Organized Retail Crime in Italy

A conversation with Italian researcher and subject-matter expert Giuseppe Mastromattei of Rome.

While certain aspects of loss prevention may be handled differently in different countries across the globe, retailers in markets everywhere still share many of the same challenges and concerns regardless of regional, geographic, legislative, or cultural differences. Organized retail crime is a universal problem for retailers everywhere, stirring both economic and safety concerns for retail companies worldwide.

Recently, LPM held a discussion with Giuseppe Mastromattei, a seasoned expert in law enforcement, security, and loss prevention in Italy who currently collaborates with different universities as a lecturer and is the author of many publications about risk and security management in the country. He is also the founder and chairman of “Laboratorio per la Sicurezza,” an association supporting the retail security and loss prevention community in Italy.

Mastromattei has spent nearly 30 years in security and loss prevention. He started his career in 1992 as a police officer in Sicily in the Mafia Crime Organization division before taking responsibility of an investigation department in Milan. In 1995 he began his private security career, working for a logistic company, 12 years as corporate security manager for The Italian Public Television, and in retail to include serving as risk security and compliance manager for H&M Italy and regional manager for western Europe. As a senior advisor in risk security and compliance, Mastromattei currently collaborates with different universities in Italy as lecturer and author of many publications about risk and security management.

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LPM: In general, what can you tell us about loss prevention and the retail crime problem in Italy?

Mastromattei: Before delving too deeply into organized retail crime, we should perhaps take a more comprehensive perspective by providing a definition of ORC from a criminalistics point of view in Italy. In our country, the expression ‘organized crime’ refers primarily to a mafia-like criminal organization. A phenomenon that has characterized–and still characterizes Italian criminality, these criminal activities follow the ever-evolving models aimed at consolidating control over a territory. This is deep-rooted as part of the criminal culture, directly associated with a strong influence and, to a great extent, the ability to blend into the society to better integrate with the economic and financial environment.

Moreover, in the last few years, collaborations with external and foreign criminal organizations have more clearly come into light. Their goal has been to further expand their criminal interests across transnational borders. The most organized mafia-structured groups – cosa nostra, ‘ndrangheta, camorra, sacra corona unita – in southern Italy, have exerted a strong control on territories over time, monopolizing any type of illegal activity and threatening the economic and financial sectors as well. In fact, recently these activities have destabilized operations in central and northern Italy, where the entrepreneurial class is more developed. That activity has largely focused on financial crimes such as money laundering, reuse of assets, interference with public contracts, and similar issues.

In the areas less subjected to mafia-like criminal organizations, the illicit activities of criminal groups from abroad, especially from East Europe, Balkans, Asia, North Africa and South America, have been detected. Transgressions primarily involve drug trafficking, irregular immigration, human trafficking, procurement, and other offenses. However, these criminal organizations, now operating out of their areas of origin, have developed a network to expand their traditional illegal activities.

Thanks to the numerous investigations and repressions carried out by the judicial authorities and the Italian national police forces over the past years, the long-standing and rigid criminal hierarchies were dismantled. At the same time, illegal activities defined as ‘acquisitive crimes’ has skyrocketed. This favored the formation of criminal organizations almost exclusively devoted to theft-related crimes that are largely comprised of groups of young, out-of-control dropouts.

LPM: How has this translated into the types of crime that is being experienced in the retail setting?

Mastromattei: Representing one of the primary risks the retail sector is facing today and increasingly prominent in the analysis of retail losses, we are now seeing real criminals working as shoplifting offenders in the retail environment. As an entry level move into the criminal world, these are often viewed as “access crimes” serving as an initiation, or stepping stone, to committing other types of crime. This shoplifting activity is typically seen as a zero-risk method to launch true criminal start-ups and achieve economic resources quickly, providing “black money” to invest in drug trafficking and other serious crimes—the starting point of a dangerous criminal escalation.

LPM: In terms of financial retail losses, how significant is the problem of organized retail crime in Italy?

Mastromattei: In general, the average financial amount of each ORC episode is always higher than the average store incident involving simple shoplifting events. At the moment, it is difficult to quantify specifically how much of the total losses experienced by retailers is directly related to organized retail crime at this time, specifically due to the lack of concrete or shared data dedicated to the problem.

However, beyond the financial outcomes there is tremendous concern in the retail sector based on the fact that there is an increase in violent behavior that typically occurs during the ORC incidents. The primary victims of these events are store employees and the employees of security companies attempting to stop or discourage these crimes, however episodes involving customers are considered rare.

LPM: In general terms, what are among the most common retail items being targeted by organized retail crime teams?

Mastromattei: Stolen items most frequently targeted will vary from sector to sector. In general, high-value items or products that are easily resalable such as clothing, alcohol, and technological or electronic items are preferred by ORC teams. Some retail respondents to our research surveys also highlight the theft of foodstuffs such as cheeses, cured meats, and canned goods, also likely destined for resale.

Among the most frequently recorded incidents of organized retail crime include organized shoplifting, such as gangs outfitted with shielded bags, ticket-switching/thefts committed through tag exchanges, and burglaries/nighttime intrusions. Cases of fraud involving payment methods are also prevalent, for example through counterfeit, stolen, or cloned payment cards.

Theft of goods in transit and online fraud episodes are also often detected, and primarily by the retailers. This is likely due to the fact that most security service providers are not directly involved in the management of logistics or e-commerce platforms, and therefore have less visibility of the related criminal threats. It is interesting to note that these methods are also those that could experience significant increases online sales continue to grow and evolve, a trend which will presumably be even more incentivized following the COVID-19 emergency.

LPM: What are some of the more common methods used by retail loss prevention teams to combat ORC in the actual retail stores?

Mastromattei: Most of the security service companies believe that organizational countermeasures are enough to combat the ORC dilemma. Retailers, on the other hand, appear to have greater confidence in technology measures. Some consider these measures adequate even when implemented alone, while the majority consider them effective if adopted in conjunction with additional organizational measures. Overall, I believe based on our research that a lack of a prevalent response suggests no clear or shared strategies have yet been universally identified to combat the problem.

Sharing information on ORC with colleagues or stakeholders is essential. Considering the pandemic scenario, most security service companies and retailers believe that containment measures will have an impact on ORC activities in the near future and that criminals will adapt their modalities to the new post-emergency reality. Although it is difficult to predict with certainty what will happen, it is possible to hypothesize some scenarios and related countermeasures.

  • It is likely that some criminal activities related to the growth of e-commerce and the consequent greater movement of products will become increasingly attractive for organized criminal groups. It will therefore be necessary to implement existing control tools and look for ways to develop new methods.
  • Through data-mining and the analysis of transactions, intercepting possible fraudulent behaviors (such as false returns, use of cards, or discount coupons), and increasing the controls related to the digital identity of customers must be developed and implemented.
  • By enhancing the control and qualification activities of the actors involved in the logistics chain to prevent the presence of criminal infiltration and screening companies potentially linked to the receipt of stolen goods.
  • The resumption of activities in the stores and the relaxation of lockdown measures will also see a probable re-emergence of criminal activities to the detriment of physical stores or warehouses. However, it is possible to try to counter this recovery by strengthening forecasting and prevention capacities.

ORC groups tend to operate repetitively and following established ways. The use of analytical tools capable of assessing the pattern of events or the levels of vulnerability of areas and stores would allow us to more effectively act in a preventive manner against this type of incident.

LPM: You mentioned information-sharing as an essential factor when combatting organized retail crime. Can you elaborate?

Mastromattei: Having such a varied and composite criminal framework in Italy has pushed loss prevention managers operating in the retail sector to adopt targeted interventions in collaboration with the police forces by strengthening partnerships and sharing information while increasing crime repression activities.

As this alarming phenomenon continues to gain ground, sharing information is crucial. By taking steps to gather and share additional data, we are better able to raise awareness and improve our knowledge of this phenomenon, while at the same creating an effective organizational model to address criminal activity.

LPM: How well do law enforcement and retail loss prevention work together as partners to address organized retail crime?

Mastromattei: There remain some critical issues linked to a lack of attention to incidents deemed not relevant to law enforcement or in cases where the criminals have not been arrested. This clearly points to the need to improve communication and share information. Sharing information within and between companies and loss prevention professionals would help to demonstrate potential links between criminal episodes brought to the attention of the police, emphasizing the presence of organized criminal behavior. Such information would also ensure greater effectiveness in fighting these criminals.

Another important consideration is the difference in support throughout the country. Sometimes communication and response is different region by region. This may be influenced by any number of factors and may be attributed to different local approaches. This only further emphasizes the need for better information sharing. Law enforcement support is stronger when communication is strong, when reporting is thorough and complete, and when investigations are detailed and well-managed.

LPM: How well do retailers work together in Italy to address organized retail crime?

Mastromattei: The Laboratorio per la Sicurezza Association in collaboration with “Crime & Tech” (a spin-off of Università Cattolica-Transcrime of Milan), brings together loss prevention professionals to work on many different projects for the retail loss prevention industry in Italy through new and unpublished studies and research to promote and start a process of sharing and awareness of the ORC phenomenon. By bring professionals together to better understand the dilemma and encourage open discussion, we are establishing channels to start defining the best and most effective actions to combat organized retail crime in Italy.

When fighting ORC, improvisation is not the best course of action. It is necessary to be prepared—and above all, organized. This process must involve all the stakeholders: not only security and loss prevention professionals from the retail sector, but also suppliers of security services, systems and technologies, and universities. Finally, there must be proactive collaboration between private stakeholders and public law enforcement partners.

While it may seem like a difficult path, a recent study, “Report of the Organized Retail Crime in Italy,” has identified a process for sharing and raising awareness of the phenomenon in Italy. This research was conducted to help better understand, through open discussion, the best and most effective interventions to fight organized retail crime in our country.

LPM: What do you think is the most significant problem that still needs to be addressed in the battle against organized retail crime in Italy?

Mastromattei: The most significant problem remains the quality of information. Before making a significant investment, it is always best to determine whether the return on investment will be adequate. This can only be done by gathering the right information. To analyze any type of information, it is first necessary to have and share relevant data to make the best and most informed decisions.

The expression organized crime, without specifying its characteristics, refers to an organization that is involved in real planning by those involved before any attack. This planning, which is often carried out through recurring methods, must be identified and analyzed by retailers. If we cannot make such an analysis and trace these episodes back to a broader string of crimes, it then becomes extremely difficult to take proper preventive measures and, above all, to ask and get support from our retail companies and the police forces.

Further, security service companies and loss prevention professionals do not have the same information or the same analytical tools necessary to fully understand the problem. Information is not always uniform, highlighting inefficiencies in the flow of information between the various parties. For this reason, we need to strengthen information sharing channels between retailers and security service providers to more effectively identify shared strategies. Once information sharing becomes a consolidated effort, we are then best able to use all the resources at our disposal to optimize our efforts resulting in the most effective results.

Our suppliers/solution provider partners will also play a critical role, sharing information and focusing their services, systems, and technologies to help in our efforts to address organized retail crime. These partners can provide great value due to their experience in the field and their knowledge of new and effective technologies. By building these relationships and working in collaboration, we can capitalize on these partnerships and use their perspectives and subject matter expertise to strengthen our efforts.

Finally, with the support of the world of research, it is best possible to structure the huge amount of information available today. Unfortunately, we often do not fully exploit the entirety of information that is available to us. I firmly believe that by having all stakeholders involved work together and in partnership, taking an ‘open innovation’ approach, we can provide added value to any loss prevention efforts in the fight against organized retail crime.

Only by behaving as a strong and organized team can we defeat organized retail crime, and the best organizational keys are cooperation, communication, knowledge, and awareness. This is the first step, and we must act together.

For more information on the ORC dilemma in Italy, download the “Report of the Organized Retail Crime in Italy.”

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