In the 1990s there was an interesting BBC series called Daylight Robberies that humorously documented the “war” between squirrels and people who took great pride in their birdfeeders. The homeowners would go to great lengths to try to put up physical safeguards to prevent the squirrels’ access to the birdseed. But regardless of how elaborate the defenses—some bordering on the Rube Goldberg end of the spectrum—the squirrels always seemed to figure out the solution. With fuel prices being as high as they are today, a similar battle is being waged with fuel thieves that have gone beyond the drive off using sophisticated techniques to steal greater quantities of fuel. This is the first of a two-part article—card lock and retail—taking a look at the issue.
The loss of tens of gallons and fuel theft can mean serious dollars to a petroleum marketer. The loss of hundreds or thousands of gallons is another thing altogether. That tends to happen when the thieves find ways to circumvent safeguards in fueling equipment or managed to gain direct access to storage tanks and remove the product in bulk. “This winter we had a guy going around pumping out fuel from card lock stations and they hit one of our competitors," said Brian Decker, card lock and retail operations manager for El Monte, Calif.- based DeWitt Petroleum. "Then they came and hit our Long Beach facility where they used a bobtail pump truck and pumped 4,000 gallons of fuel right out of the tank.”
In some cases, the thief is your generic criminal looking for a score. But all too often the thief is someone with experience in the operation or maintenance of fueling systems that knows where the loopholes exist or someone who previously might've been a reliable customer.
"This theft is usually occurring in the owner operator community, which is guys that own their own trucks and they lease on to companies and haul 'cans' back and forth between ports," said Jim Pederson, general sales manager at Associated Petroleum Products in Tacoma, Wash. "You have little guys out there that are stealing fuel cards and they're getting pin numbers and you've had that for the 20 years I've been in the industry. But, there has definitely been an uptick."
And as Greg Iverson, president of the Salem, Ore.-based Pacific Pride Services card lock network, notes the theft is migrating. "People that may have been in a smaller town that might have been immune from fraud are starting to see things that are unpleasant, so we are encouraging everybody to be as sophisticated as they can be to address this issue," he said.
To a great extent, it’s up to the individual marketer to assess his or her sites and determine what level of enhanced security might be required to address a growing threat. The franchise company may help with programs and the fueling equipment manufacturers may provide advice and security options, but ultimately each marketer has to adapt his or her sites to this threat. But the marketer does not have to operate in a vacuum. "I don't care if you are CFN, or Pacific Pride or another franchisee in the network, we all care about sharing this information because it's best for the industry that we put better checks and balances in place," said Pederson.
It has become a big enough issue that Pacific Pride assembled a task force to address the issue at franchisee request and Jim Pederson has been taking on a leadership role in that effort. Brian Decker has also worked hard to develop a range of in-house security measures to address both card lock and retail theft and has regularly spoken at industry meetings on the subject.
The card is typically the cornerstone for securing the card lock site. However, that security barrier can be easily compromised through customer sloppy practices. The customer will typically be on the hook for the theft directly related to cards that were under their control. However, keeping the customer happy is important to the business relationship and loss prevention is a cornerstone of that relationship. And, stolen cards can create opportunities for fraud that might not be easily tied to the negligent customer.
At the most basic level educating customers about the importance of the driver not writing pin numbers on cards or sleeves is critically important – even if the drive is “clever” by writing the number backward.
It is also important to set fueling parameters on the issued cards to minimize the extent of fraud. "Years ago (a local) network participant had issued cards to a customer without limits," said Decker. "Someone stole a card and went to one of our sites and over the weekend invited everybody to come on in and fill up. They pumped our tanks dry selling fuel at what I'm sure was a greatly discounted cost. When we saw the video, the trucks were lined up down the street."
To reduce the threat even further, marketers should encourage the fine tuning of the parameters for each driver and vehicle as tightly as is practical for the customer.
"An account might be going out of business, they will send their drivers out and fill up all of the vehicles they can with cards before the marketer is aware of their situation and cuts them off,” said Tom Lane, vice president of marketing at DM2 Software, Inc. “Then there is the issue where someone quits and they don't pick up his card right away and get him or her locked out of the network. Those individuals go around and take as much fuel as they can before the card is canceled.
“Those are the areas that we can help with the most. You can set up restrictions on accounts so that they can only fuel on certain days or at certain times and the system will red flag those transactions if they take place on days or times where they are not permitted to fuel. You can set it so that there are a limited number of transactions per day, or a user-defined number or a user defined number of transactions, which can all be red flagged.
“A lot of our marketers are operating their own proprietary sites and they are on CFN or they are on Pacific pride or they are accepting Voyager cards. And the driver often carries and uses multiple cards. Our fueling package can take transactions from any of those and apply those alert features to all of those transactions."
Lane noted that the accounting system will flag exceptions and not only e-mail them to the customer for review, but to the marketer as well.
Attacking the Dispenser
The dispenser performs a range of functions exceptionally well. And for day-to-day concerns they are adequately safe from theft. However, they are not ATMs where physical security is concerned and some thieves today, likely those with a petroleum maintenance or operator background (or excellent Internet skills), have found vulnerabilities to exploit.
Most of these involve access to the fuel metering pulser through various panels and then manipulating it to indicate less fuel dispensed than was physically the case.
Because these techniques often result in physical damage to the pulser, this tends to be more of an issue in the retail environment since a commercial card system should identify the person making the first bad transaction that shows up during the reconciliation process. However, a thief with a stolen card that has restrictions can use pulser manipulation to pump more fuel than they otherwise would be able to if the proper fueling controls are in place.
Another dispenser tactic Decker is aware of that hit card lock operations in Northern California involved manipulating the shear valve on the dispenser. He noted that there is a quarter-inch fitting test port that the thieves accessed and ran a hose to a separate container. Every time a pump would be authorized and the line pressurized it would slowly fill the can. If left uninterrupted a reasonable amount of fuel could be stolen over time.
Dispenser theft and deterrence will be covered in greater detail in the second part of the article in the September issue of <i>NPN Magazine</i>. As a general starting point though Decker recommends replacing the supplied dispenser locks with heavy-duty circular vending machine locks; changing the pin number on the maintenance pad from the default; removing the pad itself from the dispenser; and even removing the wires for the pad from the dispenser. Alarms and shutoffs can be added to the dispensers along with tamper detection labels and they can be further protected from intrusion by steel bands.
“We had one case in Arizona where steel bands were placed on the front of the pump and the criminals decided to come back and the franchise operator saw where they tried to get at the panels in the bands prevented that from happening,” said Lisa Garside, vice president of operations at Pacific Pride Services who spearheads Pacific Prides theft prevention taskforce. She noted that the steel bands are a relatively inexpensive solution.
Securing the tank
As noted at the start of the article, massive losses can be incurred when the thieves target the tank directly. "The locks that are certified to secure those tanks are for the most part plastic and you can take a screwdriver and pop them right off,” said Decker. “You can find metal ones, but all that takes is a bigger screwdriver because they use rabbit ears on the side of the cap to grip indents on the riser. So you have to deny access to the cap itself."
Decker noted that there are aftermarket caps, but those can have security deficiencies as well. In the end, he manufactured metal covers that use vending machine locks. "You would have to demolish the entire fuel tank fill in order to get to the fuel and I didn't figure they would go to that extent," he said.
In the case of a massive attack on a tank pumping out hundreds or thousands of gallons through the fill, an effective tank gauge should be able to catch that massive loss of fuel if it is set up for theft detection.
Reconciliation in and out
One key to prevent future theft is knowing that the theft is occurring. Reconciliation helps establish that unaccounted loss, and it starts with the delivery as a potential point of theft. "Is your delivery ticket matching your tank gauge ticket?” said Orlando Hernandez, fuel control product manager at Hodgkins, Ill.-based OPW Fuel Management Systems. "For example, if the driver says he's delivering 1,000 gallons of fuel, does your tank gauge confirm that?”
If there is a discrepancy, Hernandez noted that you need to fully check the tank geometry and have a service company check the tank gauge to rule them out as the source of the problem. With the fuel satisfactorily delivered, check to make sure the amount physically dispensed matches the amount sold. If a discrepancy is discovered, make sure the meter is calibrated, and as with delivery discrepancies make sure the tank gauge is accurate.
"If you have everything checked out and you are still getting variances, are the variances a mixture of negatives and positives or are they always negatives? If they are always negative, you have to suspect something might be going on," Hernandez said.
With some tank gauge systems you can go beyond detecting general theft to noting the discrepancy related to a specific transaction.
Catching the criminals
As a final note, brazen thieves will hit attended retail sites in broad daylight. Of course, card lock sites are unattended. Even heroic efforts might not protect fully against a theft, but the next best thing is keeping these criminals off the street by putting them behind bars. While not inexpensive, proper video surveillance is critical to help law enforcement – which can include the FBI and Homeland Security in some cases – catch the criminals.
"We put up as many security cameras as we can physically install to cover the entire location," Decker said. "I've seen people use two cameras to cover the whole site and you can hardly tell if something is a truck or car because the quality is so bad. You have to have high quality images that can identify a license plate in some cases or the name on the side of the truck.”