Print Issue: December 2008
It’s Tuesday morning and the department store has just opened. A customer walks into the ladies sportswear section. He’s interested in designer jeans and fine leather coats and jackets—he’s just not interested in paying for them. He pauses at racks to check the items’ quality and prices. However, the customer is also looking for electronic article security (EAS) tags and product-deprivation tags, and he is assessing whether there are any store employees in sight.
Eventually, he leaves the store and heads for a van in the parking lot and tells the four occupants what he has discovered. Within minutes, four of the five cohorts return to the store, leaving one as a getaway driver. Two of them distract sales associates in nearby departments while two members of the group pull designer jeans and leather jackets off the rack and stuff them into an aluminum-foil- lined bag and exit the store by the door closest to where the van is waiting.
According to the FBI’s Organized Retail Theft (ORT) Task Force, thefts from groups like this one cost U.S. retailers approximately $30 billion per year. ORT gangs target high-value consumer goods and over-the-counter medicines that are in high demand and easily concealable. The stolen goods are resold via flea markets, swap meets, and—increasingly—Internet auction and marketplace sites.
Until recently, local law enforcement agencies did not link shoplifting cases between cities and states, so they rarely recognized that an organized group was operating until it was gone from the area after having pilfered shops, stores, trailers, and distribution centers of large quantities of goods. Now, however, retailers are fighting back through a coordinated and cooperative effort with law enforcement and the manufacturing industry. These groups have developed information-sharing and action-oriented partnerships that are helping them thwart ORT activities. Among these initiatives are the following.
The interface known as the Law Enforcement Retail Partnership Network (LERPnet) was launched in April 2007. LERPnet is a secure Web portal with three levels of authentication. It provides a safe way for the industry to report cases that can be used to build a national database of retail theft incidents. That database creates a way for participants to share information with each other and law enforcement.
LERPnet is operated by the National Retail Federation and designed by an advisory team representing the spectrum of retail businesses—with input from federal and local law enforcement agencies. According to its Web site, “LERPnet is expected to become the national standard for sharing retail crime information in a secure and confidential manner.”
Among the retail companies currently subscribed to LERPnet are Wal-Mart, Target Corporation, BJ’s Wholesale Club, AutoZone, Macy’s, J. C. Penney Company, Luxottica Retail, Safeway, Saks Fifth Avenue, and many more, which together total approximately $882 billion in sales and encompass more than 85,000 individual stores.
Unlimited users from each subscribing company are allowed, and there is full control over the level of visibility of all information entered in the system. Users enter each incident separately, providing valuable detail such as suspect descriptions, getaway vehicles, and identification numbers of stolen products.
In their reports, retailers can include photos and video footage. This information can help other users to connect the incidents and suspects to similar crimes, which may assist in building a case for the detention and prosecution of criminals. LERPnet currently holds more than 27,000 incident reports.
Since 2006, the FBI has established a network of local ORT-criminal-enterprise squads that combine local, state, and federal law enforcement, as well as manufacturing or retail security personnel. They use investigative techniques and strategies that the FBI has used to fight traditional organized crime, usually in big cities.
There are also teams using similar methods that are led by private companies. For example, Nelson Harrah, senior manager of organized retail crime for Gap, Inc., oversees Organized Retail Crime (ORC) Blitz teams in eight of the locations that are used by retail theft gangs as home bases and training grounds. These locations include New York City, Miami, and Southern California. After the criminals go through training in these locations, says Harrah, they travel from state to state, usually in groups of 3 to 10 people.
The ORC Blitz teams consist of Gap loss prevention personnel, local law enforcement, and occasionally FBI agents. If the local police are not part of the ORC Blitz, as happens sometimes when they are not available to be present, they are given notice that a team is working in their area and asked to be ready to respond.
The team members position themselves strategically around a mall or shopping center looking for professional shoplifting activity by focusing on shopper behaviors. It has been noted, says Harrah, that theft gang members often maintain a stoic expression and are intense and businesslike. Regular shoppers, on the other hand, are usually much more interactive with their companions, seem more light-hearted, and will laugh aloud or banter and even argue conspicuously.
Once team members spot a potential ORT gang, they observe a theft take place and witness the handing off to a mule, who carries the stolen goods to a car or van in the parking lot. Law enforcement is then notified.
Officers and team members usually discreetly observe three or four thefts and drop-offs by the mules. This may total three or four hours of surveillance. The goal is to observe all members of the theft ring and to identify all of the involved vehicles, as the desired outcome is to apprehend the entire theft ring, reclaim all the stolen merchandise, and impound all the vehicles being used.
If an apprehension is attempted too early, the likely result will be the capture of only a small number of participants (called boosters) with only a few booster bags of merchandise. It’s likely that the rest of the thieves will scurry off, avoiding capture. Harrah notes that many boosters wear wigs, hats, scarves or bandanas, layers of clothing, and other disguises and apparel so that they can change their look quickly and attempt to become lost among other shoppers.
One investigation that Harrah is particularly proud of occurred in Las Vegas in a shopping center and casino complex. The ORC Blitz team followed the boosters for 18 hours during a full day of stealing from stores and then gambling in the casinos in the evening. The next day, when the transient theft ring members left their hotel, police arrested them and recovered more than $24,000 in merchandise.
In 2007, Harrah’s teams apprehended 450 to 500 professional shoplifters and recovered more than $3 million worth of merchandise.
The author’s company, Luxottica Retail, has its own Organized Retail Crime Task Force, headed by manager Mike Jessee. The task force includes one loss prevention analyst and four regional loss prevention managers who work together to identify and investigate organized crimes committed against the specialty stores. The task force also works closely with other retailers’ ORT teams to exchange information and offer support.
Jessee trains local police on how to identify counterfeits of Luxottica’s products. With the help of the company’s wholesale division, the task force has also created product ID cards that fit neatly into police officers’ notebooks to help them determine whether merchandise in the field is counterfeit.
These efforts have resulted in hundreds of thousands of dollars of product being confiscated in New York and on the West Coast. They have also helped to build cases for the arrest and prosecution of those selling stolen goods (called fences).
Jessee also leads quarterly meetings of the ORC Round Table, which include approximately 60 attendees. Participants range from retailers, including Stein Mart and Walgreens Pharmacies, to FBI representatives, the Warren County (Ohio) Prosecutor’s Office, and various police departments. Many successful apprehensions of ORT gangs in the Ohio, Indiana, and Kentucky tri-state area have resulted from intelligence shared and cooperation generated during these meetings.
Another aspect of the Organized Retail Crime Task Force at Luxottica Retail is the use of software to scour Internet auction sites for company products being sold in large quantities, especially after known burglaries or large ORT gang thefts. Identification of e-fences often makes it possible to trace the goods back to the thieves. The task force also uses technology such as Vigil Active—mapping software that helps to track theft gangs.
In the last several years, retail loss prevention professionals and law enforcement officials have formed valuable partnerships that are attempting to disrupt ORT through cooperative investigations and intelligence sharing. As a result, of the retailers that have focused on the issue, a smaller percentage have seen increases in ORT activity, according to the National Retail Federation.
But the problem remains serious, with two-thirds of retailers saying that they have seen an increase in e-fencing activity, according to the National Retail Federation’s 2008 Organized Retail Crime Survey. Unfortunately, legislative efforts to define as a federal crime those activities that further ORT and other bills aimed at e-fencing and at giving more tools to law enforcement failed to pass Congress. Those additional tools could help retailers make more significant headway against this determined gang of thieves.
Alan F. Greggo, CPP, is associate vice president for loss prevention of Luxottica Retail of Mason, Ohio. He is a member of the ASIS International Council on Retail Loss Prevention.