In addition to these crimes, they manipulate barcodes to pay less, return stolen goods for cash or gift cards, and use stolen or counterfeit credit cards for purchases. What distinguishes ORC from shoplifting, which is an individual act of theft for personal use, is its large-scale nature, supported by a criminal organisation, often involving other forms of theft, fraud, and money laundering.
The prevalence of ORC is increasing in both online and physical retail environments. While the expansion of digital commerce has offered businesses significant opportunities, it has also ushered in a new era of fraudulent activities.
Criminal Tactics and Technology
Organised Retail Crime (ORC) typically involves the following tactics:
Pre-Operation Planning: ORC groups start with extensive planning, often targeting big-box retailers and focusing on everyday consumer goods rather than luxury items. This careful selection reduces their risk of detection and increases their chances of success.
Team Formation: ORC groups are highly structured, consisting of roles such as drivers, shoplifters, and lookouts. This division of labour ensures that each task is carried out efficiently.
In-Store Tactics: Once inside a target store, these criminals deploy various strategies. These include fraudulent use of gift cards or reward programmes, theft of merchandise, and return fraud, constantly evolving to stay ahead of loss prevention and store security measures.
Escalation in Violence: Recently, ORC criminals have become more brazen and violent. Some are willing to use force or firearms, posing a serious threat to the safety of store employees and customers.
Technological Exploits: ORC groups are increasingly using technology, such as encrypted communication apps, to coordinate in real-time. This makes it harder for authorities to track and apprehend them.
Online Marketplaces: These criminals use online platforms to resell stolen goods, reaching a wider audience and complicating law enforcement efforts to trace the origins of these items.
Money Laundering: A common practice among ORC groups is money laundering, making it difficult for authorities to trace the illicit origins of their profits.
Adaptation: ORC groups are highly adaptable, closely monitoring law enforcement and loss prevention strategies and frequently adjusting their own methods to evade countermeasures.
Repeat Operations: These groups often target the same retailers or diversify their targets to evade detection, perpetuating the cycle of ORC activities. This underscores the need for comprehensive and coordinated countermeasures.
The Evolution of ORC
Organised Retail Crime operations typically involve two main components: boosting and fencing. ‘Boosters’ are responsible for stealing merchandise from both physical and online retailers. Following this, ‘Fences’ or fencing operations purchase or receive the stolen goods to resell them for profit. Traditionally, many stolen items were fenced at pawnshops and flea markets. However, there has been a significant shift towards reselling these items on online marketplaces, which allow for large-scale, anonymous, and rapid distribution of goods.
ORC has increasingly resembled a battle zone, with widespread and coordinated violence endangering the safety of employees and customers. This has compelled retailers to implement stringent measures to protect their staff, clients, and inventory. Retailers, particularly in the United States, invest millions of dollars in sophisticated security equipment and technology to safeguard their operations.
According to the National Retail Federation’s 2022 National Retail Security Survey (NRSS)1, more than half of the retailers are enhancing their budgets for asset protection and loss prevention, placing a high priority on capital, equipment, and technology investments. ORC groups are actively and openly recruiting employees from retail and financial companies to participate in their schemes. These complicit employees are enticed with substantial financial rewards to handle fraudulent transactions, overlook thefts, or actively engage in thefts, primarily through social media or in-person recruitment.
Similar tactics are employed by credit facilities and financial institutions to obtain personal histories, customer account information, and the capacity to routinely authorise suspicious transactions. A recent trend over the past few years has been the hiring of in-store asset protection staff by ORC groups to facilitate theft and overnight burglaries.
Statistics and Data
The National Retail Federation’s NRSS, which highlights the approximately $100 billion problem that retailers are facing in commercial theft, captures the frightening scope of this issue. Retail shrink, which is a gauge of lost inventory, represents 1.4 per cent of overall retail sales on average. With 37 per cent of the overall shrinkage, external theft is clearly the main contributor. Employee internal theft comes in second with 28.5 per cent, and process/control failures with 25.7 per cent.
One tendency that is especially concerning in this area is ORC. Ever since the post-pandemic spike in retail theft, retailers have recorded an astonishing 26.5 per cent increase in ORC instances. In order to put that into perspective, Target announced a $500 million inventory loss2 for 2023.
Several cities and merchants have had the greatest impact from retail crime, including:
• New York City: More than 63,925 theft instances were recorded in 2022 with CVS, Walgreens, Duane Reade, Macy’s, and Bloomingdale’s being the most frequently targeted retailers. Organised theft caused $4.4 billion in losses3 for New York retailers. This includes almost 93,000 instances of small-time crime and over $4 billion in theft.
• Los Angeles: 44 per cent increases from 2021 to 6,473 reported theft instances in 2022; Target, Walmart, Home Depot, Rite Aid, and Walgreens are the most frequently targeted retailers. Los Angeles holds the unpleasant distinction of being the country’s top city for organised retail theft4 for the fifth consecutive year.
• Chicago: Chicago is one of the top US cities that have been severely affected by organised retail crime, according to a report. One noteworthy development in Chicago is the sharp decline in arrests for retail crimes, as per data from the Chicago Police Department. The police department was apprehending 300–400 people5 for retail theft each month prior to the outbreak.
What Distinguishes ORC from Shoplifting?
While both ORC and conventional shoplifting involve the illegal act of stealing goods from stores, they are distinct in their scope and methodology.
Carefully Planned Operations: ORC targets high-value items that can be easily resold, unlike shoplifting, which is often impulsive and involves smaller or lower-value retail items. ORC involves elaborate planning and the coordination of multiple participants to operate efficiently within targeted retail establishments, targeting items like electronics, luxury goods, and medical supplies which are not easily concealed.
Teamwork: Shoplifting is typically a solitary act, with individuals stealing small amounts for personal use. In contrast, ORC is a larger operation requiring teamwork, often involving five to one hundred people working together to steal substantial quantities of goods for resale and profit. Strategies such as intimidation and diversion are used to distract store employees during these coordinated thefts.
Reselling Merchandise Across Multiple Channels: The primary goal of shoplifting is obtaining goods for personal use, while ORC aims to acquire goods for financial gain, reselling them through various channels like online stores, marketplaces, auction sites, or third-party merchants. This large-scale operation is a key differentiator between ORC and shoplifting.
In addition to these key differences, ORC includes a range of covert tactics:
Barcode Switching: A common ORC tactic where original barcodes are replaced with fake ones that scan at a lower price, allowing criminals to profit by reselling the item at its actual value.
Grab-and-Run: Also known as flash robbery, this involves a group entering a store, quickly grabbing as much merchandise as possible, and fleeing. The challenge in combating this tactic lies in the sheer number of perpetrators versus limited store staff.
Receipt Fraud: This form of return fraud involves creating fake receipts for stolen goods, which are then ‘returned’ for a refund, causing significant losses for retailers.
Gift Card Fraud: Involves using stolen credit cards to purchase gift cards or deceiving customers into buying them, which are then sold for profit. The Federal Trade Commission reported in 2022 that gift card theft resulted in over $228 million in losses, with gift cards being the most common subject of fraud reports compared to other payment methods.
Consumer Consequences
ORC has far-reaching consequences, impacting consumers indirectly through financial losses, operational disruptions, and safety concerns:
Financial Losses: Retailers incur significant financial losses due to ORC. For example, Target reported a $500 million6 increase in stolen goods compared to 2022. ORC rings are expanding globally, posing challenges for businesses, law enforcement, and officials in combating professional shoplifting. This is not a matter of minor losses; on average, before law enforcement intervention, an ORC enterprise can accumulate nearly $250,000 worth of stolen goods, according to National Retail Federation (NRF) research7.
Operational Disruption: The threat of ORC significantly disrupts retail operations, whether or not theft occurs. For example, extra steps may be required for handling popular and expensive items, such as securing them in cases. Retail employees often have to pause their regular duties to address or report crimes within the store or at inventory drop-off sites. The result is additional time, effort, and material costs for the store.
Safety Concerns: The most critical impact of ORC is on the safety of staff and customers. Visiting local grocery stores or retail outlets should not pose a risk. While some ORC tactics may not involve physical harm, any crime in a retail environment directly endangers those present. The increase in such crimes could lead to a labour shortage, as employees might deem the risks of working in retail too high. However, consumers may increasingly turn to online shopping to avoid potential conflicts in physical stores.
Legal Framework for Combating ORC
Since 2022, at least nine jurisdictions have introduced legislation to strengthen penalties for ORC offences; six of these states took action in 2023. Similar proposals are being considered by legislatures across the United States, including the US Senate.
These new and proposed laws aim to deter blatant retail crime by targeting the so-called kingpins who lead organised theft rings. However, there are concerns that these measures could disproportionately impact marginalised communities and may not effectively curb ORC.
Apart from promoting openness in the worldwide digital marketplace, the US House and Senate have been presented with the Combating Organized Retail If this act is approved, money for an investigative unit tasked with fighting ORC at the federal, state, and local levels will be provided.
In addition to these efforts, the US House and Senate are reviewing the Combating Organised Retail Crime Act8. If enacted, this act would provide funding for an investigative unit dedicated to tackling ORC at federal, state, and local levels.
The Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers (INFORM Consumers) Act9 was passed by Congress in 2022 and subsequently signed into law. This act requires online marketplaces to verify high-volume third-party sellers by collecting contact information, bank account details, and proof of tax identity. Sellers who fail to comply with these requirements risk suspension and penalties for violations. This legislation aims to promote transparency in the global digital marketplace and address the challenges posed by online sales of stolen goods.
Technological Solutions to Combat ORC
To mitigate the impact of ORC, various technological solutions have been implemented, including advanced surveillance systems. Key technological strategies include:
AI-Driven Analytics: Retailers are increasingly leveraging artificial intelligence (AI) to analyse inventory levels, consumer behaviour, and other data to combat ORC. By identifying suspicious activities indicative of ORC, they can take proactive steps to prevent and minimise losses.
Holistic Enterprise Security Programmes: A comprehensive security strategy is vital in addressing ORC. Retailers integrate various security measures into a cohesive programme, encompassing surveillance systems, staff training for heightened vigilance, and the use of advanced technology to enhance overall security capabilities.
Investment in Security: The significant investments retailers make in security solutions underline the severity of the ORC problem. These investments demonstrate their commitment to protecting resources and ensuring the safety of their customers and staff. For example, access control systems can prevent employee-assisted ORC by restricting access to certain areas of the store, using unique codes for staff, and tracking their movements and timings, thus aiding in identifying culprits in theft incidents.
Collaboration with Law Enforcement: Understanding the need for a coordinated approach, retailers are actively collaborating with law enforcement to tackle ORC. By sharing information and expertise, they develop effective strategies and solutions to address this growing issue. This partnership between businesses and law enforcement is crucial in preventing and apprehending ORC perpetrators.
Loss Prevention Strategies: Retailers are developing tailored loss prevention plans to combat ORC. They often collaborate with specialised ORC groups and resources to gain insightful information. Utilising these relationships enables retailers to effectively protect their merchandise and assets, staying ahead of ORC threats.
Online Monitoring: Recognising the trend of selling stolen items on online marketplaces, retailers are closely monitoring these platforms. By vigilantly observing these marketplaces and reporting suspicious activities, they can identify potential ORC activities. This proactive approach contributes to the multi-faceted efforts to combat ORC and helps create a safer online retail environment.
Instances of ORC Impacting Major Companies
Major companies like Home Depot, Lowe’s, Walmart, Best Buy, Walgreens, and CVS have reported significant issues with organised groups of criminals who steal from their stores and resell the merchandise on internet markets. In response, these companies have heavily invested in anti-theft measures such as metal detectors, plastic casings, motion-sensing monitors, and AI-powered cameras. They have even considered passing on the costs to customers if the situation does not improve.
Notably, there have been severe instances of violence associated with ORC. For example, an 83-year-old Home Depot employee in Hillsborough, North Carolina, was killed in December 2022 while confronting a shoplifter. In 2023, another Home Depot employee, Blake Mohs, was fatally shot in Pleasanton, California, during an attempted theft intervention. The National Retail Federation’s Survey indicates that over the last five years, incidents of gun violence, mass violence, active assailant scenarios, and violence against store associates have increased significantly.
A former manager at an Ulta Beauty store in Illinois recounted regular thefts by a group of men who would fill bags with fragrances and leave, causing distress among both customers and staff. This increased her workload significantly due to reporting thefts, taking inventory, restocking, and liaising with police, including court appearances.
There is sometimes a dismissive attitude towards retail theft, especially when it involves large corporations like Walmart and Home Depot. Doubts about the extent of theft are common, with a belief that businesses might exaggerate their losses. For example, Target has closed several stores citing theft, while continuing to open others. Walgreens has admitted to possibly overstating the impact of retail theft. While there may be instances of exaggeration, publicly traded companies risk severe repercussions for misleading investors, indicating that the problem of ORC is not entirely fabricated.
Conclusions and Recommendations
As ORC continues to evolve with increasingly sophisticated methods, it is becoming evident that neither retailers nor law enforcement agencies can combat this challenge alone. A unified societal effort is essential to restore safety and order in public spaces. This requires a collective understanding that the fight against ORC is not just about individual experiences but about protecting the very fabric of communities.
To effectively counter the escalating threat of ORC, a multi-faceted approach is necessary:
Prioritise Investments in People and Technology: Retailers, law enforcement, and government agencies need to prioritise investments in both human resources and technology. This includes training staff, employing advanced security systems, and leveraging technology for better crime detection and prevention.
Foster Collaboration and Data Sharing: Cooperation among all stakeholders is key. Partnerships between law enforcement and businesses, along with data-sharing initiatives, are crucial in sealing the gaps in defence mechanisms. Improving investigative processes and streamlining data-sharing through real-time data access, identity verification systems, license plate readers, and fraud detection platforms can enhance the ability to combat ORC.
Enhance Retail Security Measures: The retail industry must acknowledge the severity of the ORC problem. Retailers need to invest in adequate personnel and technology to secure their premises and should actively promote collaboration with law enforcement agencies.
Community Awareness and Engagement: Raising awareness about the impacts of ORC in communities and encouraging public participation in reporting suspicious activities can also play a significant role. This community engagement can act as a deterrent and aid in early detection of ORC activities.
Legislative Support and Policy Enforcement: Government bodies must support these efforts by enacting and enforcing laws that specifically target ORC. This includes stricter penalties for ORC activities and support for businesses and law enforcement in their anti-ORC initiatives.
By adopting these strategies, there is potential to significantly reduce the impact of ORC, ensuring safer retail environments and communities. The fight against ORC is not just a matter of business loss; it is a broader societal issue that demands a concerted and collaborative effort from all sectors.
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