Organised retail crime (ORC) is by no means new to the retail environment, but is rather a criminal element that consistently challenges us in new and different ways as it grows and evolves at a rapid pace. With thieves and the supporting criminal market urgently seeking new and creative ways to pilfer goods and maximise their profits, it becomes increasingly important for retailers to keep pace. A big part of this involves keeping current with both the means and the methods of the professional theft enterprises invading the retail space.

For many years, there have been theft groups that have moved from store to store and market to market, stealing large quantities of goods and selling product through a variety of different venues. However, while many of the basic concepts may be the same, the execution – and the potential consequences – have been greatly magnified. With the reach and sophistication of these networks, the advancements in technology, the potential profitability of the illegitimate venture and the diverse ways that they can impact the retail business, today’s professional criminals are attacking retailers with a voracious appetite.

High Value, High Demand

Businesses targeted by ORC are as diverse as the types of products targeted, whether department stores, home improvement stores, specialty stores, supermarkets, pharmacies, convenience stores, category killers, or other types of retailers.

Every area of retail can be affected and no company is immune from the prospective threats.

Attacks can come through the front door, back door, internally, over the Internet, or anywhere along the supply chain.

ORC groups can potentially steal a wide array of products, including over-the-counter drugs, razor blades, baby formula, cigarettes, batteries, video games, CDs, DVDs, gift cards, jewellery, large or small electronics, designer clothing, power tools, high-end meats, or any number of items that are in high demand. Essentially, product is only limited by the needs of the criminal element, the ingenuity of those attempting to steal the products and the expedience through which the product can be sold and converted to cash.

In some ways, this has its limitations. Some products can be moved quickly and at high volumes, while others are largely dependent on the buying market to support the criminal enterprise. So, in order to maximise profits, ORC networks would also return stolen merchandise back to the retailer without a valid receipt. With many retailers previously providing cash back for returns under a designated dollar amount, this well-known approach basically resulted in criminals selling back the stolen merchandise to the retailers for substantial profit.

Enter the Gift Card

As retailers have responded to the evolving needs of the business, most have changed their return policies and typically issue a gift card or store credit when returns are made without a receipt. Unfortunately, this still offers the thief a lucrative opportunity.

Rather than fencing the merchandise for 30 percent of its value on the street or selling the goods on the secondhand market for 60 to 70 percent of their value, they can return the merchandise to the store, receive a gift card and sell the gift card for up to 80 percent of its market value. Factoring in the sales tax portion of the return, which can bring an additional 5 to 10 percent depending on the state, the thief can be looking at an 85 to 90 percent return on their ‘investment’ for the stolen merchandise.

While these gift cards can be sold at physical locations such as pawn shops and other outlets, online sales sites currently provide an easy way for thieves to convert the cards to cash. A simple Google search using the phrase “sell gift cards” resulted in more than 73 million results. Gift cards can be bought and sold on popular sites such as eBay, Amazon and even Craigslist. But there are also sites that are specifically dedicated to purchasing ‘unwanted’ gift cards such as Raise, Cardpool, CardCash, and even Gift Card Granny that offer various buy-it-now options that enable a quick turnaround for the gift cards.

Ties to the Illegal Drug Market

It is widely known that shoplifting is considered a gateway crime, a criminal offence that, in general terms, often leads to other more serious or harmful criminal issues such as drug-related crimes and abuse, gun-related incidents, violent crimes and even terrorism. There are now even reports of a direct link between gift card issues and the opioid epidemic, with addicts stating that drug dealers will often accept gift cards as payment in lieu of cash.

For example, State Senator Richard Briggs of Tennessee in the US reports a direct connection between gift cards and drug overdoses based on reports received in his home state. Retail theft is prevalent in Tennessee, with Knoxville reportedly ranking first in the nation per capita for card abuse and theft. In Knox County, he revealed that police linked 16 of 19 overdoses to the sale of gift cards during a one-month period in 2017. In the city of Knoxville, police also tracked 83 to 98 overdoses to gift cards during a three-month period.

Senator Briggs was stunned by these numbers. “It would be no different than if there was a rock lying there, and if you lifted it up, and this horrible smell came out, and this monster came out,” he said. “We had no idea that the organised retail theft was related so intimately with the opiate and drug trade in general in Appalachia. We have a crisis in Tennessee where goods are stolen and then returned to retailers for credit on a gift card. The cards are sold for cash, which in turn is fueling the illegal drug market.”

Senator Briggs introduced new legislation approved by the Tennessee General Assembly this year defining ORC and creating two new theft offences to prosecute individuals who return stolen merchandise to receive money, gift cards, or store credit.

Education and Awareness Are Critical

Dealing with the many aspects involved with ORC requires an advanced level of skill and training, but it also necessitates sound judgment and common sense. As is true with every aspect of loss prevention, including retail crime, it is critically important that we remain aware of recent trends by working closely with other retailers, our law-enforcement partners and local, state and federal legislators.

Every effort must be made to educate our teams, heighten awareness amongst company decision makers, and protect our customers and employees from these incidents. Sound judgment, safety, prevention and awareness should be our ultimate objectives as we develop the strategies necessary to help us detect issues, deter incidents, protect resources and resolve these issues.