A rash of thefts of California Lottery tickets in San Jose prompted the state this week to roll out a new system aimed at preventing store owners from paying out purloined scratchers.
The new system forbids a practice that had allowed retailers to begin selling tickets before they confirmed that they received their full order of scratchers.
A thief or thieves exploited that practice by stealing packages of scratchers en route to retail outlets, according to a June 8 message announcing the new policy by Lottery Chief of District Sales Randy Forrester.
Retailers lost out because they wound up paying for Lottery tickets they did not receive and could not sell.
Multiple Lottery employees, speaking anonymously to The Sacramento Bee, said they had for years told their supervisors about their security concerns with the scratcher activation process. They did not want to be identified because they were worried about workplace retaliation.
Two San Jose liquor store owners also told The Bee that they have received packages of scratchers with missing tickets. They did not want to be identified in a news story
UPS has a seven-year contract to deliver scratcher tickets to stores around the state. UPS spokesman Matt O'Connor said the company worked with a California law enforcement agency earlier this year to investigate theft of lottery tickets and "took appropriate action." An employee believed to be responsible is "no longer with UPS," O'Connor said.
Lottery spokesman Russ Lopez said the Lottery in February opened an internal investigation into missing tickets in Santa Clara County. He characterized the investigation as ongoing and declined to answer further questions about the extent of the theft, when it was first reported and whether any retailers had been reimbursed. Forrester declined to comment.
"We have since implemented improved policies to better protect against the fraud and theft of our products, and will continue to review these policies in the future," Lopez wrote.
Normally, tickets become activated and available for sale when retailers confirm that they’ve received their orders from the Lottery.
According to Forrester’s email, the thief or thieves used an alternate method to activate a pack of tickets.
It simply required someone to cash in a single ticket at the store that was supposed to sell it to activate the rest of the scratchers in its package. Retailers were charged for the pack as soon as they accepted the stolen ticket.
"This practice has helped ensure players are not inconvenienced when the retailer does not follow our established process," Forrester wrote.
The thief, according to Forrester's email, would cash in a winning ticket at the retailer that was supposed to sell the scratcher, activating the pack. The thief would then cash in other tickets at different stores.
As of this week, Forrester’s email to staff said scratchers will not be able to be cashed until the retailer confirms an order.
If someone tries to cash a winning ticket from an unverified scratch pack, "the following message will be displayed on the terminal: ORDER NOT CONFIRMED – Please Confirm the order now or return the ticket to the player and ask them to come back after the order can be confirmed,” Forrester’s email said.
His message said the Lottery would investigate the thefts and reimburse retailers. He wrote twice in the message that he did not want sales representatives to talk about the thefts with their customers.
"It is important that you sell the benefit of this change with your retailers and not discuss the theft issue that was the catalyst for the change," he wrote.