Organized Retail Crime is a serious issue for global retailers — and the threat is increasing by the minute. Thanks to increasingly sophisticated strategies, enhanced technology and a broader network of hackers, ORC has shifted from the shadows and into the mainstream, driving highly organized, broad reaching attacks in every corner of the industry.

How Organized Retail Crime Works

A 2013 ABC News investigation dug into ORC and, specifically, shoplifting crime rings. In their reporting, they uncovered many of the secrets to ORC operations. “Investigators say boosters move the loot for cents on the dollar to fencing operations – which sell the stolen merchandise in plain sight in stores. Boosters, fencers, Mr. Bigs, all of those involved in these shoplifting operations can potentially make millions a year from boosting and re-selling stolen goods.” In short, it’s they’re stealing in plain sight and moving everything to the black market — a black market that’s open to everything from detergent to baby formula to electronics, clothing and everything in between. Have lots of products? Then, chances are, you’re experiencing lots of boosters.

That’s where the ORC process begins — with boosters stealing your product. With the items removed from the store, the fencers step in and scoop them up from the boosters, making it virtually impossible to track things down. To complicate matters more, the fencing process usually involves changing the packaging, labeling and, sometimes, swapping out products for an inferior version that, at first glance, looks the same. It’s virtually impossible, then, for law enforcement to trace the product back to the original retailer — even if they find it, it looks, feels and functions nothing like the original, in many cases.

Mixing & Matching

Once they reach stores, fencers will take merchandise and resell them online or to small distributors- often times mixing these stolen products with legitimate inventory. At times, small brick and mortar stores fall victim to buying repackaged goods stolen from big box stores – of course; the retailer doesn’t realize that they’re buying stolen goods, or supporting these massive ORC operations.

Tony Sheppard, LPC, national manager of the ORC unit at CVS Health, explains many “of these companies don’t realize that they’re inadvertently buying stolen or counterfeit product.” Instead, he says, “They see a good price, and it’s hard to fathom that someone stole four pallets of Mucinex, so they buy it.”

Hitting Big & Small

From this perspective, it’s clear retailers of all sizes and scales have to worry — bigger stores are getting boosted, and smaller ones are purchasing stolen goods, unbeknownst to them. But that’s just the beginning. Beyond physical thefts, many ORC networks are diversifying their strategies and attacking retailers in more ways than one, including:

  •       Return Fraud
  •       Check Fraud
  •       Credit Card Fraud
  •       Gift Card Fraud
  •       Switching Labels
  •       Fake Receipts

Each of these methods can cause a significant hit to your bottom line. While big retail chains have deals with banks that may protect them from check and credit card fraud, smaller stores don’t usually have that luxury — and, worse, they have more to lose if they’re hit by these ORC networks. Either way, “Card issuers typically perform chargebacks when customers report fraudulent transactions,” says Quickbooks Small Business Centre, “which means your business loses the merchandise it sold and the money it made on the transaction.”

Another common strategy? Switching labels and faking receipts. Often, boosters come equipped with receipts and a variety of custom-created labels. They then walk into your store, pull a few items from the shelf and swap out barcode labels so they can scan and buy for less. Sometimes, they’ll even purchase, bag and relabel, then head to Customer Service for a price adjustment.

Curbing Risk at the Store Level

The challenge, though, tends to center on corporate policy and what can be done at the store-level to prevent ORC fraud. But the problem extends beyond just limited store access and activity. Organized retail crime organizations can easily spread across cities, markets, and states, making prosecuting these criminals difficult if not impossible. The FBI doesn’t typically get involved in ORC cases unless the value of the crime exceeds $150,000. Beyond that, though, “there are no specific laws that name ORC a federal crime. That makes it difficult for police officers to make a case against someone’s widespread theft operation when it stems across state or county jurisdictions.”

So the big question: what comes next? What can retailers do to get ahead of these increasingly-sophisticated, coordinated attacks? In our next post, we share how the industry is fighting back against ORC and what brands can do to protect themselves, their merchandise and the retail community as a whole.  

In the meantime, visit our Retail Access Control page to learn how retailers are using Senseon intelligent cabinet-level access control systems to combat ORC.