Organized Crime Grows in Retail Theft

n overwhelming majority, 81% of retail loss prevention executives, indicate that their companies have been victims of organized retail crime. "Even more, 93%, say they're concerned about this rising phenomenon and see the problem as getting worse, not better.
The survey was unveiled during National Retail Federation's Loss Prevention Conference and Exhibit in Minneapolis. Organized retail crime is perpetrated by teams that steal goods in order to resell them into the stream of commerce, which distinguishes it from petty thievery and shoplifting. The Retail Industry Leaders Association estimates that such organized thievery costs retailers $34 billion a year, and, during the conference, some estimates were as high as
$37.4 billion.
A year ago, just 30% of the retail loss prevention executives in the poll saw organized retail crime as a significant or severe issue.
This year, the proportion reached 41%, and several retail companies discussed their own more organized approaches to combating it.
Safeway is among them. For years, Safeway convinced themselves that shrinkage was due primarily to a combination of bad inventory paperwork and employee theft, with shoplifting a minor factor.
Approximately a year ago, the company began cross-referencing its reports in order to determine not just dollar losses, but also obtain details on the items missing. As a result, it discovered that over a brief time it had lost $6 million worth of baby formula. A video taken by a Safeway security camera showed how skillfully organized crime teams work. One member of the criminal team, which Safeway's senior investigator, called a filler, picks designated products from the shelves and puts them into a container, which might be a false- bottomed purse or even a plastic garbage bag.
As the filler works, a spotter watches out for security, and often a cruiser keeps watch over the entire process. When the container is filled, the team whisks out the door into a waiting car. Often our stores don't even know they've been victimized until hours later.
Once away from the scene of the crime, organized retail criminals convert the stolen goods into cash through a fence or middleman who takes the merchandise to an illegitimate wholesaler, who processes it through a cleaning room before selling it to a sales agent. Cleaning usually eliminates store identification and replaces bar codes.
During the same process, the expiration date on medicines or baby formula may be extended.
Safeway investigators developed a foundation for combating organized theft. It is more complicated and time-consuming that just catching a crook. It relies on interaction with law enforcement and includes arresting fillers and using traditional crime-fighters' methods to get them to inform on and identify fences.
More than half, 59% of the loss prevention executives in the NRF poll said they had recovered merchandise or gift cards from a physical fence operator, and 67% said they had recovered such goods from eFencing (internet) operations. Due to the vastness and complexity of organized retail crime, a majority, 89%, feels there's a need for a national database to track activity. 75% say they either will or are likely to participate in such a system.
Federal legislation to support the development and maintenance of a nationwide database that helps retailers and law enforcement agencies work together to eliminate organized crime is making its way through Congress. Similar legislation is underway in at least five states.
The database, the Retail Loss Prevention Intelligence Network (RLPIN), along with other networking groups, has helped both retailers and law enforcement agencies nationwide fully understand just how multifaceted organized retail crime can be. Linking related incidents of retail crime makes it easier to build higher-penalty cases at the state and federal level.
At the same time, retail loss prevention departments are expanding to include specialists in organized retail crime and in government affairs. A government relations/loss prevention manager for Wal-Mart and an organized retail crime loss prevention investigator for Walgreens told how they are collaborating to draft legislation and to educate both retailers and legislators on the significance of organized retail crime and the need for coordinated combat practices.
By working together, they have, for example, helped legalize reverse stings in 3 states. A reverse sting allows law enforcement to sell recovered or new merchandise to known fences, thus reaching beyond the store floor to a higher level of the criminal endeavor.
One of the challenges retailers face is persuading law enforcement officials at local, state and federal levels that retailers are not asking them to deal with a shoplifter. The word shoplifting is misleading. It connotes petty theft and prevents law enforcement agents from seeing the more significant dangers of organized retail crime.
From loyal shoppers to retail executives, no one is immune from the consequences of organized retail crime. As more criminals become involved in organized theft rings, it could become increasingly violent and unpredictable. This higher level of thievery calls for greater coordination among law enforcement, legislators and retailers."
from GlobeSt.Retail, June 12, 2006
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