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Organized retail theft costs billions

Thefts cost taxpayers, result in higher prices.


Organized retail crime cost stores an estimated $30 billion nationwide last year, an expensive trend that has businesses and law enforcement looking for ways to combat what one area task force leader called “an epidemic.”

The National Retail Federation’s 2013 survey found that 94 percent of retailers were victims of organized retail crime, which means they were targeted by individuals or groups seeking out certain items with an eye on reselling them for cash or drugs.

“This is not shoplifting,” said Dennis Dansak, head of Kroger’s organized retail crime division. “

It’s not a high school student going into a store stealing a pack of gum. We’re talking about $800 to $1,200 per theft episode.”

Dansak, who was hired in 2009, has a law enforcement background that includes a counterrorism stint with the FBI. At Kroger, he’s concerned with catching thieves determined to steal items such as laundry detergent, baby formula, energy drinks and razors. Kroger uses anti-theft labels with store codes that are hard to remove.

Department and clothing stores commonly lose electronics, high-end denim, handbags and cosmetics to thieves.

“What makes it so profitable is it’s a low-risk, high-reward business,” said Bob Bowman, who coordinates an area task force of law enforcement agencies known as Investigating Organized Retail Crime, or IROC. “The chance of getting caught is really about 1-in-150. They can make phenominal profit when there’s no overhead.”

Cost to taxpayers

The cost of retail crime to businesses is significant, but it also affects taxpayers. Bowman attended an ORC session last June in Columbus during which Ohio Attorney General Mike DeWine tried to put the issue into perspective.

“He said the state of Ohio lost $30 million in 2012 of uncollected sales tax revenue directly associated with organized retail crime,” Bowman said.

Gift card/store credit fraud affected 78 percent of businesses, according to the National Retail Federation’s survey.

Warren County Prosecutor David Fornshell said thieves involved in identity theft oftentimes use that information to create phony credit cards and purchase gift cards, which they can sell.

“They go into stores and buy gift cards with the coded credit cards,” Fornshell said. “If you convert it to a gift card quickly, by the time someone realizes there is some type of illegal activity on their card, those purchases have already been converted to a gift card because it’s a lot more difficult to track down.”

Boosters, fences

Bowman, director of security at The Greene and police chief for Perry Twp. in Montgomery County, said many thieves work a circuit that includes Columbus, Dayton and Cincinnati. He explained how a “booster” works with a “fence” to affect a store’s bottom line.

“If I’m a fence and I send Billy out to shoplift and he comes back with $1,000 worth of merchandise, I might give him $200. Then I may turn around and have another associate take it back to the store, maybe the same store, and get a refund.

“I’ll give her $200 and I just made $600 by doing nothing but orchestrating the deal. Not only did they collect 100 percent of the retail value, they’re also going to collect sales tax, so my profit just went to as high as $670.”

Many stores do not require receipts for returned items, which makes it easier on thieves.

At grocery stores, thieves will use a “push-out” method, filling up a shopping cart and bolting for the parking lot.

“They’re there to steal large amounts of the same product, so they try to hide that product,” Dansak said. “They’ll throw an item over the top, and dog food is very bulky so we’ve seen them use dog food.

“If they have 37 cans of Similac (baby formula), that is a clue for someone looking at that buggy going out the door, so they’ll try to disguise it.”

Tide is a popular item among thieves because it is in demand. “They can trade a gallon of laundry detergent for a heroin capsule,” Bowman said.

Cargo thefts

Sgt. Tim Root oversees the Ohio State Highway Patrol’s vehicle theft and fraud unit. He said food shipments accounted for 25 percent of the 951 cargo thefts reported nationwide in 2012. Twenty-seven cases of cargo theft, such as on a truck shipment, were reported in Ohio.

Root said 85 percent of such thefts occur with unsecured shipments that are “primarily unattended.” He added that troopers are trained to look for inconsistencies in the stories of people they may suspect are committing crimes.

No matter the method of theft, they all hit consumers’ pocketbooks, said Fornshell.

“Stores have shrinkage (because of theft), meaning the difference what inventory says they’re supposed to have versus what they end up with when they conduct inventory. That results in higher prices for basically everything we purchase.”



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