Building an Effective Case to Combat ORC.

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Posted by Eric Miller - 18 February, 2021


Unfortunately, retailers are well acquainted with the concept of shoplifting – items stolen from a store usually for personal use or consumption. Roughly 3% of shoplifters take shoplifting to the next level and make it their profession, reselling their stolen goods or fraudulently returning the goods to turn a profit, often moving from store to store, state to state, region to region to avoid suspicion. Though only a small percentage of thieves make up this group, it costs retailers about $30 Billion annually and rising both in terms of number of cases and related losses. According to the National Retail Federation, losses due to ORC has increased 60% in the past five years.

What is ORC?

The term Organized Retail Crime (ORC) refers to this type of professional theft and fraud as part of an unlawful commercial enterprise to obtain retail merchandise in substantial quantities. Typically, these groups operate in highly coordinated, sophisticated networks that can span local, regional, national, or even international territories. ORC operations can span a wide spectrum of possibilities from simple to complex, often involving organizers, boosters, fencing operations, re-packagers, and even illegitimate wholesale operations.

ORC gangs typically steal a mix of valuable high-end products and easy-to-fence everyday necessities. Top items stolen included designer clothing, infant formula, razors, designer handbags, laundry detergent, denim pants, energy drinks, allergy medicine and high-end liquor among others.

ORC continues to be a significant challenge to the retail industry and is a growing issue among the wide range of risks faced by Loss Prevention and Asset Protection teams. The National Retail Federation (NRF) 2020 ORC survey reported average losses of almost $720,000 per $1 billion in sales. Approximately 75% of survey respondents have seen ORC crime increase in the last 12 months, while 60% of those surveyed believe federal laws are needed.

Why is ORC increasing?

One possible reason for the increase is that many states have increased the monetary level of what is considered a felony, unintentionally increasing lesser crimes. Other reasons include relaxed law enforcement guidelines, shoplifting law changes, and decreased shoplifting penalties.

Another consideration is that most retailers have policies in place to avoid physical altercations between employees and shoplifters. This is meant to protect employees from potential injury and limit liability to the company.

However, retailers are working to change policies to proactively deter or even prevent instances of theft and fraud. One-third of retailers indicated that they have changed their return policies and point of sale policies and over half are implementing new technologies to combat fraud.

But retailers cannot prevent fraud by themselves. A good practice is to set up and maintain regular communications with other Loss Prevention leaders to share information about ORC groups operating in that area. They need to partner with local and federal law enforcement. A local police force will also be able to share information on known groups in the area but will not have the jurisdiction or authority to go after inter-state ORC gangs, which is why federal law enforcement is also needed. For instance, 58% of NRF survey respondents were victims of cargo theft in the last year, including 45% who were victims of stolen shipments en-route from the distribution center to a store. More aggressive tactics, especially in large metropolitan areas are desperately needed.

Returns are another area of concern with retailers, as ORC gangs steal merchandise, return it for store credit or gift cards, and then resell the cards on a secondary market. Nearly 60% of retailers have found store gift cards for sale on websites, an increase from 51% in 2019. The most vulnerable items are designer clothing, with 34% experiencing theft.

During a pandemic, retailers were focused on lean operations and customer retention, but ORC gangs are also increasing their activity. Retailers must be prepared to take steps against ORC crime and learn how building an ORC case will prove the extent of their losses.

Building an ORC case

Christopher J. McGourty is the Founder and Executive Director of NAORCA Worldwide, The National Anti-Organized Retail Crime Association. As a 30-year loss prevention veteran, he helps retailers prepare and present ORC cases.

ORC cases must be taken seriously to get multiple incidents in different jurisdictions to overcome the local "felony theft threshold" that proves more serious crimes with steeper penalties. McGourty states that many ORC suspects are habitual offenders who go undeterred by misdemeanor offenses but continue to be highly rewarded from their ORC crime efforts.

McGourty recommends the following steps to prepare for a successful ORC case:

  1. Start with an executive summary. Provide an overview of the investigation, laws violated, jurisdictions included, people involved, suspects’ identities, and/or vehicles used.
  2. Include incident details. Include dates, times, and laws violated. Evidence that shows suspects on video, transaction information, credit/debit/gift card information, and specific laws violated should be part of the case.
  3. Calculate the financial impact. Include detail of financial losses by counties, states, and jurisdictions.
  4. Collect evidence. Collect video summaries, the chain of custody, photos, and where evidence is stored.
  5. State next steps. Insist on the highest level of prosecution and provide investigators at each court date. Your dedication to prosecuting ORC suspects must be shown by showing up and proving your case. Law enforcement attendance may be mandatory in many areas.

Presenting your ORC case

  1. Include loss prevention experts and legal counsel. Your loss prevention and asset protection experts will review your presentation for clarity, providing guidance on which jurisdictions to file charges. Your legal counsel will help you decide where and when to file charges.
  2. Schedule appointments with law enforcement agencies. Schedule an appointment with appropriate local, state, or federal agencies.
  3. Rehearse your case. Review and update your presentation to ensure you are prepared.
  4. Present your case. Be professional, present your information, discuss next steps that may include potential charges, search warrants, and other legal actions.
  5. Follow-up. In consultation with legal counsel, attend hearings, keep up on court dates, and stay apprised of next steps.
  6. Provide status reports. As needed, provide status updates to people within your organization.

These steps are an essential way to document and proved organized retailed crime that occurs in multiple jurisdictions. Even the largest retailers use this approach, often because they are the hardest hit by ORC criminals.

Define, Disrupt, Dismantle

Working together, ORC operations can steal millions of dollars of merchandise. Just a few months ago, authorities in California recorded one of the largest organized retail crime cases ever recorded in the US, resulting in multiple arrests and a $50 million case against an organization targeting retailers in the Bay Area for several years.

Loss prevention experts and law enforcement prepared their case by interviewing store employees, reviewing videos, and researching all available information to complete multiple presentations, while still ensuring stores operated smoothly during the pandemic.

“Define, Disrupt, and Dismantle” was the goal of CVS loss prevention experts who adopted a zero-tolerance approach to ORC theft. Their model of defining suspects, disrupting their operations, and dismantling gangs is the approach now used by law enforcement as they create an “Urban ORC” strategy for prime regions that include San Francisco, Los Angeles, Boston, New York, Miami, and Washington, DC.

If you have multiple locations, it may be hard to identify the degree of theft across your organization. By analyzing your inventory and transaction data, a robust data analytics platform can provide insight into the extent of your loss and help to determine if law enforcement measures are warranted.

Learn more about how Loss Prevention professionals are using technology in our on-demand webinar with APEX Retail, TalkLP, and various LP industry experts in “The LP Investigator’s Favorite Tools to Catch a Thief.

To Catch a Thief On-Demand Webinar

Topics: Blog

Posted by Eric Miller

Eric Miller is the Sales Engineer at Agilence. He is also a Certified Fraud Examiner and Certified Forensic Interviewer with over 12 years experience as an analyst in the Loss Prevention industry. When he is not using analytics to find theft or fraud, he enjoys traveling, sipping bourbon and making ice cream for friends and family.


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