What if it were possible to detect the exact moment a theft was committed and surreptitiously be able to pinpoint the identity and location of the thief? An impossible scenario? Not anymore.

Nox Defense, based in Warrenton, Va., has created what it calls an “Invisible Perimeter Defense Technology” that employs “spy chips” along with a high-resolution video camera surveillance system to create an immensely robust anti-theft solution that can be deployed in contained areas such as offices, warehouses, evidence rooms and hospitals and at anticipated crime sites.

Ideally suited for clandestine surveillance, the system can spot the occurrence of a theft, track the stolen objects and the perpetrators in real time (without their knowledge) and immediately alert authorities to the event through their cell phones or Blackberrys.

It works by discreetly placing tiny radio frequency identification (RFID) chips the size of grains of sand as tags on company products, carton labels, employee name cards, and identification badges. RFID readers hidden inside ceilings, walls or office furniture alert security personnel to any illegal entry or activity and can track stolen objects even if they are well concealed inside files, suitcases and other items. The RFID readers are tied in to digital video camera feeds that allow authorities to see video footage of the crime in real time on their iPhones or laptops or call it up later at their convenience.

“Traditional security involves doors and fences,” Carl Brown, president of Nox Defense, told HSToday. “These are very obvious barriers. The problem with them is—they’re easy to penetrate. Nox monitors everything and sends reports to a person who can make a decision on the size of the force that should respond to a break-in. The thief never knows when he’s been spotted or who is coming for him.”

Created in response to the FBI’s request for a foolproof way to track products, the system is being positioned to tackle the fastest growing crime in America today— employee theft.

A widespread problem

The American Management Association estimates that employees at US companies steal over a billion dollars a week from their employers, and, according to the US Chamber of Commerce, 75 percent of the employees who steal from the workplace do so repeatedly. The seriousness of the issue still remains largely unknown. It is estimated that employee theft is responsible for a staggering one third of all US corporate bankruptcies.

“Employee theft is a massive problem,” said Brown. “Over 80 percent of employees steal. Most of this is minor (free drinks for friends at a restaurant), but some of this is major (personal computers, data, espionage). Once a company grows beyond the initial founders, theft is pervasive. Each dollar lost due to theft requires, typically, $5 in sales to recover.”

According to the latest National Retail Security Survey, the loss due to employee theft totaled $19.5 billion in 2006 and represented nearly half of all retail losses. These were just the tangible losses detected in the retail sector alone, not in other business sectors or companies. The 19th Annual Retail Theft Survey (http://www.hayesinternational.com/thft_srvys.html), conducted by Jack L. Hayes International, a leading loss prevention and inventory shrinkage control consulting firm, estimates that on a per-case average, dishonest employees steal approximately 6.6 times the amount stolen by shoplifters.

Todd Stefan of Talon Cyber Tec, Fountain Valley, Calif., which provides computer forensic investigations and information security services for businesses, said many organizations don’t know how to mitigate the likelihood of theft through proactive means, detect such a theft as it is occurring or aid investigative efforts should a theft occur.

“Combating employee theft is becoming paramount to business sustainability as it is a fast-growing crime that is being propagated by poor employee hiring practices, dishonesty among the workforce and opportunity,” said Stefan. “With employee theft remaining undetected in almost 75 percent of its instances, businesses are learning the hard way how their employees can abuse the trust they’re provided.”

Retailers are waking up to this issue and, while they have been investing in new technologies to deter, detect and convict criminals, the solutions typically deployed include burglar alarms, visible and hidden closed-circuit televisions, digital video and regular activities such as screening, using armored cars or data mining software. These measures, though, cannot effectively address the problem.

“While there are many solutions available to businesses that can minimize the likelihood that employee theft can be successfully perpetrated, a constant issue has been the limited effectiveness and capabilities of such solutions,” Stefan pointed out. “Businesses are not adopting such solutions comprehensively and often rely on only one limited solution, such as video camera surveillance, access control measures or written policies and procedures. In addition, many organizations have found that effectively combining and utilizing different solutions together in a single uniform effort to combat employee theft is cumbersome and expensive.”

The RFID solution

Effective use of RFID technology could prove to be the answer. RFID tags typically cost fewer than 20 cents each. It’s possible to tag thousands of items with unique identifiers and read them from a distance. The small size of the tags, along with their ability to issue alerts should they cease to function or when a predefined rule is violated—such as entering an exclusion zone—makes them an ideal, cost-effective solution.

Tying in real-time video surveillance seamlessly with RFID technology confers Nox Defense’s Invisible Perimeter defense system with many unique advantages. Security personnel don’t have to monitor tapes of endless video footage anymore, since the system can automatically recognize a crime, issue an alert and create a video catalog of it. It’s possible to track every single object as it moves through a building and be aware of who moved what and where. It’s possible to monitor thousands of items in real time or forensically with an exact identifier on each item, something that’s impossible with traditional security systems.

The system can also guard against thefts that occur in plain sight. For example, thefts that look like loading errors where six items are loaded onto a delivery truck instead of three. In case of a break-in, the system allows authorities to formulate an immediate threat assessment.

In addition to employee theft, the system can also be utilized for other purposes, such as determining the validity of insurance claims, monitoring assault, customer service automation, shipping proof and printed record locators. The spy chips are silent until activated by motion or external inputs and use encrypted radio frequencies for communication. The company is also exploring the use of optically activated ID-Dust to detect whether a person has entered a secure area or handled documents they shouldn’t have.

“A significant advantage of Nox Defense’s RFID technology is that a workforce does not need to be aware and may never uncover the RFID tags in place, allowing the business to maintain its initiative and upper hand when it comes to addressing and combating employee theft,” noted Stefan. “Such a solution, if used properly, will provide businesses with the real opportunity to prevent, detect and respond to employee theft with greater accuracy, speed and effectiveness.”

According to Brown, early adopters of the technology include the FBI, government agencies, law enforcement agencies and commercial companies. About 15 systems have been deployed so far. Spread over five years, it costs about $20,000 a year for a standard-sized facility, with another $4,000 in RFID tags for asset tagging.

Though the spy chips might have some people concerned about Orwellian surveillance or personal privacy violations, Brown stated that it isn’t really a concern.

“Privacy is an illusion,” Brown argued. “It’s people’s fascination with their self-importance that makes them think anyone would care what they do—privately. What we are focused on is crime. Whether it’s theft, assault, human or drug trafficking—we’re trying to stop it. We have focused Nox technologies on stopping crimes against a person. While we respect the right to privacy, Nox is deployed by a person that wants protection from what people want to do ‘privately.’” HST