In recent years, criminal groups have selected the retail industry as a relatively low-risk/high-profit target in what has become known as organized retail crime, or ORC. Using teams of shoplifters, ORC groups pilfer high-value products like baby formula, razor blades and dietary supplements, often reselling them easily online. The problem has been growing: Total retail losses attributed to ORC range between $15 billion and $30 billion — more than auto theft, robberies, burglaries, larcenies and cargo theft combined, according to Joseph J. LaRocca, vice president of loss prevention at National Retail Federation, Washington. ORC has even been linked to terrorist groups in the Middle East. LaRocca has been one of the leaders in helping the retail industry fight back. In a recent interview with SN, he explained some recent strides made by retailers and law enforcement.
SN: What were some of the highlights last year in the industry's battle against ORC?
JL: In January 2006, President Bush signed HR3401, section 1105, which defines ORC and set aside $5 million per year for three years for the FBI to set up an ORC Task Force. Immediately thereafter, we began to see a number of states work on legislation to stiffen the penalties for ORC activity, including Texas, California, Washington, Vermont, Colorado and New Jersey. So from a legislative point of view, we had a really good year in 2006.
SN: What has the FBI done so far?
JL: The FBI does not have any of the authorized money in its pocket yet, but that should be resolved soon. In 2006, the FBI set up an ORC group at its headquarters and designated people in its field offices to work on ORC incidents. The FBI is seriously engaged in this, and so is law enforcement at local levels, such as the New York and Los Angeles police departments. [Local police] are working with retailers in real partnerships and going after these groups.
SN: Section 1105 also called for the formation of a national ORC database that will allow retailers and law enforcement to share data on ORC. What is the status of the databases that the industry has been developing?
JL: Last June, NRF launched the Retail Loss Prevention Intelligence Network. We have over 14,000 ORC incidents recorded in the system, and we've just scratched the surface. About 32 retailers are contributing data, including four supermarket chains. We are looking for more supermarkets, drug chains and other sectors. The Retail Industry Leaders Association also has a database and we are close to announcing a merger of their system and ours into a single system called the Law Enforcement Retail Partnership Network. This will be the national system for reporting, tracking and investigating ORC. It will be run by the NRF, with cooperation from RILA, the FBI and other trade associations. When the database merger happens, I think we will see significant growth in supermarket participation.
SN: How involved are food retailers in the ORC issue?
JL: As a major target of ORC, supermarkets are the one sector in the industry that has had its eye on the ORC ball for years. Most of the other retailers are just now catching up. Supermarkets and drug stores have done a good job of organizing their loss prevention departments to address ORC. Last June, we started the Joint Organized Retail Crime Task Force, which includes ORC investigators working at about a dozen retailers, including Safeway, Supervalu and Meijer. These are the guys in the field managing ORC investigations, doing link-ups with local and federal law enforcement and getting at the heart of the problem. In the group, they are sharing information and developing standard training programs for retailers and law enforcement.
SN: What else can retailers do to stop ORC?
JL: The big thing is that supermarkets and retailers in general should work with each other, sharing information via the database, meeting face-to-face and joining law enforcement. Local agencies want to help fight this problem but lack resources. Once they understand that retailers will lead the charge, law enforcement will be a willing supporter.
SN: Can technology help retailers counter ORC?
JL: There are video systems using intelligent back-end analysis to tell retailers when large quantities of products are removed from the shelf or when people are exhibiting behavior indicative of ORC. One group is testing a device that can detect booster bags, which thieves put products in to defeat electronic article surveillance tags. It can spot the bags when they're brought into the store.
SN: Why is ORC growing?
JL: It's easier to make more money by fencing stolen products on the Internet. In traditional fencing operations, groups make 30 to 35 cents on the dollar. By selling online, they can make 70 cents on the dollar. And they can remain anonymous — they don't have to show their face or their vehicle. The risk is minimal.
