ORC is growing. So how do you protect your business from becoming a victim?
As a kid I always rooted for who I considered the good guys—the superheroes, the knights, the Jedis, the firefighters, and the New York Yankees. When I got older, the line between good and bad wasn’t as clear cut as characters like Jean Valjean in Les Miserables, who pushed the limits of moral boundaries. Who could root against the downtrodden boy turned man who stole a loaf of bread to prevent him and his family from starving only to spend years trying to outrun authorities determined to jail him?
While Valjean’s circumstances cut a sympathetic story, it's a far different tale and sentiment when it comes to the profit-fueled motivations of organized retail crime (ORC).
According to the National Retail Federation, ORC is “the large-scale theft of retail merchandise with the intent to resell the items for financial gain. ORC typically involves a criminal enterprise employing a group of individuals who steal large quantities of merchandise from a number of stores and a fencing operation that converts the stolen goods into cash.”
And there are serious profits to be made by these criminal networks which conversely means serious losses for the businesses they steal from. The Retail Industry Leaders Association (RILA) estimates that in 2020 alone, U.S retailers lost nearly $70 billion at the hands of organized retail crime and that number only seems to be trending upwards.
Organized retail crime differs from shoplifting in both the scope and the level of detailed sophistication in which ORC operates. In many ways, organized retail crime organizations are structured and operate just like regular mainstream companies—they utilize hierarchies, specific job roles, and strategic risk assessments and aim to maximize profits.
How they seek to maximize profits is by sheer volume—the more inventory they can steal, the more profits they can garner. The items they focus on are not necessarily high-ticket items and they are never random. They’re goods that are specifically targeted for their demand that are easy to move in large quantities and sold for profit—think everyday items like shampoo, razors, clothing, and even over-the-counter pharmaceuticals.
On the ground level, there are the criminals who procure the products. They are on the lowest rung of the hierarchy and are easily replaced if caught. They are “boosters,” or the entry level workers who either act as lookouts, advance scouts, or the actual thieves who steal products from businesses. They strategically coordinate heists by hitting several businesses in the same area and act quickly to evade law enforcement and their goal is to grab as many of the targeted products as possible from as many businesses as possible. Efficiency equals profitability.
Once the items are stolen, they are then turned over to “fencers,” or the ones who immediately turn the illegally gotten products into cash. The process can involve repackaging and scrubbing bar codes or identifiable labels from the store it was taken from and then using a myriad of distribution channels to re-sell the stolen bounty. Sometimes the criminal organization will fence the items themselves or sell them to other middlemen at a discounted cost. The middleman fencer will then sell the item for full price and turn their profit. Distribution channels can range from selling items on the streets, flea markets, pawn shops, and online. Some fencers will even re-sell stolen inventory to unknowing legitimate third-party sellers or businesses who will in turn sell them to regular customers. With e-commerce being so prevalent, ORC has skyrocketed because it gives thieves a multitude of anonymous channels to rid themselves of stolen goods while making a healthy profit.
Another way, the criminal organizations will profit from the illicit goods is by attempting to return items that they stole for cash. They are looking to take advantage of retailers who offer customer friendly policies that allow returns without receipts. Other retailers with more stringent return policies report that ORC groups will create fake receipts to return stolen goods for refunds for items they never purchased. In fact, according to the National Retail Federation (NRF), for every $100 accepted in returns, a little over 10% of that is lost to fraud.
As retailers start to battle fake returns and tighten up their return policies, some are moving towards issuing store credit as gift cards in lieu of cash. However, that has inadvertently fueled an increase of gift card fraud, which was already a common problem for businesses.
To circumvent retailers’ efforts to minimize cash returns, ORC groups take the gift cards with store credit and then sell them at a discount while pocketing the difference. This is a slight twist to the traditional way ORC organizations profit from gift cards by purchasing large amounts of cards with stolen credit cards. Once the cards are purchased, they utilize the same business plan of re-selling them at a discount and padding their bottom lines.
For large scale and sophisticated ORC syndicates, cargo theft is a major way they can strike and come away with a large amount of inventory. Utilizing technology and a high level of precision planning and coordination, ORC enterprises focus on stealing large amounts of inventory by breaking into warehouses, shipping ports, or targeting trucks transporting goods. Along the supply chain there are numerous opportunities for sophisticated criminals to plan, coordinate, and execute large scale robberies. The saying goes that cargo at rest is cargo at risk.
Not only is organized retail crime on the rise, the aggressiveness of the crimes has also increased. In a survey conducted by RILA and the Buy Safe America Coalition, nearly 40% of Asset Protection Manager respondents said that an organized retail criminal has used a weapon to harm an employee.
Security and law enforcement experts say that when there are such large amounts of money to be made, criminals will go to extreme lengths. And just as alarming is that the money gained from ORC syndicates can now be funneled to fund their other criminal interests and enterprises. As Steve Francis, the Acting Executive Associate Director from Homeland Security Investigations explains, “many of the criminal rings orchestrating these thefts are also involved in other serious criminal activity such as human trafficking, narcotics trafficking, weapon trafficking, and more.”
With ORC being so profitable for criminal networks, it’s no wonder why so many exist not only on a local level but operating on both state and national levels. It has many retailers on alert and looking for ways to protect themselves.
Retail crime is on the rise and is becoming increasingly sophisticated. In addition, criminals have become more aggressive and brazen putting employees and customers in potentially volatile situations.
To ensure safety for all, the use of cutting-edge technology is more important than ever in protecting patrons, staff, and inventory. With the latest advances in retail surveillance cameras and mobile surveillance units which include artificial intelligence, the ability to monitor events remotely and in real-time while sharing data, it allows businesses to be proactive 24/7 while keeping staff from being in a position of escalation or close to potential danger.
With the AI predictive capabilities advancing and continuously evolving, it allows businesses to spot trends and patterns that can help flag potential incidents before they happen or minimize response times for crimes in progress.
Utilizing emerging and improving technologies both in parking lots and the stores along with tried-and-true tactics like security tags and alarms creates a layered approach. This creates a robust web of security that together can either slow down or prevent ORC from happening at all.
While employee safety is always a priority, those working at the businesses are often the ones who are in the closest contact with ORC. Retailers need to train employees on how to use surveillance equipment, what to look for, and what the business’ standard operating procedure should they encounter ORC in action. They ought to be trained on how to make sure the situation doesn't escalate and how to report the crime to authorities and their supervisors.
With organized retail crime organizations becoming so sophisticated and complex, it will take a coordinated effort by all retailers and law enforcement to make sure businesses and communities are protected and safe. This means sharing video, incident details, license plates with other retailers and law enforcement to assist in investigations and prosecutions. It can also help businesses by weaving together trends and common practices by criminals that can help thwart their efforts.
The common misconception about organized retail crime is that it is every day shoplifting or simply a means for people down on their luck to survive. It is a sophisticated multidimensional criminal enterprise that is extremely lucrative and is the lifeblood of so many other criminal endeavors. It affects businesses, citizens, and communities on every level from a single storefront to a nationwide level. However, with proactive and cutting-edge approaches to security such as AI-powered analytics, real-time remote monitoring, and portable surveillance systems, retailers can effectively deter criminals, reduce losses, and keep their businesses and assets protected. By leveraging the most up to date security solutions available in conjunction with cooperation with others in the community, companies can significantly reduce losses due to ORC and better protect their businesses.
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