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When Milestone held a seminar earlier this year, some very well connected loss prevention professionals attended and provided feedback on our approach to the retail market. We were not very far into the seminar series when one of them said, “I still don’t get what it is you do.” It was then that I realized that the migration to IP-based surveillance was not as clear to many LP folks as may be to those bringing it to market. So, this article will hopefully help provide a basic understanding of IP surveillance.

In a nutshell, surveillance is a matter of capturing and recording an image. In today’s Digital Video Recorder (DVR) technology, you basically have your software and storage in a box. The cameras connect via coaxial cables that are run all the way from the camera to the DVR. In the case of IP surveillance, your cameras run to a common storage device (Dell, HP, Intransa, etc.) via CAT-5 cables that do not necessarily have to run all the way from each camera individually, thus saving on installation costs. Basically, with IP surveillance, you are able to pick not only your cameras, but also your storage device, and the software to manage it, giving you complete control and flexibility over your surveillance system. But that can create a number of new challenges…

You see, today’s retailers have a choice when it comes to surveillance technology. But how do you know which choice is the right choice? Cost, scalability, future-proofing, bandwidth, adaptability…each of these factors weighs heavily in making that decision. Well, let’s look a little deeper into these technologies.

On one hand, as I’ve already mentioned, you have “The Old Way” with analog camera-based technology – closed circuit cameras hardwired to DVRs, both of which must be hooked to a power source as well as to one another. This sort of system is simple, but it’s usually proprietary in nature, limited in scalability and functionality, often quite costly, and most importantly, it does not allow for the easy adoption of new technologies.

On the other hand, you’ve got “The New Way” with IP-based surveillance technology – networked cameras providing high-quality video, the ability to take advantage of other technology (such as analytics), greatly reduced installation costs (the camera can be powered by the same CAT 5 cable that carries the video feed, so no need for both power and video cables). Likewise, the ability to send video feed to a proprietary DVR unit or to send the feed to a common off-the-shelf server gives you more options that your IT department will thank you for!
With IP-based surveillance technology, the retailer is free of the stone walls put up by proprietary software and hardware – effectively unbundling your surveillance system and allowing many more choices.

One of the most important of those new choices is which software you select. Your software drives the entire IP-based surveillance system, and while it may seem to be a small cog in a big machine, it is perhaps the single most critical piece of the system. The software is the foundation for your entire system, and with enough forethought, the software you choose today could serve you well enough that you will never have to buy another one again.
Part of your careful consideration when selecting new surveillance software should include:

• Open Platform: Does the software work with your existing cameras and with any company’s video storage solutions?
• Eye to the Future: Is your software written by a leader in the space, or is it simply an add-on from a hardware manufacturer?
• Partners: Is the software integrated into solutions from other providers, such as access control, analytics, etc.?

IP-based surveillance has other advantages, such as a lower total cost of ownership; the ability to use best-of-breed hardware and software solutions; the ability to pick the exact right mix of hardware and software for each application and environment; better video quality, scalability, functionality; and the ability to grow and adapt for the future – not only in size, but to encompass new solutions.

What about the disadvantages of IP-based surveillance? The only disadvantage is that inherent in any technology – analog, digital, IP-based, etc. – nobody can say what the future may hold in the way of technology and other solutions. As a result, your best choice, today, is a solution that is open-source and open-ended – able to adapt and change with the new world.

What about bandwidth? Some may be nervous about the idea of “going IP,” especially when it comes to bandwidth. Sure, pulling video over a network does take up bandwidth, but there are many ways to address this issue. First of all, just because you are going IP does not mean that all of a sudden you are forced to send every single video feed to a single server. Though you might choose to do that, you could also choose a configuration that would look very similar to a DVR setup, with your initial video being stored locally at each location, and archives stored somewhere else. And, with the right software, you are able to “throttle” your archiving and trickle the video back across the network, sending 8 hours of video over the course of 12 hours, or something similar. As for remote viewing, you have fewer bandwidth issues than you would with an analog system, and by using your software, you can adjust the settings to be bandwidth-friendly or maybe limit the number of concurrent users.

Won’t IP-based surveillance be more expensive than the old-fashioned way? Cost is a fear for many. In reality, the total cost of ownership is much less than that of a traditional surveillance system. When you take into account the cost of installation, storage, and hardware, along with the fact that you are able to simply replace any individual components that may fail, without replacing the whole system…well, you really are looking at a much more cost-effective solution by going IP-based. Still not sure about cost? Ask your provider give you two quotes when considering a new system – one for analog and one for IP-based bearing in mind that you will be able to get exactly what you need for today as well as scalability into the future.

What about storage space? Won’t all that high-quality video take up more space than the old, grainy footage? Size isn’t a problem. With the right software, it’s a very simple process (and very easily trained) to adjust the image compression and resolution to get to an acceptable image for LP’s use, while still maintaining an acceptable image size for IT to store.

What about transitioning from analog to IP? Isn’t that a huge mess? The problem in the past has been that many providers will suggest throwing away your entire existing system and changing it all to IP in one fell swoop. That simply doesn’t make sense in the retail market. Retailers have made a significant investment in their existing systems, and it wouldn’t make sense to throw away everything they have.

Instead, the migration path to IP should follow more of a replace-as-you-go model. First of all, instead of investing in more expensive, proprietary, and low-performance analog solutions at your new stores and remodels, take the opportunity to begin moving into the IP space. If you begin with the right foundation, you not only begin to take those stores up a level in terms of quality, but you also can integrate that software (if it is open) into your DVRs and start getting everything on one platform, or user interface. Then, as your DVRs reach “end of life,” instead of replacing them with another DVR, you can turn your analog cameras into IP cameras with encoders, running them to a common off-the-shelf server. When the cameras finally reach the end of their lives, you would replace them with IP cameras. IP-based surveillance allows you to replace only what isn’t working, not the entire system.

As a result, the process of transitioning from analog to IP isn’t something set in stone. The changeover could be done almost immediately, or it could happen slowly over time. Realistically, it would take a few years, depending on the age and dependability of your current systems.

The most important thing to remember about IP-based surveillance technology is the availability of open source software and solutions. If there is one key issue retailers should consider when evaluating IP video technology for their stores, it is open platform. Too many retailers find themselves locked in a box with their existing, proprietary systems. They would like to adopt new technology or solutions but are unable to do so, due to the proprietary nature of their existing system. There are many companies out there that began their migration to DVRs with the best technology available at the time. Then, when they were 1/3 of the way through the project, a new solution hit the market from a completely different manufacturer, so they switch to that solution. After a couple of years, they find themselves with a range of disparate systems, none of which will talk to each other.

Over the next five years, video surveillance technology will continue to grow and develop. You will be able to do more and more with your surveillance system that will transcend business units and be more than just an LP solution. With video analytics now being coupled with other solutions, such as exception-based reporting (EBR), alarm systems, electronic article surveillance (EAS), etc., the sky really is the limit. SO ask yourself, “Is my provider putting me into a proprietary situation so that I will never leave them, or am I putting THEM in a position of having to earn my business every day!?”

According to Eric Fullerton, chief sales and marketing officer of Milestone Systems, “In the next five years or so, the volume of video traffic running over the Internet will overtake that of voice and data.” Imagine the impact that will have on the direction of surveillance technology!

Milestone’s goal is to help our customers and partners grow their business by becoming the de facto standard for video management. By taking a firm stand as completely open and manufacturer agnostic, we will be able to follow the trends and continue to partner with best of breed, both in the manufacturer space and with other solutions providers. And we will continue to develop our solutions to fit exactly what the retailer needs.

HEDGIE BARTOL has served the retail loss prevention industry for more than a decade, bringing solutions from access control and identity theft to fraud prevention and systems integration. Before joining Milestone Systems in January 2008, he was the business development manager for the Retail Solutions Group at Diebold. A graduate of Catawba College, Bartol is also a member of the American Society for Industrial Security (ASIS) Retail Council and active in various other industry organizations.

Loss Prevention Magazine White Papers

White Papers

2009 Global Retail Theft Barometer Spotlights the $115 Billion Shrink Challenge

Learn what this means for retailers and how they can meet this challenge

Event Date: November 10, 2009 11:00 AM Eastern Standard Time

The last 12 months’ global recession has had a marked impact on retail shrink, according to the Centre for Retail Research’s third annual Global Retail Theft Barometer. This one-of-a-kind annual survey indicates shrink is now almost $115 billion, up 5.9 percent over the previous 12-month period representing a record increase in shrink over prior years. Professor Joshua Bamfield, author of the study, will shed light on this year’s findings, and will offer his insights as to what this means for retailers’ loss prevention strategies. Among the key areas of interest to be covered in this 30-minute Webinar are a breakdown of shrink trends both globally and regionally, such as sources of theft, high-theft product areas, theft levels in vertical markets, costs of retail crime, and the impact of the economic slowdown on loss prevention spending. Professor Bamfield's remarks will be followed by a live question-and-answer period enabling attendees to gain an understanding on the way this impacts retailers and how they can improve their future loss prevention initiatives.

Professor Joshua Bamfield
Executive Director of the Centre for Retail Research

Professor Joshua Bamfield is an acknowledged expert on retail crime and publishes annually the largest survey on retail fraud in 42 countries, the Global Retail Theft Barometer. He was previously the Head of the Business School at Northampton University and has published books and journal articles on crime and fraud. Professor Bamfield has been the Director of the Centre for Retail Research for ten years and pioneered the use of civil recovery against staff fraud on behalf of 75 major UK retailers in the late 1990s. He is a member of the Worshipful Company of Security Professionals, Fellow of the Royal Statistical Society, Chartered Member of the British Computer Society, Professor of Management at Nottingham Trent University and a member of the editorial board of The Security Journal. His new book Shopping and Crime will be published by Palgrave-Macmillan at the end of 2009.

Wednesday, November 11, 2009

Electronic Tagging, RFID and EAS

This is an excellent overview of electronic tagging technologies in retail and supply chain applications.

Electronic tags are now used in a wide variety of retail and supply chain applications to curb theft, provide information about shopping trolley use, control access to store or office areas, transport, drive automated or semi-automated warehouse or transhipment facilities, manage inventories, and provide information about distribution systems. The market is divided into categories differentiated upon "traditional" lines by technology. Hence there are electronic article surveillance (EAS) products; radio frequency identification devices (RFID); and smart card devices which have developed in relation to different markets and technologies and are not generally seen as being part of the same family of products. There is no accepted phrase available which can be used to group this family: "intelligent tags" is one attempt but we use the term "electronic data tagging".

The main types of electronic tag relevant to the retail industry:

  • Electronic article surveillance tags (EAS)

  • Radio frequency identification devices (RFID)

  • Smart cards (contactless)

  • Intelligent tags

These are all devices which signal their presence and transmit data, if only 1 bit (ie present or absent) as in most EAS tags. Although they are very different products, they are relatively compact electronic devices and have a wide variety of applications. They are low cost and are likely to fall further in price. They are robust in the sense they are designed to last as long as the application and are available in a number of housings, the choice of which will depend on the precise use intended for the device. They will also be affected by developments in other business sectors, which will encourage innovation and bring down prices.

Read complete article here: Electronic Tagging, RFID and EAS - Centre for Retail Research


Centre for Retail Research, Nottingham UK
Outstanding article on retail crime trends as they present themselves to retailers today. Much more reliable and less filled with moral panic button propaganda than the numerous posts below on this blog--nearly all of which refrence the same source as credible and worthy of serious consideration.

A couple telling quotes from the article are instructive:
It is probable that recession, unemployment, uncertainty, lower incomes and fear of the future may make some people more willing to steal or overcome their reservations about buying stolen goods. Without seeking to minimize their crimes, others may feel that the business, national and international failures which permitted the banking crisis and created a global recession devalues honesty and gives them some entitlement or justification to commit retail theft.

Every retailer is scrutinizing the amount spent in each budget category, including loss prevention. LP professionals are reporting this year that the loss prevention budget is very restricted and that they have to make the best of what they have received. But in a tough commercial environment like the present, where sales growth and operating cost control are both equally difficult to manage, loss prevention and shrink management may prove to be one of the few areas where improvements in net profitability can be made.

Cuts in loss prevention spending at a time when potential crime is rising may well be extremely short-sighted - particularly if the losses from higher shrinkage and out-of-stocks prove to be much greater than the gains from reduced LP budgets. Obviously every retailer has to make its own decision. Smaller LP projects dealing with discrete issues such as improving LP outcomes in the worst high-shrink retail outlets, new processes to reduce losses of high shrinkage lines, and investigating employee theft can produce rapid payback. The Pareto 80:20 rule still has wide applicability in loss prevention and means that the discriminating LP executive who chooses his or her projects carefully can have a considerable impact over performance. This is even more important now when the gains in shrinkage reduction are under threat

Retailers Organize Against Crime

Retailers Organize Against Crime

Global Retail Theft Barometer Study Finds Retail Theft Reaches $115 Billion Worldwide - AOL Money & Finance

“While most businesses have suffered as a result of the recession, few have been
as hard-hit as the retail industry,” said Rob van der Merwe, Chairman, President
and CEO of Checkpoint
Systems, Inc
., the sponsor of the study. “While retailers have had to cut
budgets in most areas, this year’s study shows the adverse effect of cutting
spending too deeply in the area of loss prevention. Prudent spending in this
area can have a very positive effect on bottom-line numbers, and act as a
force-multiplier, especially as budgets for training programs and security
personnel are reduced.”

Correlation Between Reduced Security Spending and Increase in Theft

“The 2009 study also found that retailers decreased their spending on loss
prevention and security by $900 million, no doubt in response to their general
need to trim budgets in tough times,” continued Professor Bamfield. “However ,
the correlation between $900 million in decreased security spending and a $10
billion increase in theft is very significant . It highlights the importance of
continued advancement and improvement of loss prevention programs, as reducing
theft is key to the success and growth of retailers’ businesses.”

Loss prevention spending in 2009 was equivalent to an average of 0.31% of retail sales.

Read full article at Global Retail Theft Barometer Study Finds Retail Theft Reaches $115 Billion Worldwide - AOL Money & Finance

eBay says 'consumer warning' really just retail giants' bad blood - St. Petersburg Times

eBay says 'consumer warning' really just retail giants' bad blood - St. Petersburg Times

Retail theft a problem during holidays | theft, city, holidays - News - The News Herald

As holiday shoppers rush to stores, so do thieves looking to blend in and make a profit off local retailers.
“Small businesses never expect that anybody in their stores are stealing from them, but that’s not the case,” said Doug Fleener, president for Dynamic Experiences Group, a retail consulting firm in Massachusetts.

Panama City stores have seen theft, too, store owners say. About a year ago, Out of the Box on West 23rd Street had an incident. Owners later took steps to make sure theft never occurred at the business again, said Linda Lee Bell, co-owner.

“It happened right under our nose,” Bell said.

Return fraud alone is expected cost retailers industrywide $2.7 billion during this holiday season. Retailers’ busiest time also makes them more vulnerable, Fleener said. Thieves will forge receipts and try to return boxes filled with rocks. Some claim never to have received an item ordered online.

Organized theft also is growing, according to a National Retail Federation survey. Florida law enforcement officials uncovered up to $100 million in stolen goods that was to be auctioned off last year, according to a 2008 Organized Retail Crime Survey.

Fraud is a big enough concern to catch the attention of the Better Business Bureau that covers Northwest Florida. The bureau released a press release to businesses warning them about fraud in September.

“Businesses are reporting it as a problem,” said Karen Szulczewski, bureau communications director.

Corporate representatives for Target, Victoria’s Secret and Justice Clothing for Girls did not return phone calls and e-mails seeking comment. Locally, stores referred questions to their headquarters. A Walmart spokeswoman did not answer questions asked or respond to a subsequent e-mail.

Read full article here -> Retail theft a problem during holidays theft, city, holidays - News - The News Herald

Shoplifting rings and weak economy spur retail theft -- DailyFinance

Retailers lost $36.3 billion to theft in 2008, up from $34.8 billion in 2007. While no projections are available yet for 2009, signs are that the problem is getting worse, says Joseph LaRocca, senior adviser on asset protection of the National Retail Federation (NRF). Fewer people are being detained in stores for shoplifting, but when they are stopped, they're more likely to run and even attack store employees, says LaRocca.

"Shoplifters are getting more aggressive," he says. "They're fighting, they're abusive, they're running.... It's a very disturbing trend." LaRocca attributes this escalation to the rise of shoplifting rings, gangs that steal large quantities of products for resale. These thieves are the reason you often find razor blades under lock and key in your local drugstore, says LaRocca, because small items that can be easily resold are a favorite target of pro shoplifters. "They're very organized, and they're very skilled," says LaRocca.

"They'll steal thousands of dollars in five minutes." They may even open entire stores stocked with stolen products, he says. Retailers are troubled enough by this trend that they're pressing the U.S. Congress to enact laws to facilitate federal prosecution of shoplifting gangs. A House subcommittee is holding hearings Thursday on the role of federal law enforcement in fighting the retail crime rings.

"A Matter of Greed"

LaRocca disputes claims that economic desperation could be driving a rise in shoplifting. The data show that the type of merchandise popular with shoplifters during this recession is still very similar to what was stolen years ago, he says."It's not a matter of need. It's a matter of greed," he says. "You don't need a $1,900 handbag.... Do you need a video game?"

Shoplifting rings and weak economy spur retail theft -- DailyFinance

Report: Jump in store theft cost your family $435 - Nov. 10, 2009

New global report shows that U.S. merchants suffered an almost 9% jump in store theft over the past year, forcing consumers to pay more for goods.

By Parija B. Kavilanz, senior writer

NEW YORK ( -- U.S. merchants suffered one of the biggest jumps in shoplifting and other retail crimes over the past year, a trend that cost the average American family about $435, according to a new report Tuesday.

Retail crimes such as shoplifting, employee theft and supply chain fraud rose 8.8% in the United States, to $42.2 billion, in the year ended in June, according to the 2009 Global Retail Theft Barometer report from the U.K.-based Center of Retail Research. In the prior year, retail crimes rose 1.5%.
"It is a shocking increase and something that retailers need to get to grips with quickly," said Joshua Bamfield, author of the report, which identified top trends in retail crimes in 41 countries, including the United States, China, India, Europe, Japan and Australia.

The report was based on a confidential survey of 1,069 large global retail companies
Bamfield said the 8.8% rise in retail crimes in the United States -- the biggest retail market in the world -- was largely spurred by the recession and affected about 1.6% of the nation's total retail sales in the 12-month period.

Reflecting the global scope of the downturn, he said retail crime rose 5.9% to $115 billion.
He said employee theft cost merchants about $18.7 billion in the period, shoplifting cost sellers $15 billion, and processing and other supply chain errors or fraud cost retailers about $6.8 billion.
What's worse is the cost of store crimes to consumers, which the report estimated at being about $435.17 per family over the past year.

"Prices on products would be lower on average if merchants did not have to incur lost revenue from store crimes," Bamfield said.

Most-stolen products

The report said thieves bagged a wide range of items, but tended to focus on expensive popular branded items. These included perfume, cosmetics, razor blades, small leather products and electronics such as the Wii gaming system, iPods and cellphones.
Satellite navigation equipment and laptops were also vulnerable categories, the report said. In supermarkets, thieves were targeting fresh meat and cheese.
Bamfield said the biggest driver of store theft is for resale. "It's primary to feed the habit for extra money," he said. "A lot of it funds criminal activity. So there's a societal cost on top on an economic cost of these trends."

And while merchants are at the frontline of these crime sprees, Bamfield said the repercussions are felt from manufacturer to store shelf.

"Retailers don't accurately know how much merchandise they have in stock if deliberate errors are made in processing that information," he said. "This can affect suppliers managing their production. Manufacturers and distributors are are impacted."

What's more worrying is that Bamfield said this uptick in retail crimes could last for a while. 'I think this trend is more than just a temporary response to the recession," he said.

For its part, the National Retail Federation (NRF) maintains that merchants cannot be solely responsible for trying to prevent organized retail crime. The group said tougher federal legislation is needed to contain the problem

"New federal laws will make organized retail crime part of our federal criminal statutes, giving law enforcement officers and prosecutors the tools they need to put these criminals behind bars," Joe LaRocca, an NRFofficial, said in a report earlier this month.

Report: Jump in store theft cost your family $435 - Nov. 10, 2009

Tuesday, November 10, 2009

Debunking Big Retail's Truthiness

September 22, 2008
Debunking Big Retail's Truthiness
In the waning days of Congress, a handful of retailers and their supporters are trying jam through a trio of bills that would place a serious and unnecessary burden on e-commerce. I have the honor of testifying today before the House Judiciary Committee's Subcommittee on Crime, Terrorism and Homeland Security, where I'll do my best to point out the danger of these prescriptive, ill-conceived bills.

At issue are three pieces of legislation -- H.R. 6713, H.R. 6491 and S. 3434 -- all of which ostensibly aim to address the problems of "organized retail crime" and "e-fencing."

What the bills really do, however, is cut law enforcers out of the law enforcement equation, giving retailers free reign to bully and intimidate online marketplaces and their customers.

All three bills would give retailers the power to force online marketplaces to interrogate their own customers about how they obtained items listed for sale. This has the effect of presuming that sellers are listing stolen items – unless they can affirmatively prove their ownership.

It's been clear for a long time that many traditional, brick-and-mortar retailers would like to see the online marketplace and its pro-consumer, pro-competition benefits simply disappear. These bills represent their best attempt to speed that process along.

In its written testimony before the Committee, the National Retail Federation maintains that online selling has "addictive qualities" and causes people to steal who've never stolen before. It's more than a little disturbing to have an organization that is so clearly out of touch with the Internet trying to legislate how it functions.

The sadly ironic thing about all of this is that major online retailers like eBay and Overstock have consistently received high marks for their strong cooperation with law enforcement in addressing legitimate e-fencing issues. Online marketplaces have no interest in hosting crime, and are actively engaged in cracking down on it, in away that allows legitimate commerce to flourish.

As is so often the case in this area, the real focus of retailers seems to be on squashing competition, rather than cracking down on criminals.

The Voice of the eCommerce Industry: Debunking Big Retail's Truthiness

Thursday, November 5, 2009

House Judiciary Committee Hears From Federal Law Enforcement on Retail Crime | Reuters

WASHINGTON, Nov. 5 /PRNewswire-USNewswire/ --Representatives of three federal
law enforcement agencies told a House Judiciary Subcommittee today that more
needs to be done to combat organized retail crime (ORC) in the U.S.

In testimony before the House Judiciary, Subcommittee on Crime, Terrorism and
Homeland Security, officials from the FBI, U.S. Secret Service, U.S. Postal
Inspection Service, and Immigration and Customs Enforcement testified to the
challenges they face combating this growing crime.

"The Coalition Against Organized Retail Crime (CAORC) thanks Subcommittee
Chairman Robert C. "Bobby" Scott (D-VA) for holding this hearing and for his
commitment to providing federal law enforcement with the tools they need to
address this growing criminal activity," said the coalition.

Coalition testimony provided to the committee for the record can be viewed

Organized Retail Crime involves sophisticated criminal networks made up of
many individuals who steal large quantities of goods from retailers and in
turn sell the goods for profit though pawn shops, flea markets and
increasingly on the Internet. Experts estimate organize retail crime losses in
the tens of billions of dollars annually.

Consumers are endangered when stolen goods are mishandled or altered before
being sold to unsuspecting consumers. This is of particular concern when
sensitive items such as baby formula, diabetic test strips and over the
counter medicine is involved. Recent investigations have uncovered these
sensitive health and beauty items stored at dangerous temperatures damaging
the safety and reliability of the product. In most cases, consumers are
unaware of the unlawful source of the products purchased from anonymous

Retailers work closely with law enforcement to identify and investigate local
trends and to develop cases against these criminal networks. However, ORC
criminal networks often operate across state borders, exploiting legal gaps
arising from the existing patchwork of state and local laws. Consequently,
law enforcement is often unable to fully investigate and prosecute ORC
criminal networks. As a result, despite the close coordination between
retailers and law enforcement, according to the University of Florida, 2008
National Retail Security Survey, instances of ORC activity and losses
attributable to the crime continue to rise.

Federal legislation is necessary to bring the criminal code into the 21st
century by closing the legal gaps that have benefited ORC criminals too long.

Federal Legislation Currently Under Consideration:

The E-fencing Enforcement Act of 2009 (HR 1166), introduced by Chairman Robert
C. "Bobby" Scott (D-VA), would impose reasonable duties on online marketplaces
when there is good reason to believe that items listed for sale were acquired

The Organized Retail Crime Act of 2009 (HR 1173), introduced by Rep. Brad
Ellsworth (D-IN), which modifies the federal criminal code to include ORC
activities, and makes the facilitation of ORC a crime. The legislation also
imposes practical reporting requirements on the operators of online
marketplaces and sellers when goods are suspected of having been acquired
through ORC.

The Combating Organized Retail Crime Act of 2009(S 470), introduced by Sen.
Dick Durbin (D-IL) would clarify existing law to give law enforcement the
tools to fight ORC, require on-line and off-line market places to investigate
suspicious sales, and place basic disclosure requirements on on-line

About the Coalition Against Organized Retail Crime

The CAORC, formed in 2001, is composed of 37 national manufacturing and retail
organizations as well as individual companies that have come together to fight
this growing crime. The Coalition's web site can be accessed at The CAORC has provided testimony to Congress on this
issue in March of 2005 and October of 2007. The Coalition strongly supports
enactment of pending federal legislation to combat ORC in the House of
Representatives. Those bills include: The E-Fencing Enforcement Act of 2009,
H.R. 1166, introduced by Chairman Scott, and the Organized Retail Crime Act of
2009, H.R. 1173, introduced by Reps. Brad Ellsworth and Jim Jordan.

Quotes from Members and Supporters of the Coalition Against Organized Retail

"The FBI estimates that organized retail crime costs retailers billions of
dollars annually, with proceeds from ORC often used to finance other criminal
enterprises such as drug trafficking and gang activity, including those
associated with terrorist factions. As a national retailer, Walgreens is
impacted by ORC throughout the country. That's why we're advocating for ORC
legislation in all states and support making ORC a federal criminal offense,
including criminalizing those activities that clearly promote and expand ORC,"
said Frank Muscato, Organized Retail Crime Investigations Supervisor,
Walgreen, Co.

"Organized retail crime impacts consumers as well as retailers, who must cover
losses and invest in additional security measures. Consumers are placed at
risk when package tampering occurs on consumer health care products, such as
infant formula and over-the-counter medications. These stolen products are
often repackaged and relabeled to falsely extend a product's expiration date
or to hide the fact that the item has been stolen. NACDS will continue to
work with lawmakers to pass strong legislation that will assist retailers and
law enforcement to combat the serious problem of organized retail crime," said
NACDS President and CEO Stephen C. Anderson, IOM, CAE.

"Organized retail crime (ORC) is a serious crime with real health and consumer
safety implications that endangers our neighborhoods and citizens. Consumers
are put in harm's way when stolen goods are mishandled or altered before being
sold to unsuspecting buyers and communities are endangered when illicit
proceeds from ORC are used to fund more dangerous and violent criminal
activity. Federal legislation is essential to give law enforcement the
necessary tools to combat these growing crimes and close the legal gaps
exploited by criminals for too long," said John Emling, Senior Vice President
of Government Affairs for the Retail Industry Leaders Association.

"Organized retail crime is a serious and ever-growing crime that poses serious
risks to the safety and well being of our communities. The growth of the
online marketplace has given criminals an unfettered avenue to fence their
goods to innocent consumers, including here in Cook County. Federal criminal
statutes are needed to provide law enforcement with the tools necessary to
deter and prosecute this complex criminal activity. I commend Senator Durbin's
leadership in introducing the Combating Organized Retail Crime Act (S 470) as
a means to combat organized conspiracies; including tightening regulations for
online auction sites that could serve as conduits for stolen goods," said
Thomas J. Dart Cook County Sheriff.

"The National Insurance Crime Bureau's (NICB) data and investigations show
that organized retail crime is a growing problem from coast to coast. Online
marketplaces often times become fraud victims as organized criminal rings
defraud Web sites and offer financial assistance to buyers and sellers in
transactions. Unfettered access to these online auctions negatively impacts
businesses and innocent consumers as a source to fence stolen goods. NICB
supports the Organized Retail Crime Act of 2009 as an effective means to
combat this problem. By tightening the requirements to sell items online and
beefing up federal criminal statutes, we can reduce the market for stolen
goods, making retail theft less attractive to the criminal rings," said the
National Insurance Crime Bureau.

"Organized retail crime is more sophisticated and more dangerous than petty
shoplifting as organized rings of criminals move from store to store stealing
large quantities of goods. They jeopardize the health and safety of consumers
by fencing goods to buyers unaware of their origins and increasingly use
internet auction sites, which conceal their identity. We support legislation
that gives law enforcement the tools they need to fight these criminals and
makes organized retail crime a federal felony for all the perpetrators
involved," said Leslie G. Sarasin, president and chief executive officer of
the Food Marketing Institute.

"The business of organized retail crime continues to proliferate throughout
the U.S. Winning the battle against organized retail crime begins with the
support of law enforcement, loss prevention teams and industry partners.
Winning the war requires specific legislation that will make criminals think
twice before participating in these illegal, often dangerous activities," said
Joe LaRocca, Senior Asset Protection Advisor, National Retail Federation.

"RAM strongly supports federal legislation to combat organized retail crime.
While we are backing legislation in our own state and feel that it is
necessary to update our criminal code in MA, we firmly believe that federal
legislation is needed to address this growing issue which has no state
boundaries," stated Jon Hurst, President of Retailers Association of
Massachusetts (RAM).

The Coalition Against Organized Retail Crime, hosted a briefing in advance of
today's hearing. A recording of the press conference is available by dialing
(800) 642-1687 and entering code 39367794.

SOURCE Coalition Against Organized Retail Crime

Liz Jennings of Coalition Against Organized Retail Crime, +1-703-600-2017

House Judiciary Committee Hears From Federal Law Enforcement on Retail Crime | Reuters

Day Two - Organized Retail Crime: Tackling a Multi-Billion Dollar Problem | NRF Loss Prevention Convention & EXPO Blog

Day Two - Organized Retail Crime: Tackling a Multi-Billion Dollar Problem | NRF Loss Prevention Convention & EXPO Blog

iAWFUL 6. Federal Bills on Organized Retail Crime

The Combating Organized Retail Crime Act of 2009 (S 470), the Organized Retail Crime Act of 2009 (HR 1173) and the E-Fencing Enforcement Act of 2009 (HR 1166). Together, the bills would mandate online and off-line marketplaces to investigate suspicious sales, place disclosure requirements on online marketplaces, impose obligations upon online marketplaces known to be used by high volume sellers of stolen merchandise and force online marketplaces to collect information that law enforcement can use to prosecute those that fence goods on their websites.

For more information:
Everything Old is New Again. Big Retailers go after eCommerce...again.

iAWFUL 6. Federal Bills on Organized Retail Crime

The Voice of the eCommerce Industry: Everything Old is New Again – Big Retailers Going After E-commerce Once More

The Voice of the eCommerce Industry: Everything Old is New Again – Big Retailers Going After E-commerce Once More

The Voice of the eCommerce Industry: Big Box Blame Game

The Voice of the eCommerce Industry: Big Box Blame Game

Retail Industry Presses Congress to Pass Bills to Fight Organized Retail Crime | Security Management

This article details the state of the Organized Retail Crime Act of 2009. We are at a crisis in our economic lives. Many tens of thousands of people have no place else to sell their wares, personal stuff, than on ebay, flee markets and swapmeets, Craigslist, and the likes. These avenues of trade have always been a popluar place of commerce in hard times. These acts by congress do no more to protect consumers and retailers than to eliminate their competition in the form of legislation that basically makes the outlet a suspected venue of organized criminal activity. So now you are a suspect if you go to ebay, flee-markets or swap-meets to sell in a tough environment.

Often these criminal gangs conduct countersurveillance, noting security sweeps and camera technology, before they hit a retailer. Once inside the store, the gangs use cellphones and hand signals to steal thousands of dollars worth of goods in minutes, LaRocca said.

A recent survey conducted by the NRF found that 9 out of ten retailers surveyed reported their companies were victims of ORC in the past year. That was up 8 percent from the prior year.

But ORC doesn’t only hurt retailers. State and local governments suffer from the loss of much needed sales and income tax revenue already depleted by a hurting economy. The practice also jeopardizes the health of American consumers. Many criminal gangs steal consumer goods— like baby formula and over-the-counter pharmaceuticals—that can expire or go bad, with the potential to harm or to kill a person when consumed.

Local and state law enforcement agencies have struggled to catch the criminal gangs as ORC has exploded over the past few years. According to Special Agent Danny Banks of the Florida Department of Law Enforcement, police efforts to combat retail crime were traditionally focused at the local level. But over the past five years, Banks said, police across the country have seen retail crime become well-organized, national, and very profitable

Tomorrow, the Subcommittee on Crime, Terrorism, and Homeland Security of the House Judiciary Committee will hold a hearing on federal law enforcement's role in fighting ORC..

Read full article at Retail Industry Presses Congress to Pass Bills to Fight Organized Retail Crime | Security Management

Lawmakers Want Organized Retail Crime as Federal Offense

This is pretty funny stuff if you think about it.

Making organized crime a federal issue is one thing, and it's not a new concern for the general public, business interests, or law makers. The mob has been around for quite a while, and there has been quite a bit of concern and laws enacted on the state and federal level for about a long fucking time now...

But to say that "law makers want to make organized retail crime a federal offense" is disingenuous at best. The headlines should read: "The Giant Multi-National Mega-Retailers Coalition Of The World Superstate has made its case to U.S. federal law makers, saying "we want new Federal laws enacted to help us justify and substize our organization's corporate criminal members' dwindling profit margins and stock values in this collapsing global economy, damn it!"

But the headlines read "Federal Law Makers Want New Laws!" And you should want new laws too, considering, that they are being made to protect your Corporate Gods! This is a perfect example of how corporate conglomerates set the agenda of congressional law makers, as well as the agenda of the corporate mass-media... Blah, Blah, Blah...

Watch This News Clip: Lawmakers Want Organized Retail Crime as Federal Offense. It should give you a chuckle if your mind and sense of humer are still relatively in tact.

Coalition Against Organized Retail Crime

Coalition Members?

Abbott Laboratories, Ahold USA, Inc., American Council on Regulatory Compliance, Consumer Healthcare Products Association, Cosmetic, Toiletry, and Fragrance Association, CVS/pharmacy, Duane Reade, Eastman Kodak Company, Food Lion, LLC, Food Marketing Institute, Giant Food LLC, GlaxoSmithKline, Grocery Manufacturers/Food Products Association, The Home Depot, International Formula Council, The King Rogers Group, The Kroger Co., Macy’s, National Association of Chain Drug Stores, National Association of Convenience Stores, National Community Pharmacists Association, National Insurance Crime Bureau, National Retail Federation, Nestle, Personal Care Products Council, Publix Super Markets, Inc., Retail Industry Leaders Association, Rite Aid Corporation, Safeway Inc., Security Industry Association
The Stop & Shop Supermarket Company, Supervalu, Target Corporation, Tops Markets, LLC, Universal Surveillance Systems, Wal-Mart Stores, Inc, Walgreen Co.

Wednesday, November 4, 2009

Organized Retail Crime

On Jun 11, 2009 The Super Market News writes:

Nine out of ten retailers (92%) report that their companies were victims of organized retail crime during the past year, up 8% from 2008, according to the fifth annual Organized Retail Crime survey conducted by the National Retail Federation here.
An Ebay exec responding to the article says: "The National Retail Federation's recent report on organized retail crime is filled with best guesses vs. facts and hard numbers," he said. "It simply doesn't make sense to blame online marketplaces for a problem that has existed since well before the Internet was invented."

The article makes no mention of what they considered to be a retailer. If by "retailer" they mean every storefront shop, the statistic is obviously rediculous. If they mean national chain stores, the number is still misleading, as it would have us believe that 9 out of 10 of their stores have been hit by "organized retail crime" in the past year", a statistic which it provides no impirical data to back up.

It seems to me that a major campaign is underway to make Organized Retail Crime into a household word. Look for it in a news story soon.

This is not a new phenomena, and has been a growing “concern” for law enforcement form some time. The headline for An article in the California Chronicle of June 6th 2008 reads “ORGANIZED RETAIL CRIME RING DISMANTLED BY AUTHORITIES

A major organized retail crime ring in the Bay Area has been broken up, thanks to a three-year partnership by the San Jose Police Department, US Attorney´s office, Internal Revenue Service, Federal Bureau of Investigation, Safeway and other retailers. Today, Senator Leland Yee (D-San Francisco/San Mateo) joined law enforcement officials to announce that yesterday police served arrest warrants to numerous San Jose and South Bay residents who allegedly purchased merchandise stolen from major retailers, resold the goods, and shipped them to other states.

The arrests stem from a long-standing investigation into organized retail crime – a type of illicit activity that costs retailers over 37 billion dollars per a year. Under this crime, individuals steal large volumes of goods, such as razor blades, baby formula, Oil of Olay, Crest White Strips and over-the-counter medications from retailers such as Safeway, Wal-Mart, Walgreens, Save-Mart and Target. The stolen goods are often resold at flea markets, on the Internet or shipped to wholesale companies.

In the bust announced today, agents executed search warrants at six locations in San Jose, including retail stores, warehouses and residences.

"We're glad to be part of today's arrests and appreciate the great work from the San Jose Police Department, FBI and IRS," said Stephan Chase, manager of loss prevention for Walgreens. "This is part of what we're doing to prevent organized retail theft, which drive up retail prices for everyone and cost the community lost sales tax revenue. With retailers and law enforcement working together like we did on this case, both customers and the community will benefit from cracking down on this criminal activity."

Considering California accounts for fifteen percent of retail sales nationally, the estimated impact of organize retail theft is approximately $5 billion annually for California retailers. This in turn accounts for roughly $375 million in lost sales tax revenue to the State.
IRS? Where does the IRS fit into the mix here? Of course the FBI claims jurisdiction in interstate rackets and that makes sense, but what about the IRS? I’ll cover this in detail in a later post. For now, just keep that question in mind for later.

For now, let’s move on to the New Bills Aimed to Reduce Organized Retail Crime. As reported in MultiChannel Merchant:

The bills include the Combating Organized Retail Crime Act of 2009, introduced by Senator Dick Durbin (D-IL); the Organized Retail Crime Act of 2009 (HR 1173), introduced by Congressman Brad Ellsworth (D-IN); and the E-Fencing Enforcement Act of 2009 (HR 1166), introduced by Congressman Bobby Scott (D-VA).

If approved as is, the Combating Organized Retail Crime Act of 2009 would clarify existing law to give law enforcement the tools to fight ORC, require online and off-line market places to investigate suspicious sales, and place basic disclosure requirements on online marketplaces.

The Organized Retail Crime Act of 2009 HR 1173 would amend federal criminal code, making it illegal to engage in activities that further organized retail crime. To deter illegal activities of organized retail criminals, it would also impose specific and narrow obligations on online marketplaces used by high-volume sellers of stolen merchandise.

The E-Fencing Enforcement Act of 2009 HR 1166 would address ORC by imposing reasonable duties on online marketplaces to collect information that law enforcement can in turn use to prosecute those that fence goods on their Websites. The bill requires that online marketplaces halt the sale of goods on Websites if goods are determined stolen.
So I guess that just about covers it!

Monday, November 2, 2009

Economy Drives More Organized Retail Crime: NRF

Economy Drives More Organized Retail Crime: NRF
Jun 11, 2009 6:00 AM
The Super Market News

Nine out of ten retailers (92%) report that their companies were victims of organized retail crime during the past year, up 8% from 2008, according to the fifth annual Organized Retail Crime survey conducted by the National Retail Federation here.
An Ebay exec responding to the article says: "The National Retail Federation's recent report on organized retail crime is filled with best guesses vs. facts and hard numbers," he said. "It simply doesn't make sense to blame online marketplaces for a problem that has existed since well before the Internet was invented."

The article makes no mention of what they considered to be a retailer. If by "retailer" they mean every storefront shop, the statistic is obviously rediculous. If they mean national chain stores, the number is still misleading, as it would have us believe that 9 out of 10 of their stores have been hit by "organized retail crime" in the past year", a statistic which it provides no impirical data to back up.

It seems to me that a major campaign is underway to make Organized Retail Crime into a household word. Look for it in a news story soon.

NRF Organized Retail Crime Survey Finds Criminals View Global Recession as Opportunity to Abuse Retailers and Consumers

NRF Organized Retail Crime Survey Finds Criminals View Global Recession as Opportunity to Abuse Retailers and Consumers

View or download NRF's 2009 Organized Retail Crime survey report
For Immediate Release
Kathy Grannis (202)783-7971

NRF Organized Retail Crime Survey Finds Criminals View Global Recession as Opportunity to Abuse Retailers and Consumers
--Organized Retail Crime Activity Jumps by 8%, According to NRF Survey--

Washington, June 10, 2009 – As another illustration of the wide effect of the down economy, retailers and consumers are increasingly being victimized by organized retail crime groups. According to NRF’s fifth annual Organized Retail Crime survey, nine out of ten retailers (92%) report that their companies were victims of organized retail crime during the past year, up eight percent from 2008. Nearly three-fourths (73%) of retailers also reported the level of organized retail crime activity has increased over the past 12 months, an increase of 11 percent from 2008. Loss prevention executives from 115 companies, including department, discount, drug, grocery, restaurant and specialty retailers, completed the survey last month.

“The unfortunate economic events of the past year have played an intricate role in how criminals continue to rip off the retail industry,” said Joe LaRocca, NRF Senior Asset Protection Advisor. “Organized retail crime rings have realized that tough economic times present new business opportunities by stealing valuable items from retailers and turning around to sell the merchandise to consumers looking for bargains.”

Even with the economy forcing retailers to cut staff and do more with less, 42 percent of retailers say their company is allocating additional resources to address organized retail crime. According to the survey, the average retailer spends approximately $215,000 annually just on labor costs to fight organized retail crime. Some retailers surveyed spend far more, with six percent of respondents spending more than $1 million dollars a year to employ loss prevention executives devoted to organized retail crime.

The fight against organized retail crime would be futile without the support of top management. According to the survey, nearly half (49%) of respondents believe senior management in their company understands the seriousness of the issue. For the first time in the survey’s history, NRF also asked loss prevention executives whether they felt law enforcement had a firm grasp on the issue; 38 percent agreed that police officers, detectives and federal law enforcement understood the complexity and severity of organized retail crime.

Thanks to the new partnerships formed with Federal and local law enforcement officials, retailers have had some success identifying stolen merchandise or gift cards at physical fence locations such as pawn shops and temporary stores (60%) and through online e-fencing operations (60%), where stolen merchandise is sold through online auction sites.

Organized retail crime is not only an isolated problem in a handful of areas across the country. According to the survey, a staggering 72 percent of retailers have identified organized retail crime syndicates who are exporting goods outside of the U.S. or across state lines. Additionally, 28 percent found that criminal groups under current investigation have connections to street gangs with international connections.

When asked how they would rank organized retail crime as a threat to their company, nearly one-third (29%) of retailers gave organized retail crime a “four” or “five” rating, identifying the problem as severe or significant. On average, retailers gave organized retail crime a rating of 2.87 on a five-point scale.

NRF will address organized retail crime and many other loss prevention issues such as return fraud and counterfeiting at its annual Loss Prevention Conference and EXPO at the Los Angeles Convention Center, June 15-17. Law enforcement officials and retailers are eligible for complimentary EXPO Hall passes. Visit NRF’s LP Conference website for more information.

The National Retail Federation is the world's largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet, independent stores, chain restaurants, drug stores and grocery stores as well as the industry's key trading partners of retail goods and services. NRF represents an industry with more than 1.6 million U.S. retail establishments, more than 24 million employees - about one in five American workers - and 2008 sales of $4.6 trillion. As the industry umbrella group, NRF also represents more than 100 state, national and international retail associations.

NRF is pleased to grant complimentary registration to editorial staff members of the press, as well as accredited retail analysts and bloggers. Register online for NRF’s 2009 Loss Prevention Conference and EXPO, or call Kathy Grannis at (202) 626-8189.

Link to this article at

Organized Retail Crime Jumps to 92%

Published on June 10, 2009
According to the fifth annual NRF Organized Retail Crime Survey [pdf], 92% of retail respondents were victimized by organized retail crime in the past year. This represents a 7 percentage point increase from the 85% of respondents who reported being victimized by organized retail crime in 2008.

Other survey results also indicate that as the global economic recession continues, organized retail crime keeps rising. For example, 73% of respondents reported the level of organized retail crime activity has increased during the past year, an 11 percentage point increase from the 62% of respondents reporting increased activity in 2008. As a result, close to half of respondents, 42%, say they are allocating additional resources to address organized retail crime, spending an average of $215,000 in labor costs on the issue.

According to the survey, there has been a sharp increase in the number of retailers discovering stolen merchandise being fenced, either in a physical location or online. Sixty percent of respondents say they have identified or recovered stolen merchandise at a fence location in 2009, up from 40% in 2008. The percentages of respondents who have identified or recovered stolen merchandise being “e-fenced” online were almost identical, 60% in 2009 compared to 39% in 2008.

The 49% of respondents who believe senior management understands the seriousness of the issue is a 5 percentage point decline from the 54% who held this belief in 2008. Meanwhile, only 38% of respondents believe law enforcement understands the seriousness of the issue in the first year this question was asked.

Interestingly, when asked to rate the seriousness of the organized retail crime threat to their company on a one- to five-point scale (with five being the most serious), the average rating in 2009 was 2.87, down from an average of 3.02 in 2008. This drop came despite 72% of respondents saying they have identified organized retail crime syndicates who are exporting goods outside of the U.S. or across state lines, and 28% saying that criminal groups under current investigation have ties to street gangs with international connections.

Two recent incidents support survey findings that organized retail crime remains a prevalent threat to the industry. A member of the Gambino organized crime family faces as many as 20 years in federal prison after pleading guilty to running a scam that used fake bar codes to dramatically reduce prices on goods at retailers including Lowe’s, Home Depot, Best Buy and Circuit City in New York and New Jersey. The stolen items were then resold or returned at profit. As part of the scheme, an associate of the scam operation got a cashier’s job at a Lowe’s store in an effort to steal customer identities and credit card information, although there is no indication any information was stolen.

In addition, the May 2009 arrest of four New York state residents in Merrimack, NH for shoplifting at a Rite Aid store turned up evidence of a sophisticated theft ring specializing in stealing hair care products from pharmacies. The men, who were all charged with felony theft and felony receiving stolen property, allegedly had thousands of dollars worth of hair care products in their van, as well as maps detailing the locations of drugstores in several states along the East Coast.

A recent Datamonitor report indicates that retail shrink from theft, crime, and waste is having a damaging impact on retailers’ profit margins, with over half the losses attributable to point of sale (POS) shrink—loss incurred through cashier error, theft, and fraudulent transactions. The report predicts that global retail shrinkage will climb to almost $115 billion by the end of 2009.

Auto parts retailer AutoZone provides an example of how shrink can damage the bottom line. AutoZone attributed a 0.2% decrease in Q2 2009 gross margin to increased shrink expenses, although the retailer did not specify exactly how the shrink occurred.

Loss prevention executives from 115 retail companies across a variety of verticals completed the NRF Organized Retail Crime survey in May 2009.

» NRF Survey shows Organized Retail Crime activity is growing! - Blogger News Network

Posted on June 11th, 2008 by Ed Dickson in All News, Blogosphere News, Breaking News, Business News, Technology NewsRead 1,559 times.According to FBI estimates, Organized Retail Crime (ORC) is a $30 billion a year business. The National Retail Federation’s 2008 Organized Crime Survey shows another alarming trend, which is that the amount of e-fencing to sell stolen merchandise on auction sites like eBay and Craigslist has grown 6 percent.

Also mentioned in the survey are shady e-commerce sites being put up on the Internet to fence the proceeeds of ORC.

In case you’ve never heard the term, Organized Retail Crime, here is a good description of the activity:

Organized retail crime (ORC) refers to groups, gangs and sometimes individuals who are engaged in illegally obtaining retail merchandise through both theft and fraud in substantial quantities as part of a commercial enterprise. These crime rings generally consist of “boosters” who methodically steal merchandise from retail stores and fence operators who convert the product to cash or drugs, as part of the criminal enterprise. Some of the more sophisticated criminals engage in changing the UPC bar codes on merchandise so they ring up differently at checkout, this is commonly called “ticket switching.” Others use stolen or cloned credit cards to obtain merchandise or produce fictitious receipts to return products back to retail outlets.

The report acknowledges that these groups are using cloned credit cards to steal merchandise and or get the necessary receipts to refund the merchandise for cash.

In the wake of the TJX data breach, where up to 94 million personal and financial records were hacked, a group was caught in Florida using data from the breach (cloned cards) to buy a reported $8 million worth of gift cards.

Please note that TJX is hardly the only retailer, or financial services institution that has had personal and financial records hacked from their systems in recent history. does a good job of recording the known breaches on their Data Loss Database - Open Source .

Although not addressed in the current report, I suspect the use of fraudulent checks are used to obtain merchandise and receipts, also.

This could be fueled by another organized crime activity. Portable technology has made the counterfeiting of identification documents another growing trend. Over the past two years or so, I’ve had the pleasure of being able to speak with Suad Leija and her husband about this organized criminal activity on a semi-regular basis. Suad, the step-daughter of one of the top players in this game was recruited in an intelligence operation and eventually exposed a cartel operating throughout North America to the government. Prosecution of members of the cartel is ongoing in this case and Suad is currently working on a book.

These documents, which are available throughout the United States, can be easily used to support both check and refund fraud by using names that get past the data bases designed to protect retailers from these types of fraudulent activity.

Portable technology is also being used to clone payment cards and some of it is easily found on auction, or shady e-commerce sites set up to sell these devices. As of this writing, I was easily able to find credit card encoders for sale on eBay. A site called provides an array of devices that could be used to steal and produce payment (credit/debit) cards. They also provide tools to make counterfeit checks and even, paper for fake prescriptions. They do have a “disclaimer” stating that none of their products are to be used for illegal purposes, but it is pretty obvious someone could.

There is no doubt that there is a lot of technology that is enabling a lot of criminal activity out there!

NRF’s Vice President of Loss Prevention, Joe LaRocca, made what I consider a sage comment on this activity:

“Law enforcement and retailers alike are fed up with organized retail crime rings and are stepping up efforts to stop them in their tracks,” said NRF Vice President of Loss Prevention Joseph LaRocca. “The brazen and unethical behavior of organized retail crime suspects results in possible health risks for consumers, adds unnecessary fees to consumers’ purchases and funds criminal enterprises, including the mob and terrorist organizations around the world.”

When I stated that this activity hurts all of us, the reason is that retailers have to make up the $30 billion they are losing to this activity somewhere. This normally equates to higher prices, or in extreme circumstances (especially in tight economic times) cutting payroll. Simply stated, people might be losing their jobs because of this activity.

So far as health risks, the report sums up the obvious risks rather well:

For example, criminals may not keep stolen merchandise in a temperature-controlled environment, so merchandise like baby formula and over-the-counter medicines can easily spoil. When criminals sell these items online through third party auction sites consumers are left with no way to guarantee they are getting safe and reliable healthy and beauty products.

I decided to see if I could find baby formula on eBay. As you can see - there seems to be a lot of it for sale on the site at discounted prices. At the time I checked 26 pages of it were for sale on the site.

Actual cases in the report that support how organized this activity has become are a $60-$100 million dollar case in Florida involving health, beauty, cosmetic products and over-the-counter medicines. Another case mentioned involved a high ranking member Gambino Crime Family and a sophisticated ticket/UPC switching case and extortion. In this case, a planted employee was making up the labels and providing temporary credit cards to move the merchandise through point-of-sale systems.

Recent initiatives to combat Organized Retail Crime include launching LerpNET, which is a crime database available to both retailers and law enforcement. Also highlighted was legislation against ORC throughout the country to “reduce the rewards and increase the risk” to the groups involved in it. Several States have already passed this legislation and more are considering it.

Full 2008 ORC Survey, here.

» NRF Survey shows Organized Retail Crime activity is growing! - Blogger News Network