Organized Retail Crime and the Federal Response

INSIGHTi

Organized Retail Crime and the Federal
Response
January 14, 2022
Retailers and retail industry advocacy groups have expressed concern about what they see as a general
increase in retail crime, and more specifically an increase in organized retail crime (ORC). Reports of
criminal groups, acting in flash mobs, storming stores and at times assaulting employees, have
underscored these concerns. Some retail organizations have cited certain elements of the COVID-19
pandemic as possibly contributing to this apparent increase in ORC and have urged policymakers and law
enforcement to take steps to educate the public and crack down on ORC. Some law enforcement agencies
have increased resources and information sharing to counter these crimes.
Organized Retail Crime
ORC is a form of retail crime—a broader category of crime that also includes employee theft, shoplifting,
and robberies. ORC typically refers to large-scale retail theft and fraud by organized groups of
professional shoplifters, or boosters. Organized crime rings resell illegally acquired merchandise via a
variety of fencing operations such as flea markets, swap meets, pawn shops, and online marketplaces.
ORC differs from shoplifting in that amateur shoplifters tend to steal merchandise for personal
consumption. Boosters, on the other hand, are professional thieves who make money by stealing
merchandise and reselling it to fences, who in turn sell the goods—through legal or illegal economic
outlets—for a fraction of the retail cost. Stolen and fraudulently obtained goods may be taken not only
from retailers, but from manufacturers and distributors as well.
There are no national data on the prevalence of ORC, and some rely on industry experts to estimate
losses. The National Retail Federation (NRF), through its 2021 National Retail Security Survey (NRSS),
notes that 69% of retailers responding to the survey reported an increase in ORC activity over the prior
year. This follows the NRF’s 2020 Organized Retail Crime Survey (ORC Survey), in which 75% of
retailers noted a slight (44%) or significant (31%) increase in ORC activity over the prior year. However,
possible limitations to these survey data may include small sample sizes, lack of generalizability, barriers
to replication, and retailers’ varying conceptualizations of ORC.
Based on the 2020 ORC Survey results, NRF estimates that ORC costs retailers an average of $719,548
for every $1 billion in sales. This is an increase over the estimated costs of $703,320 in 2019 and
$453,940 in 2015. However, the economic effects of loss—related to ORC and other causes of inventory
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shrink—extend beyond those to retailers. Retailers who do not subsume these losses may pass them along
to consumers in the form of higher prices on goods, and states lose the tax revenue that would otherwise
be generated from the sale of these goods by legitimate retailers.
Some have questioned whether ORC tactics could be changing. For instance, 65% of respondents to the
2021 NRSS reported that ORC gangs have been more aggressive. There have been anecdotal reports of
smash-and-grab, or flash mob style thefts, where a large group of thieves storm a retail establishment,
overwhelming any potential security in place. Some criminal justice researchers have questioned whether
this is a long-term trend in ORC or whether it may be short term, perhaps influenced by incidents seen in
videos circulated online.
ORC and the COVID-19 Pandemic
While many retailers surveyed by the NRF reported an increase in ORC in 2020 and 2021, it is unclear if
these changes were influenced by the COVID-19 pandemic. Nonetheless, 57% of retailers responding to
the 2021 NRSS indicated that the pandemic increased the risk of ORC. For instance, the increase in multi-
channel sales—such as customers buying online and picking up goods in a store—can provide enhanced
opportunities for fraud by ORC groups and others. In addition, as more people turned to online shopping,
online marketplaces have become even more attractive venues for fencing stolen goods.
Some may question whether ORC gangs would increasingly target goods early in the distribution chain
due to supply chain disruptions. While some suggest there has been an increase in thefts from cargo
containers and trucks, others have not reported a significant change.
Policy Issues
There is debate over the appropriate federal role in deterring ORC and sanctioning the actors involved in
committing or facilitating these crimes.
Criminalizing ORC. Combating retail theft is primarily handled by state and local law enforcement
under state criminal laws. States have often relied on felony theft statutes to investigate and prosecute
ORC. Those, however, vary from state to state with respect to the monetary threshold constituting a
felony theft and law enforcement’s appetite to investigate them. Federal law enforcement such as the
Federal Bureau of Investigation (FBI) engages directly with retailers and with state and local law
enforcement through task forces and ad hoc partnerships to investigate and prosecute ORC. Federal law
does not criminalize theft itself, but it prohibits related crimes such as transportation of stolen goods
across state lines, sale or receipt of stolen goods, money laundering, and conspiracy. While some have
advocated for a federal ORC law, law enforcement has previously argued that existing tools are sufficient.
Impediments to investigating and prosecuting these cases may come more from a lack of resources and
competing priorities than from needing additional tools.
Enhancing Awareness. Policymakers may consider whether regulating certain marketplaces (online
markets, in particular) to require such entities to increase information-sharing with retailers and law
enforcement would strengthen investigations and prosecutions of ORC as well as decrease opportunities
to fence stolen goods through legitimate online marketplaces. Several bills in Congress (e.g., S. 936, the
Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act or INFORM
Consumers Act, and companion bill H.R. 5502) would, among other things, require online marketplaces
to collect, verify, and disclose certain information from high-volume sellers and to provide consumers
with means to report suspicious activity. Some retailers and industry advocates have supported the
INFORM Consumers Act, while some online marketplaces have favored small business protections in the
House version.

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Author Information

Kristin Finklea

Specialist in Domestic Security




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