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Organized Retail Crime: Overcoming Public Misperceptions

Editor’s Note: As 2015 draws to a close, LP Magazine is taking a look back at some of its top articles from the past 12 months. This story highlights the tremendous negative impact that can be caused by sophisticated criminal networks and reminds loss prevention professionals of the need to educate others in the industry on concerns related to organized retail crime.

Each year, we encourage our readers to take part in the National Retail Foundation Organized Retail Crime Survey, which explores numerous aspects of ORC issues and how retailers are responding to these issues in stores, throughout the supply chain, across digital networks, and through other channels that impact businesses and customers.

Tools like the annual Organized Retail Crime Survey help to bring awareness to the impact that these types of crimes have on the retail industry, the economy, and ultimately the retail consumer. But there are many other ways that as an industry we have responded to the dramatic growth of ORC incidents.

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Industry associations dedicate significant resources to combating ORC efforts. Whether your company attends conferences with the Retail Industry Leaders Association (RILA), the National Retail Federation (NRF), the Food Marketing Institute (FMI), or the Restaurant Loss Prevention and Security Association (RLPSA), each of these industry-specific conferences hold both general and breakout sessions, workshops, and group forums to train and educate industry leadership on the latest trends, innovations, and collaborations surrounding ORC issues. There are sponsored events in select markets where professionals can learn and network with law enforcement agencies to enhance engagement and build stronger partnerships.

Each of these associations also put forth efforts to influence leaders on Capitol Hill to continue to search for legislative solutions, enact stronger statutes, increase penalties, and encourage enforcement in an effort to deter this type of criminal activity. For example, as part of the National Retail Federation’s annual Retail Advocates Summit, Loss Prevention Legislative Committee members headed by Jeff Fulmer, vice president of loss prevention at Barnes & Noble, recently met in Washington to continue efforts to enact legislation that would update criminal codes to recognize organized retail crime issues at the federal level. This would further include the creation of an Organized Retail Crime Investigation and Prosecution Unit within the Justice Department to assist in the investigation and prosecution of organized crime rings.

There are also organizations that offer educational and networking opportunities on the local, state, and national levels. These groups provide training sessions, webinars, and other resources as well to help build knowledge and awareness. And of course, LP Magazine provides both digital and print resources to keep you up to date on the latest news and information on the subject. The dramatic growth of ORC incidents has caused significant concern throughout the retail industry. All of us are partners in the fight against this growing concern, and should work together in the search for solutions.

However, the public perception of organized retail crime is typically not viewed in the light that we might expect. Often perceived as a minor distraction in the larger scheme of things, theft and theft-related crimes—to include ORC incidents—are not always seen as a primary concern in the eyes of those outside of retail. So how do we change this perception? What can we do to increase public awareness and influence a different way of thinking? Perhaps the starting point is to identify where the breakdown is taking place…

LP Magazine’s recent Instant Poll took a closer look by asking: What do you feel is the public’s greatest misunderstanding regarding Organized Retail Crime? Poll results showed that respondents have mixed views on which issue carries the greatest misconceptions.

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Eighteen percent of respondents believe that our greatest challenge is a failure to understand the financial impact that ORC issues can have on retail and the global economy. With losses to the retail industry as a result of organized retail crime costing the industry upwards of $30 billion annually, the direct financial impact should be relatively clear, with losses affecting consumers in the form of higher prices. However, there are other economic consequences as well. For example, lost tax revenue attributed to ORC activities also dramatically impact our economy. According to reports on organized retail crime activity conducted by the Federal Bureau of Investigation, “the hundreds of millions of dollars in revenue losses to our states (as a result of lost tax revenue) can be considered catastrophic.”

Twenty-three percent of respondents feel that the greatest public misconceptions involve a misunderstanding of the role that ORC plays as a gateway crime to other illicit activities, such as violent crimes, illegal drugs, and even terrorism. Loss prevention professionals witness this almost daily in personal experiences and through news resources. But this is further underscored through other information channels available to the general public: for example, Google searches combining “shoplifter” and “drug possession” yields 1,540,000 results; while searches combining “shoplifter” and “heroin” yields 328,000 results. A brief look at the content posted provides a sobering glimpse at the degree of the problem.

What may also pose a concern is the potential relationship between organized retail crime syndicates and other serious threats to our communities and our nation. According to a Federal Bureau of Investigation statement before the House Judiciary Subcommittee on Crime, Terrorism, and Homeland Security, criminal investigations have shown direct ties between ORC operations and international street gangs such as Mara Salvatrucha (commonly abbreviated as MS-13)—a group allegedly involved in violent crimes, torture, and teenage prostitution—involving millions of dollars in stolen goods. The FBI has also found direct evidence of ORC groups sending a cut of their illicit profits to terrorist organizations such as Hezbollah, a militant group that the US government and its European allies consider to be a global terrorist threat and a menace to Mideast stability.

The majority of respondents—48 percent–view the sophistication of ORC networks and the ways that they can impact our communities as the primary public misconception. While this would include many of the concerns voiced in our other poll options, it would also involve additional issues. For example, repackaging operations have the potential to impact consumer health and safety when products such as stolen infant formula, formula, and other consumables are repackaged and/or improperly stored before being resold to unsuspecting customers. Small market stores and occasionally larger retail operations are consistently involved as fronts for fencing operations. And how many of those buying detergent at a local flea market would realize that their purchase, if bought from the wrong source, could potentially be funding terrorist activity? The possibilities can be highly sophisticated, far-reaching, and in some instances devastating to our communities and our society as a whole.

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Eleven percent of respondents believe that the role that ORC plays is largely overstated and shouldn’t carry so much attention. Based on comments shared, this is not necessarily a reflection on the potentially harmful consequences associated with organized retail crime, but rather an insight into the overall impact of ORC issues as it pertains to retail shrink performance in general. The role of loss prevention is to reduce shrink and enhance the profitability of our businesses. While ORC concerns may pose a real and serious threat, we cannot lose sight of our primary mission. There is a responsibility to manage a comprehensive program that addresses all of the different aspects of shrink performance; one that is focused on training, awareness, operational controls, protection, and prevention. As an industry and as individual professionals, we can’t afford to lose that focus, or over-commit limited resources to one aspect of a much larger responsibility. A balanced program that evolves with the needs of the business must remain our objective.

Regardless of which particular perspective we hold, it remains clear that much can be done to change the public perception of organized retail crime. Information and awareness help put us on the path to meaningful solutions. By the same respect, and as several have pointed out, this must be accomplished without losing sight of our primary mission. As we evolve as an industry, we have to explore new ways to approach what we do and how we do it in order to change perspectives, build support, and accomplish our goals. This begins with educating ourselves, reflecting on our overall mission, and making informed decisions as we look for the best and most productive ways to share that information with others. To put others on the path to understanding, send a strong message—but build the right message. Then share it with anyone who will listen.

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