Reports Of Increased Crime

Reports Of Increase Crime
When a kid shoplifts a pack of gum from a convenience store, that’s a crime. But when these sticky-fingered young criminals realize their dreams of turning pro, that’s organized crime, a growing problem that costs retailers and consumers billions of dollars a year.

Organized retail theft, as the government calls the phenomenon, has attracted the attention of lawmakers and law enforcement as a criminal growth industry that accounts for $30 billion in losses each year. And while the majority of professional shoplifters still focus on larger retail establishments—where they can swipe costly items like designer clothing, jewelry and electronics— the convenience retailing sector is hardly immune.

“Shoplifting has always been a problem in convenience stores, but organized shoplifting is an entirely different beast. As the Targets and Walmarts of the world work to make their properties less hospitable to thieves, these gangs are undoubtedly looking for other, easier targets. And convenience stores are finding themselves in the crosshairs,” said Lyle Beckwith, National Association of Convenience Stores (NACS) senior vice president of government relations. “It’s a threat that is just now emerging, but it is certainly one the industry should be tracking,” Beckwith said.

The problem, fueled in recent years by a booming online market for stolen goods, has experienced an unprecedented growth spurt in the last two years as the economy has struggled. According to the National Retail Federation’s fifth annual Organized Retail Crime Survey, issued in 2009, 92 percent of retailers said organized, professional shoplifting gangs hit them, and 73 percent said the problem was growing.

“The unfortunate economic events of the past year have played an intricate role in how criminals continue to rip off the retail industry,” said Joe LaRocca, NRF senior asset protection advisor. “Organized retail crime rings have realized that tough economic times present new business opportunities by stealing valuable items from retailers and selling the merchandise to consumers looking for bargains.”

Prime Targets
What kinds of stores are most vulnerable to organized retail theft? Well, according to a 2007 U.S. Justice Department report, it all depends on what kind of merchandise a store sells.

“Perhaps the principal factor determining a store’s shoplifting rate is the type of goods sold. For obvious reasons, furniture stores have much lower shoplifting rates than, say, convenience or drug stores,” the report said, though, like many studies, it failed to distinguish between casual, opportunistic shoplifting and organized retail theft.

Among shoplifters’ favorite targets are smaller, high-demand items that are easy to steal and easy to resell. The Justice Department’s list of frequently swiped goods included many items sold in convenience stores: cigarettes, batteries, over-the-counter remedies, beauty aids, pens, trinkets such as key chains and action figures, and CDs and DVDs.

Keeping a close eye on shrinkage of certain products can help retailers determine if they have been targeted by professional shoplifters, according to Chuck Miller, a security consultant for the Retail Industry Network and author of industry handbook Organized Retail Theft.

“Retailers should be particularly aware of organized retail theft when shrink figures for cosmetics, over-the-counter drugs, pain relievers, films, batteries, vitamins, etc., consistently are above expectations. Shrink figures at 15 percent to 40 percent for a single product or groups of similar products often indicate an organized retail theft ring is working the area,” he said.

C-Store “Fences”
At the same time, convenience store operators can be victimized on both ends of the organized retail theft enterprise, unwittingly or otherwise. The FBI lists convenience stores, along with flea markets and online outlets, as places thieves turn to to dispose of stolen merchandise.

“Boosters—the front line thieves who intend to resell stolen goods—generally coordinate with ‘fences’ who may sell the items outright at flea markets or convenience stores or online, or repackage them for sale to higher level fences. The problem is significant for its negative economic impact, the safety issues it brings to unsuspecting consumers, and its potential link to other criminal enterprises,” said David Johnson, section chief of the FBI’s criminal division.

A Good Location
As the numbers continue to spike, the FBI says it’s on the case. Convenience stores focused on stopping amateurs and opportunists face a far more daunting task in dealing with professionals experienced in evading sophisticated security protocols. They may use everything from new handheld technologies to fake mustaches to thwart even the best antitheft practices. “These criminal groups are particularly nimble—able to easily change their appearance, alter their method of operation and are particularly adept at circumventing security devices and procedures,” Johnson said.

Resourceful and clever, professional shoplifters are, just that, professional: “They frequently identify store locations with global positioning systems (GPS), identify escape routes, use false identification, utilize rented or borrowed vehicles, and employ diversionary tactics in stores. They are known to travel from state to state or city to city following interstate corridors around large cities,” Johnson said.

Rosemary Erickson, a sociologist who studies retail crime as president of Athena Research Corporation, said stores located close to convenient escape routes like highways could be more attractive to professional shoplifters, just as they are to other criminals. “There’s always a greater risk if you’re near an interstate or other highway. That’s been the case for robberies and it certainly applies to shoplifting gangs as well,” she said. Erickson added that convenience stores also have become more attractive targets for organized shoplifting gangs as they have added new lines of merchandise, like CDs, DVDs and electronic gadgets, that thieves covet for their easy resale potential.

Experienced Professionals
How sophisticated have professional shoplifters become? Recently, the Kansas City Police Department, the FBI and the U.S. Postal Inspection Service charged seven suspects with operating a theft ring that included benefits for its employees. The ring stole and attempted to resell $1.2 million worth of goods, employing its own IT department to liquidate its inventory online.

Court records showed the operation hired low-level shoplifters to handle acquisition, paying them a percentage of their profits. These “boosters” were given gas cards to cover transportation expenses, and the operation included bail money as a perk.

To address the problem, in 2007, the Justice Department established the Law Enforcement Retail Partnership Network (LERPnet), a database to allow retailers to track and identify organized retail theft online. So far, nearly 100,000 retail locations have shared information with the LERPnet database (lerpnet.com), which can be accessed by law enforcement to search reported incidents and track organized retail theft nationwide.

The September 30, 2009, report from LERPnet, which covered the first three quarters of 2009, included nearly 25,000 incidents with losses totaling $19 million. The report found that Friday was the busiest day for retail criminals and that the highest number of incidents per hour were reported between 3 p.m. and 4 p.m.

Fighting Back
Congress, meanwhile, has responded with several bills that are backed by NACS, NRF, the Food Marketing Institute and other members of the Coalition Against Organized Retail Crime. Among them: the E-Fencing Enforcement Act of 2009 (H.R. 1166), Organized Retail Crime Act of 2009 (H.R. 1173) and the Combating Organized Retail Crime Act of 2009 (S. 470). All of the bills contain language aimed at preventing organized shoplifting by cutting off thieves’ access to online markets and toughening the way federal criminal codes treat organized retail theft.

“In the midst of the deepening economic crisis, organized retail crime seems to be flourishing,” said Senator Dick Durbin (D-IL), the lead sponsor of S. 470. “Organized theft affects struggling retailers’ bottom lines at a time when they can afford it least, and the resale of these stolen goods puts consumers at tremendous risk of buying tainted or outdated products,” he added.

Representative Brad Ellsworth (D­IN), the sponsor of H.R. 1173, said organized retail theft can take place anywhere, even in tiny Vanderburgh County, Indiana, where he formerly served as sheriff. “I spent a career in law enforcement and saw the problems associated with organized retail crime first­hand. The Internet enables these criminals to expand their operations from the flea markets and pawn shops we all think about to millions of unsuspecting consumers’ living rooms,” he said.

The Coalition Against Organized Retail Crime urges its members and others concerned about the issue to contact their lawmakers in support of the initiatives: “Every moment that this serious crime persists, consumers are placed in harm’s way, our economy is further crippled and other kinds of crime are bred,” the coalition said.

Unsafe Budget Cuts
While the recession may be contributing to the rise of organized shoplifting, it is also pressing some cash-strapped retailers to cut back on their investments in in-store security. But research shows that retailers who cut back on security spending do so at their own peril.

The U.K.-based Centre for Retail Research reported in its 2009 Global Retail Theft Barometer that retailers decreased spending on security by $900 million between 2008 and 2009, a period that saw an increase of $10 billion in losses for U.K. retailers, to $115 billion worldwide. The report said U.S. retailers lost more than $42 billion to shrinkage, which included theft other than organized shoplifting in 2009, an increase of nearly 9 percent over 2008.

“While retailers have had to cut budgets in most areas, this year’s study shows the adverse effect of cutting spending too deeply in the area of loss prevention. Prudent spending in this area can have a very positive effect on bottom-line numbers and act as a force-multiplier, especially as budgets for training programs and security personnel are reduced,” said Rob van der Merwe, president and CEO of Checkpoint Systems Inc., the theft barometer report’s sponsor.

“The correlation between $900 million in decreased security spending and a $10 billion increase in theft is very significant. It highlights the importance of continued advancement and improvement of loss prevention programs,” added Joshua Bamfield, director of the British Centre for Retail Research.

Among the most effective antishoplifting initiatives: security cameras, strict monitoring of inventory and a store layout that promotes visibility. Perhaps the best deterrent, experts agree, is also among the cheapest: training employees to better spot thieves.

This article, written by Scott Orr, a freelance writer based in Washington, D.C., is reprinted with permission from NACS Magazine, The Association of Convenience & Petroleum Retailing, www.nacsonline.com.