What Does It Take To Stop a Thief?By Joanne Costin
Article Date: 06-01-2010
Copyright(C) 2010 Associated Equipment Distributors. All Rights Reserved.
Think multiple layers of protection to stay ahead of criminals who want your machines.
Thieves will never stop creating new ways to steal construction machinery, and a dealer’s best defense is to stay one step ahead of them with multiple layers of protection.
While thieves still seek out easy targets on unattended jobsites, they are also increasingly likely to walk into an equipment dealership in broad daylight, rent a machine with false identification and then never return.
When you add up the cost of machine replacement, downtime and penalties, equipment theft costs the industry nearly $1 billion annually. In 2008, the Federal Bureau of Investigation’s Uniform Crime Report shows 13,500 construction equipment assets were stolen, with four out of five machines never recovered.
Record Keeping Will Help in the Recovery Efforts
According to Rusty Russell, director for vehicle investigations for the National Insurance Crime Bureau, one of the reasons for the poor recovery rate on stolen machines is the lack of standardization in the serial or pin number. “A sampling of the national crime database showed that the error rate in the pin numbers was as high as 65 percent on construction machinery,” said Russell. “Police can’t recover what they don’t know is stolen.”
A long time lag between when the equipment is actually stolen and when it is reported stolen is yet another problem for law enforcement. With equipment out on jobsites, and many similar machines in a fleet, it may be days before a dealer realizes a machine is missing. More than 90 percent of all equipment thefts take place between 6 p.m. Friday and 6 a.m. Monday. Thieves know that this is when construction sites are most vulnerable, and are quick to sell and move machines before they are ever recorded as stolen.
Experts from the National Equipment Register, which keeps a national registry of construction equipment and database of stolen machines, advise dealers to keep accurate records of their equipment so if something is stolen, you will at least have a chance for recovery.
“A pin is 17 characters, but often dealers and mechanics will only provide the last eight digits, because that is what they typically use,” said Ryan Shepherd, operations manager for NER.
Sometimes thieves will tamper with the pin plate. “We are finding that someone will remove a pin plate from rental equipment and utilize that plate to cover the identity of a stolen piece,” said Russell.
To combat this, experts advise equipment owners to place the pin number on the machine in another more inconspicuous location. Frank Moore, inspector for the DuPage County Auto Theft Task Force in Illinois, says this could be something as simple as taking a business card, writing the pin and owner identification on it and putting it in a hidden spot on the machine.
In addition to pin numbers, owner- applied markings and decals are yet another strategy to deter theft and help dealers keep track of their equipment. Phone numbers can be helpful. These can be obvious or subtle. While thieves may take the time to remove obvious markings, it is still a deterrent to theft.
“[Owners] have to make their machines more difficult to steal than the people closest to them,” advised Moore. Moore said one fleet owner uses a subtle marking system that involves painting the rims of the machines a specific color, a tactic that the company hopes would not be noticeable to most thieves.
You can help law enforcement by providing information that will help them identify the stolen machine. This includes photographs, identifying marks and information on the location of pin numbers.
The National Equipment Register helps facilitate information-sharing with insurers, equipment owners and law enforcement by allowing equipment owners to register machine product identification numbers (PINs) and other unique serialized identifiers on NER’s database. The service enables NER to identify a machine’s owner at any time, to prevent thefts, capture units returned to the used-equipment market, or return those found in questionable locations. Costs are dependent on the volume of machines registered, but range from $40 for lifetime registration to less than $1 per machine per year, for larger fleets.
Costs can be offset by reductions in insurance costs. Many insurers offer deductible waivers of up to $10,000 or premium credits when fleet owners register their equipment with NER. A list of companies involved in the program can be found at www.nerusa.com.
Technology Provides Added Protection
There is no data being collected to show how GPS technology is helping to prevent thefts, but it is yet another layer of protection to help dealers know where their machines are located in real time.
“There is certainly a trend towards doing more GPS, and it’s a risk-reward and cost-versus-benefit decision that everybody has to make,” said Jim Cox, president of Casey Equipment in Arlington Heights. “It is definitely becoming more popular.”
However, no system is foolproof. Systems can be dismantled, and if a machine is placed in a shipping container the GPS won’t work.
Superior Steel Connectors, a Denver-based steel construction company, effectively used the Intergis Kuva, a highly configurable wireless asset tracking device, to recover a stolen welding machine. Compact in size, the Kuva units are covertly installed and have a long battery life, which means they don’t have to be linked to an ignition.
LoJack is another covert theft recovery system that utilizes a special FCC-allowed radio frequency technology that can penetrate many obstructions. When a theft occurs, the system is activated and law enforcement immediately notified – they can then follow the signal to recover the piece of equipment. In 2009, the company recovered more than $10 million in stolen equipment. More than 71 percent of LoJack-equipped construction equipment was recovered in less than 24 hours, compared to about 10 to 20 percent for nonequipped machines. One-time costs to equip machines range from $795 for a single machine to $400 or $500 for large purchasers. LoJack dealers would benefit from a wholesale price of $395. LoJack is available in 26 states.
“We do want dealers to distribute the product and we have had successful relationships with dealers who use them on their rental fleets,” said Bob De Angelis, senior director, commercial products for LoJack. “We are doing more installations at the factory at the request of large end users,” he added. “That enables us to do a very covert installation. Dealers should be aware of insurance premium discounts and waived deductibles if a LoJack-equipped machine is stolen and not found.
While D3 Equipment, a Case dealer in Fontana, Calif., hasn’t had a problem with theft themselves, customers have come looking for antitheft solutions. Two solutions the company provides are LoJack devices and a GPS tracking and maintenance program.
“In most cases, the devices have been helpful and customers have been able to get premium deductions,” said Kirk Vanderschel, branch manager. If a customer’s machine is stolen, the dealer will also put the machine’s serial number on a Case theft recovery list.
Of course, more low-tech methods such as frequent inventory checks and storing equipment so that missing machines will be easily noticed remain effective in helping dealers identify when a theft has occurred.
Dealers Unite to Recover Stolen Equipment
The Illinois Equipment Distributors (IED) are working together to improve their chances of recovering stolen equipment locally.
“We felt that there wasn’t any central local group to do any kind of theft notification,” said Cox, who is president of the association. “It is very possible that if we have something stolen, that the thief may be going to another local dealership to get parts or trade in the piece to get something else. “As we got into it, we wanted to expand it to “missing equipment.”
While not categorized as an outright theft, missing equipment is an equally big problem for equipment distributors. A piece of equipment “goes missing” when a contractor rents a machine, disappears with it, and quits paying the distributor. If he legitimately paid for a rental, it is not considered a criminal matter, and law enforcement cannot get involved. It is described as “theft of service.”
Executive Secretary of IED, Hugh Goulding, of e-TIP, Inc., will chair the committee to launch the notification system. The first step will be building a database of e-mails for parts managers, sales managers and dealer principals who are members. An online form with equipment data would be completed when equipment was stolen, and it would include key data such as company name, make, model, serial numbers, identifying marks, damage and specialty attachments. For missing equipment, they might be looking for additional information on the person who rented the equipment. When a theft occurs, e-mail alerts would be sent to everyone in the database.
“The most important thing you can do is raise awareness immediately, and we feel it is through a local e-mail notification system,” said Goulding.
Law enforcement, as well as LoJack’s 2010 Annual Theft Study, supports the idea that construction theft continues to be a local issue. In 98 percent of LoJack cases, the stolen equipment was recovered in the same state in which the theft was reported. Machinery was recovered either in a storage facility or in use at another jobsite. Since IED’s idea was initially proposed, the group has had interest from local contractor groups who also want to participate in the notification system when it gets up and running. IED hopes its system will serve as a model for other local dealer groups.
Increasing Awareness Among Buyers
As long as there is a market for stolen equipment, there will be theft. But dealers can help put a dent in this market by instructing buyers to check the equipment they are purchasing to see if has been reported stolen. IRONcheck, available on the www.nerusa.com site enables equipment buyers, dealers, auctioneers, and lenders to search the extensive database before making transactions.
Rental dealers can also help their customers better secure the equipment on the jobsite. Roman Kubesa, service manager for Sugar Grove, Ill.-based Metrolift, relies on good communication with customers to prevent thefts of aerial work platforms. “We want to be sure the customer is aware that he should not leave the equipment exposed,” said Kubesa. “We show the customer how to disable the machine and take the control box with them.”
“We want to make sure the GCs have secured jobsites, and when they get done with the equipment we try to pick it up the next morning,” added Kubesa. “We stress to the customer that they are responsible for the unit until it is picked up.”
The fact that most manufacturers use a common key system has never helped theft prevention efforts. But new systems are being introduced by manufacturers, such as the keyless start security system for Bobcat loaders. These allow equipment users to use a customizable eight-digit security code to unlock the machine. In addition to thwarting thieves, the system has the added advantage of preventing other trades from unauthorized use of the machine.
“There is a layered approach that works best,” said Brian Witchey, vice president of marketing and sales for Equipment Lock Co. “ You make things as hard as possible so thieves are more likely to go on to the next machine, or the next jobsite. Thieves are basically lazy; they want the easy pickings,” added Witchey.
The company’s locks provide a proactive mechanical means of security, locking the drive controls for the equipment so it can’t be driven. They are available for skid-steers, attachments, backhoes, and excavators, as well as other applications. A changeable combination lock provides added security to rental machines, protecting the customer, as well as the dealer. Costs for the locks ranges from $114 to $209 per machine.
“Dealers get a fantastic dealer wholesale price,” said Witchey, “so they are able to resell the items out of the parts department, and they can purchase the devices at wholesale to secure the equipment on their yard and to turn around and rent the devices on their equipment. It’s going to be paying for itself over and over.”
Don’t Forget the Basics of Physical Security
Basic physical security for the yard is an area that Jeff Lieberman, field investigations unit manager for Sentry Insurance, would like to see improved. “So many of the dealerships have very poor lighting,” said Lieberman. “They really aren’t following some of the basic crime prevention strategies such as lighting and fencing.” Lieberman also recommends video surveillance as an inexpensive deterrent to theft.
Above all, dealers need to become more knowledgeable about equipment theft if they are to control their losses. Valuable resources include the National Insurance Crime Bureau and National Equipment Register, which regularly hold one-day regional summits on heavy equipment theft and also have a wealth of information on their Web sites.
“A lot of what I know about equipment theft I learned on the Internet,” said Inspector Moore.
Dealers who can help themselves to the information and establish theft-prevention policies will be ahead of the game. Not only are they likely to see lower premiums for their own efforts, but they will also become a valued resource for their customers.
How to Protect Your Business from Credit Card Fraud and Business Identify Theft
Construction equipment dealers are being increasingly victimized by identity thieves who purchase or rent equipment using a stolen identity of an individual or business. Dealers need to be wary of the schemes which often involve tricking employees through social engineering. “It’s a way of manipulating people that relies on our innate human tendencies to trust and help other people,” said Jon McDowall, CEO of Fraud Resources Group, a firm which investigates fraud for insurance companies and businesses.
McDowall cautions dealers to investigate their insurance policies to determine coverage against these kinds of losses. He has seen some instances where insurance would not cover losses if the dealer had not been diligent in their efforts to avoid a loss. Dealers should check their policies so they have clear understanding of what diligence is required.
“I think employee training is critical,” said McDowall. Employees need a basic understanding of the schemes, and need to feel empowered to ask additional questions or to escalate a rental to a supervisor if they have a gut feeling that something is wrong. “There is an inherent conflict,” said McDowall. “On the one hand, we are all about customer service and getting them in and out quickly because they have a job to do, and security is on the other side of that.”
For new customers there are a number of ways to establish that a customer is who they say they are, that go beyond a drivers license and credit card. There are services provided by credit bureaus and other organizations that can provide dealers with a set of non-traditional “out of wallet” type of questions that can help ferret out fraudsters. Dealers should look to their credit card providers and processors to help them develop a proactive approach to preventing these types of fraud.
Thieves have also successfully targeted rental dealerships posing as employees of a current established customer. McDowall says one way to effectively prevent unauthorized rentals is to establish a pin number for use by authorized customer employees. Dealers should work proactively with customers and make them aware of increasing incidences of business identity theft and the need for added security measures.
The bottom line is that there are a lot of resources to help dealers prevent “missing equipment” as well as credit card fraud. They are the insurance companies, credit card providers and law enforcement agencies who all have a stake in preventing fraud. It’s time to take full advantage of them.
[ TOP ]