Dragonflies exhibit fascinating behavioral patterns—they’re incredible creatures. Studies conducted over the last five years indicate that dragonflies possess a brain feature referred to in part as “predictive focus” and “target trajectory,” suggesting that dragonflies can predict the path of both predators and prey, as well as anticipate and estimate future movements and placements of objects.
Recently, I noticed how a dragonfly swarm works in sync, flying in a networked pattern, exchanging touches and communication. Those who took rest did so carefully, ever aware of their surroundings, and taking off at any perceived discontent or threat. What lessons can we learn from dragonflies? We observe many similar patterns in retail crimes, with patterns and rationalizations relative to dynamic phenomena affecting retail crime.
The Psychology of Fraud: Understanding the Risk-Benefit Calculation in Retail Crime
First, let’s explore a simple rationalization of a participant in organized retail crime and fraud, with a money cycle as the overarching theme. This rationalization is relevant to the actions of retail theft and fraud—the “why,” the need, the want, and the challenge. Even these most basic concepts apply in advanced ORC operations, particularly ones involving fraud. The methodology of profiting can act as a separator.
Some participants view fraud as a pastime; others may commit fraud for greed, need, or under pressure. Social media plays an increasingly significant role in this space.
There are elements of planned deception in fraud. Being detected is a risk, but not desired. Fraudsters endure great lengths of work to remain successful, sometimes to spare injury, embarrassment, and most of all, accountability. However, it’s more attractive for fraudsters to persevere because of the perceived low risk. There may be a belief that retailers don’t know about fraud, don’t investigate it, won’t investigate, can’t investigate it, or just do not care. Likewise, a fraudster may not have a level of worry; then, the above is not a concern. This further relates to the expectation of benefits and weighs the level of need and desperation. Relative to the participant, fraudulent actions are fueled by a multitude of factors, both internally and externally. It takes a person to commit the act. Even if that person is not the mastermind, if there is a convenient benefit, then the
risk-benefit calculation enters. It is natural for people to calculate risk due to the need to preserve success; we aggressively protect what is financially successful. Just as with our dragonfly friend, there is a of risk vs. benefit and careful evaluation of the setting.
The Art of Deception in Retail Fraud
As linear concepts, if fraud is compared to the physical theft of goods, even the common booster understands that there is more exposure with the physical theft of goods, and that means a higher probability of being detected and identified. My opinion is that “frauds” are transactional, both as people and as processes. That does not necessarily require the presence of a financial transaction. Fraudsters tend to like getting lost—or wrapped up—in a transaction to make it appear to be something else. Fraudsters and their frauds try to introduce confusion, which allows for the possibility of misinterpretation either by the establishment or the investigator. Fraud likes to have a case of mistaken identity. Fraud likes to hide in the details.
Next, let’s explore the idea that fraudsters invent prescriptions for how to carry out their scheme. As our dragonfly prescribes its approach based on setting, risk, and continuous evaluation, so does a possible offender in retail crime. Our example of fraud is one of several other examples of the risks, calculations, and prescriptive approaches that a participant will consider before and during the action. While one actor may not be exactly like another, just like our dragonfly, each one may use common patterns and rationalizations to accomplish its goals. And while dragonflies may come with the natural ability to form prescriptive focus for survival and success, some of our retail crime actors have gained agility within these themes by encountering complex dynamics fueled by social and environmental phenomena.
Social Media’s Role in Facilitating Retail Crime
It is increasingly tiresome to contemplate the multi-pronged attack on the retail industry. People minimize what they have done (or are going to do) and rationalize a way to evade personal responsibility. When that is alleviated, there is no perceived harm done. However, the most recent threats come from social media.
Found on social media platforms are online challenges, how-to guides, technical descriptions, and materials reminiscent of recruitment and training—it’s fun, but profitable, so why stop? Then, people minimize what they are doing because their perception is that once it’s done, it’s over, and nothing else happens to anyone because of it. So, they engage in the cycle and the repetition. There is a subscription to convenience. The more convenient the delusions believed by retail crime participants, the more the level of seriousness is minimized. In obsessing over their ledger, many bad actors possibly become trapped in the incessant cycle of money transfer.
The Swarm Mentality: How Fraud Networks Evolve and Adapt
Let’s think back to our dragonfly swarm network. As we imagine the swarm as one among countless others, we can also imagine how it resembles ORC and fraud networks. Retail crime networks often study their surroundings, attempting to prescribe approaches and plans, and perform countersurveillance on the retail system, much like our dragonfly tries to estimate and predict the outcome of its survival based on how it moves, where it lands, and how long it stays. Any threat of discontent can send it flying away, diminishing the potential for analysis and capture. Information is shared among other participants via this network and system of intelligence.
Now, let’s acknowledge some important available data and literature that provides insight into several of these dynamic phenomena. In the 2020 National Retail Security Survey, 33.3 percent of respondents indicated that LP budgets remained flat, despite the same respondents indicating a higher threat level priority from five relevant risk areas, including ORC, e-commerce crime, and internal theft and fraud. Unfortunately, the trend is nothing new. An article published in 1972 by Noel B. Zabriskie, assistant professor of marketing at the University of Maryland, indicated results from a study on consumer fraud, where 12 percent of the observed retail interactions were fraud-related. The same study showed results where the observed retail interactions were “probable fraud of two types,” which included criminal intent. The study implied that stores needed to develop mechanisms to separate legitimate and illegitimate interactions.
Navigating Complex Challenges in Loss Prevention and Retail Investigations
This brings us to acknowledge some key concepts regarding the importance of loss prevention and retail investigations. A short column in LPM from 2022 references Auror Co-CEO Phil Thomson’s confirmation that “key challenges include the surge in aggression and violence in stores, changes in law enforcement response and legislation, impacts of lockdowns, rapid growth in online marketplaces, and the subsequent and continued rise in ORC.” The column also highlights a podcast hosted by Jacque Brittain, LPC, with Scott Pethuyne, LPC, and Molly Pollard (both with Zebra Technologies at the time), in which they explain the challenge of the “do more with less” initiatives by corporate departments. In the podcast, Pethuyne and Pollard both shared insights into the headwinds faced by LP teams in combating retail crimes and added to the reasons why companies should consider technologies like prescriptive analytics to supplement staffing. Outsmarting the enemy in a changing retail landscape is as important as the correct placement of physical personnel; we should be using all tools available. With ORC and fraud, perhaps retail corporations lack coping mechanisms, which are again amplified by a lack of employees to perform reviews of major theft and fraud incidents.
To further supplement our efforts in outsmarting bad actors, Cory Lowe, PhD, provided a “model of deterrence” in his 2022 LPM article “5D Retail Theft Prevention.” In this model, Lowe emphasizes that strategy must be one where offenders “see it, get it, and fear it.” Noted in Lowe’s presentation of this model is the fact that offenders must believe the solution is a “credible threat.” Aside from this one model, I highly recommend reading Lowe’s entire article.
It’s no secret that social media platforms are bolstering the capabilities of ORC networks and amateur shoplifters. The mechanisms of how this is happening are described beautifully in Neil Spencer’s 2021 LPM article on “alt-tech” social networks. Quoted and provided below are several excerpts from the article:
“Over the past year, tens of millions of people have abandoned mainstream platforms like Facebook and Twitter. In their place, users have shifted to a growing collection of new offerings that promise less content moderation and more privacy features. That creates new challenges for loss prevention teams. On one hand, more users have turned these alt-tech sites into an invaluable source of threat intelligence. But they can also serve as havens for nefarious groups like cyber criminals, shoplifting rings, and other bad actors.”
Spencer further points out social media platforms that have attracted ORC groups. Of note is the collective of spin-off platforms behaving like a “Shoplifters’ University.” Spencer says, “Organized criminal groups may have once coordinated their activities on mainstream websites. But today, these groups are far more likely to use alternatives… Security teams that fail to monitor these sites could be caught off guard by a threat that they later discover was published right in plain sight.”
These platforms are themselves becoming a phenomenon, complete with all the materials, players, and support needed to maintain behavior inviting of activity, driving retail crime and fraud. Some fraudsters will couple their view of these phenomena (as a means to succeed) with their rationalizations to form patterns. Consider these final points in Garrett Seivold’s 2022 article in LP Magazine:
“Success here… requires an attack on multiple fronts with a variety of tactics. It demands industry-wide coordination and store-level solutions, high tech investment, and basic protection.” Sievold includes a few points made by Brian Neimeyer in the same article, where Neimeyer described contributing factors to crime, including “social media facilitating coordination among thieves, lack of enforcement surrounding these types of crimes… fewer consequences for offenders who are caught, and an accessible online marketplace to sell stolen goods.” A suggested strategy from Daniel Binder in the same article is to “continuously align fraud and theft prevention with sales strategies.” It is past time for us to realize that all these concepts are in the employ of businesses and boosters.
Lastly, while data provides valuable scientific insight, it is convenient for us to ignore how much we still do not know. This is best articulated in a 2021 article by Cory Lowe, PhD, and Read Hayes, PhD, that addresses the unknown side of our supporting data and research into ORC networking. According to Lowe and Hayes, “there is simply a lot that we do not know.” The main ideas are that there are still knowledge gaps in our understanding of ORC, definitional differences need to be accounted for when analyzing data we claim to know, we must consider the section of knowledge we do not know, and we must continue to seek advanced understanding through better research and data.
Practice makes perfect. The rule of persistence and the law of numbers are critical considerations for both investigators and bad actors. One reason why large retailers should have robust investigations departments at all levels of the enterprise is that, when necessary, their capabilities can be used. Thieves are counting on retailers’ lack of awareness or investigative capabilities to succeed. ORC groups are banking on success because they know retailers follow rules and must play catch-up. Where does it stop? When does it end? A theft can take only minutes to conduct, but an investigation takes however long it takes—weeks, months, possibly years.
Eventually, though, luck will run out, time will run out, funds will run out, and greed will take over, causing missteps and negligence. We cannot rest only on these expectations to catch the bad actors. We must be aggressively proactive in the implementation of systems, execution of protection measures, and investigation of exceptions. We must be aggressively reactive by following the trails, leaving no stone unturned, and positioning ourselves well. Surely, we can all remember when we caught a dragonfly or two, can we not?
Barry Mince, CFI, LPC, is a retail loss prevention professional specializing in investigations and organized retail crime. He serves as vice chair for LAMAORCA and has seventeen years of experience providing retail crime case resolution. Barry actively engages in academic opportunities with ORC, AP industry partnership networking, and investigative interviewing. He is based near New Orleans.