Overview

Overview

Because ORC is a subset of a variety of crimes such as shoplifting, cargo theft, fraud, and burglary and it affects retailers differently, ORC is difficult to precisely categorize.

Generally, ORC contains at least one of four basic elements:

1. Theft from a retail establishment in quantities that would not normally be used for personal consumption.
2. Reselling large quantities of stolen items to be re-entered into the marketplace.
3. Receiving, concealing, transporting, or disposing of stolen items in quantities not normally used for personal consumption.
4. Coordinating, organizing, or recruiting to commit the above offenses.

The National Retail Federation (NRF) defines ORC as groups, gangs, and/or individuals who are engaged in illegally obtaining retail merchandise through both theft and fraud in substantial quantities as part of a commercial enterprise. The Organized Retail Crime Act of 2008 defines it as the acquiring of retail merchandise by illegal means for the purposes of reselling the items. According to the Coalition Against Organized Retail Crime, ORC refers to an offense wherein individuals who are associated with a professional crime ring steal large quantities of merchandise and resell it into the marketplace. These definitions allow for varied interpretations by retailers and law enforcement. For instance, one retailer may categorize ORC as any theft over a certain dollar amount regardless of how many criminals were involved.

Theft from retail establishments has long been a problem, but the problem has gradually grown beyond simple, isolated incidences of shoplifting and burglary into something more complex. It wasn’t until the 1980’s that organized retail crime was recognized as a phenomenon, but the problem has continued to grow in volume, sophistication, and scope.

What has emerged are sophisticated, multilevel criminal organizations that steal large amounts of high-value products, focusing on small and easily resalable items, and then resell the goods through a variety of means, including flea markets, smaller stores, and increasingly over the Internet. Sales over the Internet have evolved to a point where they have become a new crime phenomenon referred to as “eFencing.”

Ultimately, ORC impacts everyone from the big box retailers to the small, independent stores. This type of crime obviously has a direct impact on those from whom the items are stolen. They have fewer items in their inventory to sell and their profits suffer. To make up for it they must often pass along the burden to consumers in the form of higher prices (Combating ORC.PDF).

Organized retail crime (ORC) refers to groups, gangs and sometimes individuals who are engaged in illegally obtaining retail merchandise through both theft and fraud in substantial quantities as part of a criminal enterprise.

These crime rings generally consist of “boosters” – who methodically steal merchandise from retail stores – and fence operators who convert the product to cash or drugs as part of the criminal enterprise. Sophisticated criminals have even found ways to switch UPC barcodes on merchandise so they ring up differently at checkout, commonly called “ticket switching.” Others use stolen or cloned credit cards to obtain merchandise or produce fictitious receipts to return products back to retail stores.

Precise measurements of the true scope of this problem are difficult to determine given the inherently secretive nature of these criminal operators. According to Congressional testimony and industry experts, ORC losses total an estimated $15-30 billion annually (NRF).

To take the merchandise from the store without detection, these professional thieves sometimes employ advanced techniques including booster bags, electronic article surveillance (EAS) jammers, and magnetic detachers.

• Booster bags are bags lined with foil to prevent detection of the merchandise EAS tags (special tags on merchandise that trigger an alarm if taken from the store) by the EAS detection equipment installed at store entrances/exits.
• EAS jammers are electronic devices that interfere with the EAS detection equipment placed at store entrances/exits to prevent the equipment from detecting the EAS tags on the stolen merchandise.
• Magnetic detachers are used to detach and remove the EAS tags on the merchandise thus allowing the items to be taken from the store without detection.

As mentioned, organized retail crime rings generally include individuals serving in one of two main capacities: boosters or fences. Generally, boosters act as professional shoplifters who steal or illegally obtain merchandise. Fences pay boosters for stolen goods and then resell them to witting or unwitting consumers and businesses.

Boosters work either alone or in groups to steal goods that they will later sell to fences for about 10% to 25% of the ticket value. They often carry “fence sheets,” or shopping lists provided to boosters by fences. These shopping lists itemize the goods fences desire, the amounts fences will pay for each item and retail store locations where each item may be. In some cases, boosters may travel across state lines to target specific establishments in multiple states. Consequently, many boosters will, at some point, transport stolen merchandise across state lines either when shipping stolen goods to a fence or when physically delivering merchandise to a fence after stealing it in another state.

Fencing operations can be very straight forward or can involve multiple stages and a degree of operational sophistication. Most stolen merchandise is sold to a low-level fence, commonly called a “street fence.” Street fences will either sell these goods directly to the public—through flea markets, swap meets, or the Internet—or will sell the merchandise to mid-level fences who run “cleaning operations.” Cleaning operations remove security tags and store labels as well as repackage stolen goods so they appear as though they came directly from the manufacturer. A notable concern for public health and safety, this cleaning process may even involve changing the expiration date on perishable goods. The “clean” goods may then be sold to the public or to higher-level fences, which often operate illegitimate wholesale businesses. Through these businesses, the fences can supply merchandise to retailers, often mixing stolen merchandise with legitimate goods. The illegal activities of fences may be of concern for policymakers and federal law enforcement because—like boosters—fences’ activities may cross state lines. They may, for instance, purchase stolen goods from boosters in one state and send them to another state to be cleaned; they may then sell this “clean” merchandise to illegitimate wholesalers in another state. In addition, fences selling goods via online marketplaces may ship stolen goods across state or national lines.

ORC groups and sometimes individuals travel and methodically steal merchandise from a number of stores over a short period of time. The stolen merchandise is then typically liquidated through three main channels:

1. Traditional “fencing” operations, such as street corners, flea markets, and pawnshops. In larger cases, merchandise also may be fed back through the supply chain by re-packagers and illegitimate wholesalers who move the products into the distribution system, rerouting the items to unsuspecting retailers and consumers.
2. Returned to the store for a refund, sometimes using fake receipts, to obtain cash or store credit. In these cases, suspects receive the full value of the merchandise plus sales tax.
3. Online marketplaces, such as websites and online auction sites, providing a national or even international platform to liquidate goods.

While these acts may initially appear harmless, many retailers in this survey report an increase in violent behavior among criminals, which puts both employees and shoppers at risk. When asked, “Within the past year, what trends in organized retail crime have you noticed,” answers included:

• Less fear of getting caught
• Smash and grab activity significantly increased
• Criminals are getting more violent, bolder
• Steady increase in activity

For the first time, NRF asked retail executives to list cities where organized retail crime affects their stores and/or distribution centers most. As Figure 8 shows, the top cities in include:

FIGURE 8