Organized Retail Crime on the Rise

Savvy, confident organized retail crime gangs – who steal billions of dollars worth of merchandise each year only to sell that merchandise online or at physical fence locations – continue to test retailers to the core, oftentimes stopping at nothing to profit from their criminal behavior. NRF’s ninth annual Organized Retail Crime (ORC) Survey found that 93.5 percent of retailers say they have been a victim of organized retail crime in the past year, down slightly from 96.0 percent in 2012. For the past three years, more than 90 percent of the retailers surveyed have admitted to being victims of ORC. Equally disturbing: eight in 10 (81.3%) believe that ORC activity in general in the United States has increased over the past three years.

“We are extremely concerned by the organized patterns that are taking place in the retail industry right now as these crime gangs continue to find ways to maneuver the system,” said NRF Vice President of Loss Prevention Rich Mellor. “Though retailers continue to make great strides in their fight against organized retail crime, savvy, unconscionable criminals are selling stolen merchandise for a profit that doesn’t belong to them. With the types of organized retail crimes changing in severity each year, retailers remain vigilant in their fight against ORC.”

Store merchandise credit/gift card fraud poses new threat to retailers
For the first time, NRF asked the senior loss prevention executives surveyed about their experience with store credit merchandise/gift card fraud, and the results are troubling: when asked specifically if they’ve experienced boosters who return stolen merchandise without a receipt for the sole purpose of receiving store credit via a gift card, who then turn around and sell that merchandise credit for cash to secondary markets that include kiosks, pawn shops and check cashing stores, 77.8 percent said they have experienced this.

“This is an important crime to keep an eye on, as this could easily turn from being an organized tactic to one that amateurs could adopt,” continued Mellor. “In conversations with retailers and law enforcement, we’ve learned that there are already defrauding processes being put in place, but retailers continue to lose millions of dollars to this enterprise scheme.”

Survey finds increases in violence, connection to “gateway crimes”
One of the most distressing trends in organized crime activity is the propensity for thieves to resort to violence to avoid being apprehended, putting store personnel, law enforcement and customers at risk. According to the survey, retailers say on average two in 10 (18.3%) apprehensions lead to some level of violence, up from 15.2 percent last year and 13.0 percent in 2011.

Individuals connected to “gateway crimes,” or crimes that are known to lead to bigger crimes, such as the use of or sale of drugs and weapons, are often found to be associated with organized crime gangs. According to the survey, retailers say on average 44.8 percent of those apprehended for ORC are involved in gateway crimes.

Law enforcement understanding of issue grows
Thanks to organized methods of communication between retailers and law enforcement, awareness among law enforcement officials is at an all-time high. According to the survey, nearly half (48.1%) of retailers say they believe law enforcement understands the complexity and severity of ORC, up from 40.0 percent last year and the highest percent reported in the five years of asking this question.

Nearly six in 10 (58.4%) believe top management at their organization understands the severity of ORC, up from 54.4 percent last year.

Top cities for organized retail crime activity
Organized retail crime gangs wreak havoc throughout the country, but many cities have remained top locations for ORC activity for the past several years, including Dallas, Houston, Miami and Los Angeles. The top 10 locations that retailers say have the most criminal activity are (in alphabetical order):

·         Atlanta
·         Baltimore
·         Chicago
·         Dallas
·         Houston
·         Los Angeles
·         Miami
·         New York
·         Northern New Jersey
·         San Francisco/Oakland

Federal Legislation Still Needed to Combat Growing Problem
For years, retailers and other vested parties have worked together to tackle organized retail crime. These partnerships include regional groups and associations who host meetings to share intelligence and work with local, state and federal law enforcement agencies.  Even with the success of these partnerships, organized retail crime remains a Federal matter because of the jurisdictional issues with criminals crossing state lines. NRF strongly believes that organized retail crime must be addressed through Federal legislation by amending the Federal Criminal Code to effectively address the organized and serious nature of this issue and, be properly defined as a Federal crime with appropriate sentencing guidelines.

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