Organized Retail Crime in US Rises 6%, Fueled in Part by Internet

June 13, 2008

This article is included in these additional categories:

Retail & E-Commerce

The vast majority of retailers (85%) say their companies have been victims of organized retail crime activity in the past 12 months, up 6% from last year, according to the National Retail Federation‘s 2008 Organized Retail Crime Survey.

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However, the number of companies (66%) reporting increases in activity declined five percentage points from last year.

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The 114 senior loss-prevention executives participating in the annual survey estimate that nearly half of external theft at their organizations is caused by professional or organized crime groups. They report that to fight this problem they spend on average $230,000 per year on labor costs.

Loss-prevention professionals also say they are becoming more aggressive about targeting the location of stolen merchandise. More than two-thirds (68%) have identified or recovered stolen merchandise or gift cards from a fence location, up from 61% last year.

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Much of the stolen merchandise ends up online, being sold through third party auction sites, where crime rings can maintain anonymity, NRF reports.

Some 68% of retailers had identified stolen goods that were being e-fenced, and nearly two-thirds (63%) experienced an increase in e-fencing activity in the past 12 months, the report found:

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Respondents estimate that nearly 40% of “new in box” merchandise being sold through online auction sites is likely stolen or fraudulently obtained.

Asked how organized retail crime ranks as a threat to their company on a scale of one to five, with five being severe, retailers gave organized retail crime an average rating of 3.02.

Though just over half (54%) of respondents say senior management similarly understands the complexity and seriousness of the problem, that number has risen since 2005, when only 39% said so.

Organized retail crime refers to groups, gangs and individuals engaged in illegally obtaining substantial quantities of retail merchandise through both theft and fraud as part of a commercial 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. According to the NRF, these types of crimes account for as much as $30 billion in retail losses every year. The most popular items targeted by these groups include designer clothing, Benadryl, Crest Whitestrips, Prilosec, gift cards, electronics and Similac infant formula.

About the survey: The NRF’s fourth annual survey was conducted to help retailers understand the impact of organized retail crime on retailers across the US. Results include responses from 114 senior loss-prevention executives representing all retail segments, including drugstore, supermarket, mass merchant, home improvement, apparel, department and specialty stores.

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