The growing issue of organized retail crime (ORC)

It’s easy to think of crime in the retail sector as being largely related to small-scale shoplifting, either by individual criminals acting alone, those who are contacts of retail staff, or the staff themselves. However, the issue of organized retail crime (ORC) is growing and may well outstrip the impact of shoplifting alone with crime taking place throughout the entire retail supply chain.

Hedgie Bartol, Retail Business Development Manager at Axis, caught up with Dave Thompson, CFI, President of Wicklander-Zulawski & Associates to take a closer look at ORC and its impact on retail today. Dave has over 15 years’ experience in criminal investigations and supporting the retail industry, which gives him an ideal insight into the subject.

Hedgie Bartol: Dave, ORC seems to be becoming an ever more serious issue. In its ORC report, the National Retail Federation says that 65% of retailers see ORC as more of a focus today than five years ago. Would you agree, and what are the reasons behind it?

Dave Thomson
Dave Thompson, CFI, President of Wicklander-Zulawski & Associates

Dave Thompson, CFI: Hi Hedgie. Absolutely – there has been a sizeable increase in ORC activity in the retail supply chain, warehouses and omnichannel fraud over the last few years.  The impact of supply chain fraud is increasing each year with a large emphasis on cargo theft.  Omnichannel fraud and the ability for retailers to accept digital currency has also globalized ORC, as the location of the crime is no longer dependent as to the location of the suspect.  This creates a jurisdictional nightmare for retailers and law enforcement as they attempt to build a case across the globe.

Many retailers and law enforcement also attribute the increase in ORC to restrictive policies and the decriminalization of these crimes.  Retailers are taking a more hands-off approach with shoplifters and often have prosecution guidelines that may result in a trespass notice but no criminal charge.  Law enforcement also may have their hands tied in certain jurisdictions as felony thresholds have increased and the priority for a misdemeanor shoplifting case falls low on the list.  The lack of prosecution for these crimes may incentivize additional criminal activity.

HB: I’ve seen reports that the pandemic has had an impact on ORC. How?

DT: The pandemic has driven the growth in ORC in a number of ways. Supply chain and vendor fraud has increased as there have been fewer in-person audits and checks and balances on these processes during the pandemic.  Travel restrictions have limited the quality control and ability of compliance departments to be able to identify fraud and sanction accordingly. Digital fraud has continued to escalate during the pandemic, as digital currency is more widely accepted, and employees working remotely are also more susceptible for social engineering or phishing schemes.

Where they’ve been open, retail stores themselves have seen an increase in ORC fraud during the pandemic for a variety of reasons.  Major cuts in payroll have resulted in less staffing, both from a customer service and security standpoint which create greater opportunity for theft.  Several retailers have also restricted apprehensions or close encounters with shoplifters due to social distancing and other regulations, obviously resulting in an easier pathway for shoplifters.

HB: I guess the criminal elements have had to adjust how they do “business” during the pandemic as much as retailers have had to adjust. Though of course ORC would not worry about whether it is seen as “essential” or not. Can you share some ORC examples involving omnichannel and supply chain?

DT: ORC is not just limited to storefronts and customer-facing locations.  Omnichannel and supply chains are also a major target and often offer a larger return with less risk for ORC groups.  ORC fraud revolving around gift card scams and digital payment fraud are evolving every day.  Unfortunately, the law has yet to catch up to the sophistication of digital fraud which allows ORC groups to target a larger amount of financial gain with minimal risk.  There have been numerous cases recently where ORC groups use social engineering techniques to persuade cashiers to activate gift cards over the phone, resulting in millions of dollars of loss globally.  The era of writing a bad check has evolved into digitizing money laundering, credit card fraud, identity theft and the movement of money happening too quickly to recover the loss.

Trucks leaving ferry

The global market is heavily impacted by ORC in supply chain logistics.  There is opportunity for fraud at vendor location, transportation companies and the ports themselves before it ever lands at a retailer’s distribution center. A recent industry report from the standards body BSI and insurer TT Club claims that in-transit cargo theft was responsible for 71% of total theft in the supply chain.

HB: It has always fascinated me at how far behind the laws are in regards to ORC.  If someone were to be caught with a briefcase of illegal drugs, the penalties are huge, but if they were caught with a tractor trailer full of flat screen TVs, then they might not get penalized at all. But what are some of the working practices and techniques of the ORC networks and groups?

DT: ORC groups range in their level of sophistication, ranging from a small group of local members to a structured, organized criminal enterprise.  The most structured groups have several parallels to a military chain of command or company org chart.  Typically, in these sophisticated groups, there are clearly defined roles for each member and often different “job titles” for each.  The shoplifters that retailers see in a store may just be the tip of the iceberg and often the lowest level on the org chart.

In a single shoplifting incident, there may be several people involved on the ground including; the shoplifter themselves, a driver, lookouts and distractors.  ORC groups typically have lists of items to target and are in constant communication with each other throughout the event.  They are strategic in their approach, deciding where to enter the building and how to distract store personnel. Geographically, ORC groups are always on the move, typically targeting locations near major airports or highways and often travel with rental or stolen vehicles.

HB: As a growing issue, how are retailers’ policies and law enforcement guidelines evolving to keep pace?

DT: Organizations, including retailers, law enforcement, prosecutors and legislators are now recognizing ORC as a major problem that needs to be addressed differently than the opportunistic shoplifter.  In the US for instance, dollar amounts that surpass the felony threshold are being scrutinized in each state.  Many organizations are working with law enforcement and lobbying groups to create specific charges for ORC groups, including the aggregation of crimes over a set period of time or other factors that allow charges to be raised above a petty theft or misdemeanor.

HB: Are there networks where retailers can collaborate and share best practice?

DT: There are no shortage of networking opportunities.  Globally, many solution providers are a great source of networking as they deal with multiple clients that share the same concerns.   There are associations like LP Foundation, ASIS, IAI, CLEAR and others that encourage networking and information sharing.  Specific to ORC in the US, there are many regional groups that host training events, conferences and information sharing meetings to encourage collaboration.  Participating in these regional groups can be the tipping point in the fight against ORC.  My WZ colleagues and I have spoken at a number of their conferences including California-ORCA, Georgia-ROC, Florida Retail Federation, Minneapolis-ORCA and Metro-ORCA.

HB: Sharing information is the key to combatting ORC.  It has been refreshing to see more and more retailers coming together and working to battle the issue.  It’s something that you don’t always see in other industries. What can retailers specifically do to prevent and reduce ORC?


DT: There are a number of things retailers can do to tackle the issues. Firstly, educate staff on the key indicators of ORC activity and how they may differ from the opportunistic shoplifter.  Customer service and the presence of store personnel is often the largest deterrent to this activity.

Secondly, leverage technology to stay ahead of the curve.  RFID tagging, surveillance cameras, and facial recognition are just a few of the areas that retailers are investing in.  The evolution of technology, specifically surveillance cameras, now include data gathering, artificial intelligence and the ability to create a comprehensive case prior to any apprehension.

Finally, network and collaborate with other retailers, law enforcement and legislature.  Information sharing and networking not only will help to connect circumstantial evidence together but also provides an opportunity to learn of investigative tools used by other organizations.

HB: How are retailers adding additional technology resources to human intelligence to address the risk?

DT: Data gathering and predictive analytics have helped retailers identify weak points in their security systems as well as anticipate the major areas of concern.  Technology has allowed for retailers to invest appropriately in markets or specific products that have the highest loss. Analytics, combined with camera technology, has also provided retailers with alert systems and assistance for their store personnel to identify ORC activity in real-time.

Human intelligence, gathered through interviews with ORC suspects in partnership with technological resources, have allowed for a more comprehensive preparation of a case when presenting to prosecution.  For example, an interview that results in a suspect informing the retailer of names of other suspects, addresses of fencing locations or other locations hit can be paired with facial recognition, open-source intelligence and video surveillance to identify criminals.

HB: Thanks Dave, it’s been great to talk. It will be interesting to see what can be done to address ORC as technology becomes more advanced and is able to free the human intelligence more actionable data in real time.


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