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Fighting Organized Retail Crime

Aug 1, 2008

As organized retail crime continues to plague the industry, retailers are getting more serious about uncovering, dismantling and prosecuting the responsible individuals and crime rings. The National Retail Federation's 2008 Organized Retail Crime report found that two thirds of retailers, have identified or recovered stolen merchandise and/or gift cards from a fence location, up from 61 percent a year ago.

Much of the stolen merchandise also ends up online, being sold through third party auction sites, where crime rings can maintain anonymity. The report revealed that nearly two thirds, of retailers experienced an increase in eFencing activity in the past 12 months.

"Law enforcement and retailers alike are fed up with organized retail crime rings and are stepping up efforts to stop them in their tracks," said Joseph LaRocca, the NRF's VP of loss prevention. "The brazen and unethical behavior of organized retail crime suspects results in possible health risks for consumers, adds unnecessary fees to consumers' purchases and funds criminal enterprises, including the mob and terrorist organizations around the world."

The survey found that these crimes are still a threat to retailers' bottom lines, as more companies this year have been victims of organized retail crime activity within the last 12 months by a ratio of 85 percent this year, versus 79 percent in 2007. However, the report also found that of the retailers who have identified organized retail crime as a problem in their stores, fewer reported an increase in activity within the past 12 months by a ratio of 66 percent this year, versus 71 percent a year ago.

"Organized retail crime is continuing to proliferate throughout the entire industry as criminals pursue different retail categories that may not have been original targets," said LaRocca. "Retailers who have been affected by organized retail crime for several years may not be seeing increases, but the problem continues to grow, as more retailers are being impacted."

When it comes to how much retailers spend fighting organized retail crime each year, the survey found the average retailer spends approximately $230,000 per year on labor costs. Many larger retailers who are particularly affected by the problem can spend upwards of $1 million a year. According to the Federal Bureau of Investigation, organized retail crime accounts for as much as $30 billion in retail losses every year.

Fortunately, loss prevention professionals believe that company executives have begun to understand the impact that organized retail crime has on their bottom line. According to the survey, 54 percent of loss prevention professionals feel their top management understands the complexity and seriousness of organized retail crime, which is a sharp increase over the 39 percent who said their executives understood the severity of the issue in 2005, when the survey was first conducted.

As a response to the growing problem of organized retail crime, the NRF, along with the FBI and other industry associations, launched the Law Enforcement Retail Partnership Network in April 2007. LERPnet was designed to track patterned crimes and criminals through a secure national database that will allow retailers to share information through its unique web based design. With LERPnet, retailers and law enforcement will be able to fight back against illegal activity, including organized retail crime, burglaries, robberies, counterfeiting, and online auction fraud.

Topic: Business Strategies

Related Articles: retail 

Article ID: 696

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