Breaking News in the Industry: March 17, 2017

working in loss prevention

Twelve are accused of selling over $12M in stolen electronics online

Twelve people were recently indicted on 41 charges, as state officials work to take down a prolific criminal network. Police investigators believe the organization made nearly $12 million stealing items including flash drives, ink cartridges, and headphones before flipping the products on eBay and Amazon.

The crew is alleged to include four crews that operated around the US, stealing merchandise from retailers such as Office Depot, Best Buy, and Staples. About $7.7 million was seized from the twelve defendants and more than $1 million was recovered in stolen goods. 64-year old Richard Rimbaugh and 62-year old George Athanasatos are the alleged ringleaders. The men would request specific items to be stolen and were also responsible for issuing credit cards to cover the groups travel expenses.

The group is alleged to have run a very sophisticated operation, targeting 28 states across the US. They would walk into specific big-box stores with custom clothing, outfitted with hidden pockets. They would even listen in on security personnel using shortwave radios, and further prepared by carrying devices designed to deactivate security systems.
 “Operation Sticky Fingers” took over ten months as authorities used CCTV footage, surveillance, and wiretaps to carry out the investigation. The National Retail Federation reported that organized crime costs the industry an estimated $30 billion annually.  [For more: The New York Times]

Seven from Cleveland indicted for stealing nearly $750K worth of cell phones from stores across 11 states

Charges were brought against seven people from Cleveland, accused of stealing nearly $750,000 worth of cell phones and electronics, across eleven states.
 The group appears to have targeted locked storage areas in malls, kiosks, and other cell phone and electronic retailers along the Eastern US. The stolen items were then returned to Cleveland where they would be re-sold to independent phone stores, gas stations, or individuals.

The FBI helped investigate the group, who are also believed to be gang-affiliated. In just a three-month period (April 24th – July 24th), the conspirators appear to be responsible for an estimated $738,500 worth of stolen items. The indictment also includes 13 charges of transporting stolen goods in interstate commerce.

“The criminals named in this indictment have victimized multiple local businesses, causing significant damage and loss,” said Cleveland Police Chief Calvin Williams. “In addition, their crimes spread to multiple states and even overseas, showing what a damaging effect organized crime has on society. I am proud of the work done by the officers and agents in this case and grateful for the strong partnership the Cleveland Division of Police has with the Cleveland Office of the Federal Bureau of Investigation.”  Assistant United States Attorneys Megan R. Miller and Elliot D. Morrison are prosecuting the case following an investigation by the Federal Bureau of Investigation and the Cleveland Division of Police[For more: United States Department of Justice]

2.2 Million email addresses exposed in social media app data breach

Wishbone, a social media app popular among teenagers, has become the latest victim to suffer a massive data breach. Over 2.2 million email addresses were leaked alongside roughly 287,000 phone numbers. The breach seems to have occurred sometime this past August. The attackers then began to share the stolen database on underground web forums.

Security researcher Troy Hunt was recently sent the MongoDB database belonging to Wishbone, that also included 2.2 million full names among other personal information. Mr. Hunt independently verified the leaked data before sharing the news.
 Wishbone has notified those affected and sent out a letter informing its users. They also suggested that users change passwords as a safety precaution, although it is not believed at this time, that any passwords were stolen.  [For more: TripWire]

LP Worldwide: Perth employee charged with stealing $580,000 from construction business

A 53-year-old Australian woman who allegedly siphoned more than half a million dollars from the construction company she worked for in Perth’s southeast has been charged with 19 counts of stealing. Police say the woman conducted the fraudulent transactions while employed for the Maddington business between March 2013 and August last year, transferring $580,000 into her personal bank accounts instead of the business account. The woman is due to appear in Armadale Magistrates’ Court on April 7.  [For more: Perth Now]

In fight between Moose Knuckles and counterfeiters, It’s a KO for the retailer

An Illinois federal court recently awarded the Canadian retailer Moose Knuckles a $52 million default judgment related to claims of trademark infringement, counterfeiting, and cybersquatting by 26 Chinese defendants. The case offers a useful road-map for companies that are trying to crack down on anonymous foreign infringers.

As many retailers know, trying to combat anonymous foreign infringers can be a bit like a game of whack-a-mole: when one site goes down, another pops up. That said, cases like this – with claims based on trademark infringement, counterfeiting, and cybersquatting – offer a good road map for how to pursue a large number of infringing domains in a relatively efficient way, even when the identities of the defendants are unknown. Companies that are contemplating challenging a foreign entity for counterfeiting and IP infringement should consider the following:

•    Investigate and Record: Visit the applicable web sites and save date-stamped screen shots of the disputed products that are offered for sale; make anonymous purchases of the products; save packaging and all evidence associated with your investigation. Contemplate hiring an investigator to assist you with your efforts.
•    Contact: Consider making contact with the owner of the products to gain confidence of their location to ascertain the best venue for your filing.
•    Strategize: Consider contacting the host of the web site to determine if they can shut down portions of the site or the pages, in the event you do not want to file a law suit.
•    Select: Work with an attorney to select the venue for the case that will be most effective for your goal.

  [For more: Lexology]

Retailers seek shoplift law change

Last year, Oklahoma passed a law raising the felony threshold for property crimes including shoplifting to $1,000, up from the previously set $500. The Oklahoma Retail Merchants Association (ORMA) believes this new law had a negative impact and incentivized some shoplifters. The reasoning is due to the felony threshold only applying to single incidents when someone is caught. State Legislature is addressing this concern by proposing amendments that should help deter organized retail crime. 

The amendment would allow authorities to charge shoplifters with a felony if caught three or more times in one month and if the value of stolen goods exceeds $1,000. Furthermore, if authorities have reason to suspect two or more people were involved (and the stolen goods again exceed $1,000) then a felony can again be charged.

Norm Smaligo, a loss prevention specialist and consultant, believes the proposed amendments will be effective. He has noticed that the average value in attempted stolen goods has increased since threshold was increased. Professional shoplifters have taken advantage of this law. These criminals are smart enough to understand that they could theoretically keep walking into different retailers, steal $900 worth of goods, and if caught will simply get a ticket and be released.
 Smaligo agrees with the lawmakers that first-time shoplifters are not the priority. “Diversion programs [work] great… for the first time offenders”. But loss prevention professionals like himself are more concerned with the full-time shoplifters, that have been taking advantage of the laws leniency. 
The former Oklahoma Speaker of the House, Kris Steele, understands that many criminals guilty of property crime are likely to suffer from substance abuse or mental health disorders. But Steele, a proponent for criminal justice reform, also sees the importance in protecting victims and business owners, especially from organized retail crime.

Steele says apprehensions by loss prevention staff have increased by a third, and the average amount stolen jumped from $192 to $235, since the threshold increase took effect. “We have a lot of educating to do… People don’t realize how [shoplifting] affects the community, because they think of shoplifting as kids stealing candy, … not $20,000 in merchandise in a day.”  [For more: The Oklahoman]

February core retail sales rose 0.1%

Retail sales appear to be softening, though delays in tax refunds could be adding to that and, once refunds are in hand, consumers may buy more, as they did in 2013 when a similar delay occurred, GlobalData Retail managing director Neil Saunders said in an email to Retail Dive. Last year was also a leap year, which boosted sales figures somewhat, he added.

The tax refund issue has likely most hurt electronics retailers, which saw a 2.8% sales dip in February and a 6% decrease year over year, because consumers tend to splurge on that category using their refunds, he said. “Given all this, it is fair to say that the downtick in spending during February is not the result of structural factors or a downswing in consumer sentiment; It is largely a temporary blip,” Saunders said, adding that, considering employment stability “there is nothing to suggest that the consumer economy should be losing this much momentum.”

Still, it would be “imprudent” not to acknowledge the vulnerabilities faced by retailers, especially those in the apparel segment (which saw February sales tumble 0.5%), he said. Pressure to discount will continue to plague those retailers, according to Saunders. “The rise in fuel prices is foremost among these,” he said. “Although there are now signs that pump prices are moderating and may start to fall as spring approaches, there is no doubt that consumers are paying more to fill up their vehicles – something that puts a dint in the amount they can spend elsewhere. … All in all, it points to a year that will see reasonable growth, but one in which margins will be under pressure.”  [For more: RetailDive]

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