoppers steal stuff regularly.

Re:Self-checkout fraud possible

[geekoid]

if you remember, slashdot poswted a link to an article that tlaked about rfid.
The jist of it was people didn't like it, so they came up with a plan to bet consumers used to it.
Enter self checkout.
The ones I use want to press my items against a yellow strip after I scan them. I don't.

If there damn infernal machine starts making noise, I don't stop on the way ot, either.
I am not a thief, and I will not prove my innocents.
I will defend it, however.

Re:Doesn't add up

[kd4zqe]

Actually, Wal-Mart has their receipts printed with their logo as an invisible UV Watermark on their receipt paper. Try holding it under blacklight sometime... After all, almost everyone has a Wal-Mart ticket somewhere...

Under every Wal-Mart customer service counter is a blacklight to test this if the authenticity of the sales ticket is ever called into question. They even go so far as to store blank receipt paper rolls in a lockbox.

Additionally, on every Wal-Mart ticket, there is a transaction identifying barcode and transaction number. If I remember correctly, they keep the sales record in the database for at least 5 years before it is archived to more permenant storage. In a local legal case, the local court was able to subpeona (sp?) Wal-Mart for a copy of a receipt as evidence to replace a ticket that was faded out after something like 4 years.
______________________________
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