Retail Solutions recently published a whitepaper focused on
retailers and organized retail crime. Over the next few days
the Daily will be publishing the report in parts. Here's
part two. To view the entire article
Increased economic pressure on consumers has probably led to
greater participation in organized shoplifting and tolerance
of purchasing stolen merchandise. But more important are
permanent structural changes in global retail markets:
• New distribution channels include online stores,
distributors, and auction sites, which are far more
efficient than the old networks of street vendors, flea
markets, and other informal channels.
• Multiple price points advertised by online vendors dilute
the pricing power of valid priced products and raise
shoppers’ expectations of a deal.
• Cross-border mobility of people supports theft by
itinerant gangs throughout Europe, and in the US from Puerto
Rico and Central America. And global shipping allows goods
stolen in the US, for example, to be sold overseas, often at
much higher prices.
• Easy monetization, through return fraud and gift cards
that may be consolidated and sold online, raises thieves’
returns: goods with a street value 30% of retail may be sold
online for 70%, or returned and converted into gift cards at
Like retail theft itself, monetization activity resists
direct measurement, but indirect data point to widespread
abuse. Over one-quarter of surveyed retailers believe that
more than 50% of "new in box" and "new with tags"
merchandise sold online is stolen or fraudulently obtained
and fraudulent returns account for a $9.6 billion annual
drain on US retailers’ profits.
The rising presence of both theft and monetization
associated with Organized Retail Crime comes at a time when
gang activity of all kinds is undiminished. Retail
loss-prevention and security staff are being pared back in a
soft economy and as smaller store footprints reduce revenue
support for in-store Loss Prevention staff. Technology plays
a role, too, especially mobile phones that offer Instant
Messaging and "push-to-talk" features gangs use to
coordinate their activities (see sidebar, "Organized Retail
Crime: Gang Organization and Methods").
Organized Retail Crime: Gang
Organization and Methods
Segregation of roles is typical of retail gangs; for
efficient deployment of specialized skills, and to provide
"cut-outs" that limit the damage in case a team member is
identified or apprehended. Most gangs are headed by a
director who controls "business" interactions such as
managing travel and shipping, handling the group’s cash, and
interacting with bail bond agencies. A second specialty is
lookout or countersurveillance teams, responsible for
reporting when the gang’s activities, including those of the
lookouts themselves, have drawn the attention of store
security or law enforcement.
In-store "boosters" (who steal the merchandise) and "mules"
(who take it out of the store) will exchange roles as needed
to carry out a theft or avoid detection. Depending on the
gang’s experience and sophistication, they may:
• Prepare merchandise for theft, marking it with pennies or
store flyers, removing Electronic Article Surveillance tags
in fitting rooms.
• Conceal goods in fitting rooms or under-stock drawers for
• Distract store employees by applying for store credit
cards, calling the department and hanging up, or hiding a
size or style of apparel and then requesting it.
Boosters steal merchandise using a dizzying variety of
methods and tools:
• Booster bags, boxes, purses, baby strollers, laptop bags,
etc. are lined with
many layers of aluminum foil to defeat Electronic Article
systems. Sophisticated gangs make sturdy custom bags, often
handles, and disguise them as bags from a national brand
with presence in
the target mall.
• Booster clothing is a variation on this theme, and
includes pants, dresses, overcoats,
skirts, and girdles. Experienced security personnel look for
overdressed for the weather, holding garments in front of
them as they walk,
and moving slowly.
• Tools include keys for display-cases and under-stock
drawers, makeshift or
stolen EAS removal tools (that may also be used as weapons),
sophisticated EAS jamming devices, sold openly online as
devices", often for thousands of dollars.
• Alternate methods of theft include "box stuffing" of
into the emptied boxes of large, cheap items, and "ticket
or replacing barcode tags with tags stolen or copied from
Evasion and getaway
To conceal their theft, booster teams redistribute
merchandise and take hangers
along with garments. "Mules" take merchandise out of the
store to a rental car
parked in the lot.
"Drop" vehicles have stolen, obscured, or missing license
plates. Keys are carried
separately from the remote-locking fob so security and
can’t find the car just by walking through the lot. The
focus of activity is the
back seat, not the trunk. Merchandise is concealed there
under motel blankets,
why motel blankets? often by another gang member sitting in
the rear seat with
the car’s engine off. Sometimes the rear seat is removed to
make room for more
Organized Retail Crime gangs still use physical fencing
through pawnshops, flea
markets, and street corners, although e-fencing through
auction sites and web
pages has become much more common.
The gangs also monetize their take by exploiting store
refund and gift-card policies.
They use multiple methods to generate "cash" receipts. For
example, many stores
issue cash receipts for returned merchandise if the thief
presents any amount of
cash, for example to "buy" a slightly more expensive item.
The thief then returns
the "purchased" item, using the cash receipt for a cash
refund, pocketing the full
value of the original stolen item. They also return
unreceipted items for gift cards
that they consolidate into large denominations and sell
online, for faster payout
and better margins than they could get by fencing the
Gangs’ financial specialists seldom limit themselves to just
and check fraud, often for gift cards, is common. And
counterfeit receipts using stolen rolls of receipt stock and
Comparison with local offenders
Organized retail criminal gangs are disciplined, focused,
and use far more sophisticated methods than local habitual
offenders, who often leave hangers and defeated EAS tags
behind them. Local criminals also typically have records of
multiple crimes involving theft and fraud—for which they are
often on probation.
Tomorrow more on defenses