A Perfect Storm for Organized Retail Crime

The landscape of organized retail crime (ORC) has shown dramatic changes over the last several years and has grown more sophisticated, especially considering the volume of merchandise stolen, the criminal element involved, and the platforms used to resell stolen goods. According to the National Retail Federation (NRF), organized retail crime has risen by 60 percent since 2015, with nearly 70 percent of retailers reporting an increase in 2021. With bad actors taking advantage of every opportunity, ORC can operate on a local, regional, national, or international scale. Whether loosely planned or highly organized, these intricate operations are responsible for the loss of tens of billions of dollars each year and can devastate a retail business.

Retailers have a diverse selection of merchandise available on their shelves that have high consumer demand, and these products can be readily converted to profit by the illicit crews bludgeoning retail profits across the nation and world. Those involved can be deliberate, aggressive, and even violent in their pursuit of retail products, posing serious safety concerns in addition to extreme financial injuries.

If recent history has taught us anything, it is that every retail organization must be prepared to manage complex and disruptive situations, and ORC is no different. But that does not mean we must address these situations in a silo. Working together in cooperative partnerships can lead to striking results.

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LP Magazine recently met with leaders from CVS Health, Rite Aid, and Walgreens who are directing the efforts against ORC to get their insights into the current challenges and the story behind their exceptional partnership. In a highly volatile retail market, these leaders and their teams have bridged their competitive differences to build a highly effective alliance in the ongoing battle against ORC.

Ben Dugan, CFI, is the director of ORC and corporate investigations at CVS Health. With more than thirty years of retail loss prevention experience he is certified as an expert in ORC and diversion by the US Department of Justice. He is also currently the president of the national Coalition of Law Enforcement and Retail (CLEAR).

Steve Walker, LPC, CPht, is asset protection lead director of major crimes at Walgreens. He has been with Walgreens for twenty-three years starting as an asset protection manager and has served as director for the past eight years. Prior to Walgreens, he dedicated seventeen years to law enforcement with the Arkansas State Police.

Jason Davies, CFI, CORCI, SMIA, is director of ORC and special investigations at Rite Aid. In addition to his nearly thirty years in retail loss prevention, he also serves as vice president of CLEAR and state director of the Florida Law Enforcement Property Recovery Unit (FLEPRU).

Working together and in tandem with law enforcement partners at the local, state, and federal levels, these teams have resolved a multitude of million-dollar-plus investigations all across the US, touching practically every major retail market in the country.

BRITTAIN: Let’s begin with the topic driving today’s discussion. Why do you think we’ve seen such an increase in ORC activity across the board?

Jason Davies

DAVIES: There are so many things contributing to the problem. We have legislative concerns. In many areas there is very little consequence to the criminal activity. Often there is little or no jail time, even after a conviction or multiple convictions. In some markets, we have seen hard pushes for bail reform and the raising of the felony thresholds, talk of defunding the police, and a general lack of respect for the rule of law. Combine that with the many issues surrounding the pandemic, and it has been a perfect storm for this type of activity.

Steve Walker

WALKER: Legislation has simply not evolved to meet the threat. Look at e-commerce for example, and the problems we are facing with the online marketplaces. There is no teeth in the legislation and very little accountability. I think it’s more complicated than people make it out to be and that only contributes to the problem.

DUGAN: Decriminalization is playing a major role in the increase in ORC. However, ORC has really been on the rise since 2017 with the expansion of the online marketplaces. That’s when we really started seeing ORC activity grow exponentially. And then, COVID was the tipping point, really accelerating what was already happening. In many ways, the criminal justice system basically grinded to a halt. The courts were closed. Law enforcement was not responding to any nonviolent property crimes. Thieves felt emboldened and the violence increased. Looking at the consequences of COVID, decriminalization, expansion of the online marketplaces, and so many other contributing factors, I agree it’s been a perfect storm for ORC.

Ben Dugan
Ben Dugan

BRITTAIN: Can you expand further on how COVID has contributed to the problem?

DUGAN: COVID limited our resources in many different ways. The pandemic limited the manpower needed to deal with the problem. For example, many of our major sting operations were canceled due to the pandemic. There are teams from many criminal organizations that should already be in jail—and they’re not. We are still trying to play catch‑up with large-scale operations, dealing with law enforcement to dismantle some of these big crews that we know exist. And delays in the retail world mean money and lost profits.

Every day these guys are on the streets, we lose money. In some cases, our companies are continuing to take significant losses to the same criminal organizations on a regular basis. At the height of the pandemic, no one was going to plan and execute a huge operation where we needed a hundred law enforcement officers going out to one scene to manage the operation properly and safely.

DAVIES: You had stores that were shut down or operating with fewer employees. You had individuals across the country that couldn’t work. Couple that with these emboldened boosters entering stores, wiping shelves clean, and creating havoc.

At the peak of COVID, many consumers stopped shopping in stores and were buying their goods online. It was a win‑win‑win situation for the online marketplaces, knowing that people would rather migrate to the online seller and have products delivered to their front door rather than going into the stores and possibly contracting COVID. The circumstances behind COVID were driving the demand, and the online marketplaces filled that demand. The ORC networks took full advantage, many of whom were creating their own sites to sell stolen goods to the public.

BRITTAIN: When we first started talking about the ORC epidemic years ago, many believed that it wasn’t quite as violent or sophisticated as people thought. How do you think that has evolved?

DAVIES: I think it’s not so much the problem has evolved as much as the perpetrator has evolved. We still have professional crews stealing from our stores who don’t want to get in fights, be noticed, or become violent. They are the ones making $100,000 a year stealing from our stores. And then, you have the other side—those that are coming in and stealing by all means and methods and pose a greater risk to both our customers and associates.

When we see the violence uptick, it often involves younger offenders. We also have those with mental health and other issues. These offenders commonly use threats of violence and engage our associates. We see this more often in inner-city environments where local fencing operations are employing the homeless or serious drug addicts who have nothing to lose. They do the stealing for them. But at the end of the day, it all comes back to a lack of consequences.

DUGAN: I would add that I don’t think we understood everything about ORC ten or fifteen years ago either. We thought we knew, but we didn’t. We knew how it affected our individual businesses, but now the internet has made it easy for professional thieves to steal—and resell almost anything.

Boosters used to specialize. They would travel across the country hitting CVS, Walgreens, and Rite Aid. That’s not the case anymore. They will go to Home Depot or Lowe’s. Then they will hit a Ross or TJX store. They will hit a high-end retailer, steal ten purses, and throw it in the back with a trunkful of Prilosec. We never used to see that kind of activity. Now, everyone is an entrepreneur.

WALKER: Criminals are adaptive and roll with the circumstances. Many are adapting to the lack of the ability for police officers to respond in a prudent manner. For example, we just had an associate that was basically taken hostage as an ORC team wandered around the store stealing merchandise. Many feel that the worst-case scenario is getting caught, and yet they are out the same day. The reward is worth the risk for them. It’s a vicious cycle.

By the same respect, I do feel that perpetrators are becoming more sophisticated. Many of these groups have grown tremendously on the technology side, getting involved in some things that we probably haven’t seen before. As a society, I don’t know that we’re always adapting fast enough to keep up.

BRITTAIN: Let’s talk about legislation not keeping up. All of you have mentioned this as a contributing concern.

DUGAN: Steve and Jason are right. Does everyone in the public sector understand the magnitude that we’re talking about? The amount of violence, the levels of theft, the financial damage and hardship that it causes? I don’t think many members of law enforcement or legislators truly understood ORC until Thanksgiving of 2021 when it appeared center stage and sensationalized in the media following the events at Nordstrom stores in Northern California. Despite the attention, some still hesitate. I don’t think the legislation has kept up, but I think most understand it now. The legislative process doesn’t always move as fast as we would like, but we’re making progress.

DAVIES: The over-arching problem is we are stuck treating the symptoms rather than the root cause of the issue, which is legislation. Retailers need their executive leadership to speak up. We need their voices. We need more retailers that are willing to say to lawmakers, “We’re not going to take this anymore.” That is where we’re going to have the greatest impact long-term.

WALKER: We also have to enforce the laws we have. If we pass laws tomorrow, how will they be enforced? We’re going to have to go to law enforcement and prosecutors and make sure they have the information they need. We need to make sure the laws are carried out effectively and efficiently.

BRITTAIN: Let’s talk about the partnerships between your three companies. What can you tell us more about how you work together?

DUGAN: Our relationship is based on friendship and trust. The three of us have known each other and been friends for more than fifteen years, and our teams have known each other for a long time as well. With the three of us now at the director level for the pharmacies, it helps us affect positive change. We understand pharmacy ORC. We listen to one another. We talk about solutions and strategies. We share ideas and our thoughts on tools and technologies that can improve upon those strategies.

Building partnerships and sharing the knowledge and strategy is just as important as investing in other resources. Don’t get me wrong—we invest a lot of money going after these criminal organizations, and it is definitely necessary. But if there was one thing that gives us the advantage over the bad guys, it is our ability to partner and work together.

DAVIES: I think that partnerships are at the heart of the evolution of ORC investigations. The Rite Aid ORC team works very closely with Walgreens and CVS in the field, down to the point where we share the same radio channels on our vehicle radios. We do the same surveillance training to mitigate risk and ensure that everyone operates on the same level. The relationships are a force multiplier. We can’t do it on our own.

BRITTAIN: You each have massive retail organizations behind you. How do you bring them along for the ride? Company leadership is also enabling you to take that approach. How did you evolve that?

WALKER: That is a critical point. You must build that level of trust with senior leadership. That’s not to say it’s easy, because we are robust competitors in the retail market. But everyone knew that if we were going to get a foothold here and accomplish anything important in the battle against ORC, we were going to have to work together and communicate at a high level.

Part of it was educating senior leadership and building that trust. We must be outcome-driven and fact-centric. We are all proud of our teams. I think we have put together a great group of people. We are very conscious of the fact that whether we’re providing information to law enforcement or senior leadership, we must do it right. They looked at the reports and saw the shrink dollars, but just didn’t understand how the losses were happening. I think it is a combination of respect and the ability to go out and put forth a good work product.

DAVIES: I agree. The biggest and most important piece is educating leadership, but also consistently marketing what we do—every win, no matter how small or how big. Asset protection leadership does not always do a good job marketing to the executive teams exactly what their team does day-in and day-out and how it impacts the business, not just from a shrink standpoint, but from a brand standpoint. There are all these different things we must constantly teach and train and market.

DUGAN: We had a joint meeting at the CLEAR conference with all our ORC folks along with all the VPs and senior executives. We went over every major case that we are managing, just so the bosses could listen to us speak together—Walgreens, Rite Aid, and CVS Health. Everything we do projects that teamwork. We talk about all the investigative partnerships with law enforcement and other retailers, so they understand that those relationships are extremely important to our success.

Leading the frontline field teams fighting the ORC storm across the country for the three major pharmacy retailers are pictured here (left to right): Jose “Joey” Varela, LPC, and Terry Mullen, senior managers, ORC and corporate investigations at CVS Health; John Moore, manager of ORC and special investigations for Rite Aid; and Bryan Lindsay, CFE, major crimes asset protection manager at Walgreens.

BRITTAIN: What do you recommend to other retailers out there? I mean what do you think they need to be doing that can help promote that approach?

WALKER: Making sure they are involved and engaged, driving the education of legislators, law enforcement, and senior leadership. It is important that the problem is clearly understood, and that key decision makers have a true perspective on how ORC impacts society as a whole. Most are already taking the steps, but if you are a subject matter expert on ORC, there is a responsibility to educate these critical partners about what the problem is and how to combat it.

DAVIES: The networking side is extremely important. That is where groups like CLEAR and the different organized retail crime associations across the country become key contributors, bringing us together to brainstorm different strategies and discuss different tools, techniques, and technologies. The sharing, triaging, and linking of data to intelligence is also an important part of it. We need to work together to educate company leadership of the tools available to share intelligence and link activity between retailers.

WALKER: Information sharing is more crucial now than ever before. We have evolved in how we interact with these nefarious people in our stores. The safety of our team members and customers is paramount. That is the first thing we tell everyone—we are not going to get someone hurt over these situations. We are taking a different approach to try and impact these groups. And I think that just makes it much more critical that we are able to share information. There should not be secrets when it comes to mitigating violence in our stores. There just shouldn’t.

BRITTAIN: What message do you think is most important to send to the people in the stores? How do you expect them to respond if something happens in the stores?

WALKER: We have very robust, clearly detailed policies around what those interactions look like. The first thing is to make sure that every new team member is up to speed on what the expectation is, how to interact or not interact with them. The policies stress that if you feel unsafe, you should remove yourself from that situation. Their safety is paramount. At the end of the day, don’t put yourself in a position where you’re not safe. Those policies must be very clear, understood, and reinforced.

DAVIES: Also, we need to give the employees a sense of confidence and security that we are taking positive action and something’s being done. When there are gaps in the legal system when dealing with these individuals, they have to live with it. They are seeing people being arrested and then coming back an hour or two later and hitting the stores again. They are dealing with enough stress with all that’s happening in the world, and they need to know they have our backing and support at all times.

We are communicating with the stores. We are providing them with detailed training. We speak to them on the importance of documentation when building a case against these illicit actors. We are working with the district attorney offices and getting indictments. We are taking those wins and sharing them with the stores. The store teams get a bulletin, a case closure with images of the individuals in handcuffs, merchandise recovered, a fencing location that was identified, and how it all started with their documentation. We are empowering them to let us take the bad guys outside the store and go after the fencing location.

WALKER: We also implement a post-event follow-up if an incident occurs in one of the stores. We have a third-party vendor that can provide counseling free of charge to team members. There can be a lingering level of stress if someone jumps over the counter or overwise traumatizes our associates. We make sure that we’re providing those kinds of after-action support to the team, and they know it is available.

BRITTAIN: Talk about your relationship with your law enforcement partners.

DAVIES: I believe all of us have some amazing relationships with our local, state, and federal law enforcement partners. I think there can be times when law enforcement can feel they’re fighting a losing battle. They can grow frustrated just like we do. But we try in every encounter to bolster the fact that what they are doing has tremendous value and that we stand behind them. There are some amazing partners out there that go above and beyond. They understand the impact that ORC has on their communities as well as our businesses, and they want to be part of the solution.

For example, NYPD precincts are bringing their new officers into our stores when we are conducting ORC blitz operations to teach them how to suppress recidivist activity and learn more about how these groups operate. There are countless examples across the country where law enforcement partners visit our stores and work closely with our ORC investigators to address activity.

WALKER: We need law enforcement engaged. They want to get bad guys off the street. They want to do the right thing. But they also run up against roadblocks that they can’t control. They have to operate within the parameters of the current legislation and the laws that are on the books. It’s not just about us. We must understand what is important to law enforcement and make sure they understand how this impacts their communities. Believe me, if the command staff thinks that ORC is an issue and what is going on in our stores is a problem, then the street officer and that sergeant is going to want to get engaged and learn more about the problem as well.

That same message must be shared with the prosecutors. We have to educate the prosecutors as well, and make sure they understand the tremendous impact that ORC can have on their communities. We have presented to state prosecuting attorney’s associations to further educate them on the problem and share that message. They must understand the impact and level of violence these types of crimes are having on their community. They need to understand more than the financial impact for us as a business, but how these huge losses affect the tax base. How can these losses impact your city budgets, public services, and other key projects in your jurisdiction? What about the safety factors? How might this impact tourism, police funding, roads, or other necessary services? It’s not enough to say it’s important. We have to show them why it is important.

DAVIES: When we have these meetings with legislators, prosecutors, and other key public partners, the one thing that I would stress is not to go in alone. Partner with other retailers that are experiencing similar issues. Make sure they understand the magnitude of the problem, and the many different businesses being affected. Make sure they know this is a community problem that impacts everyone, not just an issue with one particular business. That holds a lot more weight.

Final Thoughts

As we were finalizing this story, the teams at CVS Health, Rite Aid, and Walgreens were working together with San Francisco police and other law enforcement partners to initiate warrants and make arrests on another major ORC operation in the greater San Francisco area. These are not isolated incidents, and operations such as this one only further underscore the relentless attack on our retail stores by these criminal operations and the tremendous dedication and commitment by these retail teams and our law enforcement partners.

We have heard time and again the importance of partnerships and communication when dealing with the ORC storm involving fellow retailers, the law enforcement community, prosecutors, associations, and legislators. Through words and actions, the teams at CVS Health, Rite Aid, and Walgreens provide a road map to successfully achieve those objectives on a national scale. But we also fully understand that they are not alone in these efforts.

We salute all those public and private partners that offer their energy, experience, and expertise toward these goals, building the relationships that lead to results. We look forward to hearing more of your success stories. Working together, there is very little we cannot accomplish.

To download a PDF version of the entire ORC special edition, click here.

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