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Losses From Organized Retail Crime Reach New High

Retail crime is on the rise and losses are skyrocketing.

A strong majority of retailers surveyed in the annual Organized Retail Crime study from the National Retail Federation (NRF) said such criminal activity is growing.

Losses averaged $777,877 per $1 billion in sales, up 7 percent from last year’s previous record of $726,351.

Organized retail crime, according to the study, typically targets items that are easy to steal and resell. Top items range from low-cost products like blue jeans, laundry detergent, razors, deodorant and infant formula to high-end goods like designer clothing and handbags, expensive liquor and cellphones.

Stolen goods are normally recovered in places that range from flea markets and pawnshops to online, with gift cards often ending up on online gift card exchanges. While online fencing has increased over the years, retailers said 60 percent of recovered merchandise is found at physical locations.

Retailers attributed the increase in crime to the simplicity of online selling, gift card fraud, shortage of staff in stores and demand for specific brand name items or products. What’s making matters worse, according to NRF, is that several states have increased the threshold for a theft to be considered a felony, meaning criminals can steal a larger quantity of goods while keeping the crime a misdemeanor and avoiding the risk of higher penalties.

“Retailers continue to deal with increasing challenges and complications surrounding organized retail crime,” said Bob Moraca, NRF vice president of loss prevention. “These criminals find new ways to expand their networks and manipulate the retail supply chain every day. The retail industry is fighting this battle by upgrading technology, improving relationships with local law enforcement and taking steps such as tightening return policies, but it is a never-ending battle.”

Even though 34 states have organized retail crime laws, 73 percent of retailers surveyed supported the creation of a federal law on the problem, since such gangs often operate across state lines.

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Some organized retail crime occurs before the merchandise even reaches stores, with 29 percent of retailers saying they had been the victim of cargo theft that occurred along their supply chains, though the number was down from 40 percent last year and 44 percent the year before.

The country’s largest cities are the most frequent targets of organized retail crime. Top locations are New York City; Los Angeles; Miami; Chicago; Houston; San Francisco-Oakland; Atlanta; Baltimore; Orlando, Fla.; northern New Jersey; Washington, D.C.; Philadelphia; Arlington-Dallas-Fort Worth, Tex.; Fort Lauderdale, Fla., and Seattle.

Return fraud also continues to pose a serious threat to the industry.

Retailers estimated that 11 percent of their annual sales will be returned this year and that 8 percent of those returns are likely to be fraudulent. An estimated 12 percent of returns will not include a receipt, and 21 percent of those are expected to be fraudulent. In addition, 38 percent reported in an increase in online purchases returned to a brick-and-mortar location, and 29 percent cited an increase of those returns being fraudulent.