Dealing with Drive-Offs

With the onset of spring, retailers can count on a segment of their "consumers" filling up and driving off without paying. Increased gas prices haven’t helped the situation, but it is improving.

Typically, convenience stores can experience a few gasoline thefts a week. But when prices increase, some stores see several gas thefts a day. With retailers making a penny or two profit on the sale of gasoline, a store needs to sell thousands of additional gallons of gasoline just to make up for the loss. Oftentimes, it only takes one $50 theft a day to significantly erode–or wipe out entirely–a retailer’s daily gasoline profits.

"Since 2005, in the post-Katrina era, many more stations are mandating that customers prepay," said Jeff Lenard, vice president of communications for NACS in Alexandria, Va. "That has helped greatly diminished the problem and the number of instances retailers are reporting."

But to think the problem is going away would be a mistake. NACS urges retailers to minimize risk at the pumps. Low-tech solutions have proved to be useful. Simply greeting all customers, whether by intercom or in person, is effective. This takes away the feeling of anonymity.

A technology like the patented program developed by Pump-on LLC largely protects the customer’s convenience and still ensures that theft is eliminated. With this program, cash customers use their driver’s licenses (where basic identification information is read) at the pump to authorize dispensing. As of January 2008, a number of retailers have committed to work to further develop this program, including Sheetz, Wawa, RaceTrac and QuikTrip. In fact, QuikTrip has been using this type of program to great success in a number of cities. If customers fill up and fail to pay, their names are turned over to police. In Tulsa, Okla., and Kansas City, Mo., gasoline theft was "reduced to a trickle," QuikTrip reports.

Pondering Prepay
While requiring customers to prepay for their fuel would virtually eliminate the problem of gasoline theft, it does come with a cost, NACS said, because it takes away the "convenience" element of a particular store. Even so, NACS numbers indicate that higher gas prices have necessitated a record number of retailers to mandate that customers prepay for their fuel.

Besides the risk of losing customers, retailers usually elect to require prepay as a last resort, since generally customers will underestimate their gasoline purchases because they don’t want to have to go back in the store for change. Also, they tend to shop less inside the store, where margins are healthier, because they have already been inside once to prepay and find going back inside to be inconvenient. There also are concerns that mandating prepay could spur cash customers to pay by credit at the pump to avoid the inconvenience of prepaying. Since credit card fees are 2.5 to 3%, retailers could incur an additional 5 to 8 cents per gallon in fees when gasoline is $2.50 per gallon.

Usually, retailers will look at requiring prepay for certain pumps or certain hours before requiring it all the time at a store, NACS said.

What to Look For
According to NACS, the profile of a typical gasoline thief has evolved. Here’s what to look for:

* Teenagers were common perpetrators taking a few dollars of gasoline for a thrill. Today, the problem of theft is across all demographics, and the cars involved with the crime are everything from "junkers" to late-model SUVs.

* Just as the frequency of gasoline theft increases, so does the size of the fill-up stolen. And with higher prices, the amount lost from just one gasoline theft can easily top $100 when an SUV in involved.

* A disturbing trend over the past few years is the emergence of gasoline theft rings in which specially designed trucks are used to siphon fuel from stations’ underground storage tanks. Members of a theft ring operating in Florida were arrested in June 2005 for using trucks that could siphon upwards of 1,000 gallons of fuel undetected. Also in June 2005, a man in Cottondale, Ala. was severely burned in an explosion while allegedly trying to siphon hundreds of gallons of fuel from a station.

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