Organized retail crime (ORC)
Organized retail crime (ORC) refers to coordinated criminal activities involving theft and resale of goods in retail environments. ORC encompasses a range of crimes, including shoplifting, cargo theft, and identity fraud, often carried out by groups that create distractions to facilitate theft. High-value items, such as electronics and designer accessories, are typically targeted. Reports indicate that these criminal enterprises not only focus on personal financial gain but also may fund larger criminal organizations globally. The impact of ORC is significant, with retailers facing substantial losses—approximately $74 billion in 2022 alone—alongside the growing concern over violence related to these crimes.
The evolution of ORC has been marked by a shift from traditional theft methods to online avenues, where stolen goods are resold through auction sites and e-commerce platforms. Retailers have implemented increased security measures to combat this issue, including locking up high-value items. In response to the rising threat, regional organized retail crime associations have formed to facilitate information sharing among retailers and law enforcement. Legislative efforts, such as the 2023 INFORM Consumers Act, aim to combat the sale of stolen goods online by enhancing seller verification requirements on major platforms. The multifaceted nature of ORC and its implications for society highlight the need for ongoing attention and collaborative strategies to address this growing challenge.
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Organized retail crime (ORC)
Organized retail crime (ORC) is professional cargo theft, crime rings, shoplifting, and other crimes involving multiple people targeting retail environments. It is also known as organized retail theft. Typically, one or more individuals create a distraction while others steal. Thieves may target specific high-value types of merchandise, such as designer bags or electronics. Many in the retail and security industries say ORC groups also are involved in identity theft, counterfeiting, money laundering, cyber fraud, credit fraud, con games, and other criminal activities. Authorities say many of these criminal enterprises are focused on personal financial gain, but increasingly they are stealing to help fund criminal and militant organizations, often in other parts of the world. The FBI reports that much of this crime involves Asian, Cuban, Mexican, and South American theft groups and gangs.
ORC is rising in the twenty-first century. Retailers say theft accounts for about 66 percent of losses. In 2021, this amounted to about $60 billion, while in 2023, it increased to about $121.6 billion. In addition to the financial toll, retailers, employees, and shoppers are concerned about the increasing level of violence ORC rings employ, and some companies have resorted to closing stores that have been targeted.
Background
Police noticed ORC groups in the 1980s. They realized that many shoplifters had developed an industry in which they resold large amounts of stolen goods on the black market. Often, they used small shops or pawn markets to convert goods into cash. They operated in this fashion for some time until the Internet allowed them to move their activities online. During the early 2010s, organized criminal gangs became the primary cause of inventory loss, supplanting employees who surreptitiously stole goods on a small scale.
Some of the most common types of merchandise stolen are cosmetics, perfume, power tools, and toiletries. Major victims have included Best Buy, Costco, Dollar Tree, Foot Locker, Home Depot, Lululemon, Target, T.J. Maxx, Ulta Beauty, and Walgreens.
In the late 2010s, the National Retail Federation noted an increase in in-store violence. They attributed this in part to retailers’ policies banning or discouraging employees from confronting shoplifters. A Lululemon store in Georgia, for example, fired some employees who tried to interfere when three people tried to steal armfuls of clothing.
Overview
ORC rings usually consist of two groups: thieves and people who convert stolen items into cash. They may resell stolen goods through online auction sites, e-commerce sites, or flea markets. Some fences enlist cleaners, people who remove identifying marks such as stickers from products so the goods can be repackaged. Often, stolen products are mixed in with legitimate goods in the supply chain. In some cases, middle merchants buy stolen goods and resell them to the same retailers who were victimized.
ORC groups frequently enlist employees of their targets. They may pay retail employees to steal, overlook theft, or process fraudulent transactions (for example, by ringing up lower-priced goods but bagging expensive items for thieves). ORC groups may also pay employees for customer account information.
Some organized crime groups and gangs have moved away from traditional ways of financing their organizations, such as violent crime and drug sales, to ORC. Many see retail theft, even on a large scale, as a low-risk, high-reward endeavor because the penalties for being caught and sentenced are comparatively low. Even if they operate in multiple states or move from one state to another, the chances of federal prosecution are low.
ORC’s impact is much greater than the loss of revenue for retailers. ORC can have a profound effect on a company’s brand. Customers who witness ORC can become frightened and may be unwilling to visit the retailer again. Publicity of such events and other actions, such as theft of credit card information, can also influence shoppers or potential customers, who may avoid targeted businesses or locations. Communities can also be harmed when retailers choose to close stores because of ORC; this has happened among major chains including Walgreens, Target, and Nike. Other effects specifically tied to increasing ORC violence have been more workers’ compensation claims and difficulty in retaining employees.
Officials have noted that ORC became part of a harmful loop in the early 2020s. The global COVID-19 pandemic that began in 2020 closed many stores and disrupted supply chains, so customers increasingly turned to online retailers. Thieves took this opportunity to steal and sell more goods online, often pricing the products at nearly retail levels and thus increasing their profits. ORC groups targeted specific items, often hitting multiple stores in a small area and creating localized shortages. Consumers concerned about violent retail theft were more inclined to shop online, increasing the incentive for thieves to steal more to meet demand and perpetuating the cycle.
By 2024, forty-eight US states had established organized retail crime associations (ORCAs). These groups have each created their own databases of ORC information. Industry insiders have called on these groups to share information by creating a master database that would aid both retailers and law enforcement in identifying ORC perpetrators and trends. This would also aid federal agencies in prosecuting theft groups.
Several states have invested hundreds of millions of dollars to assist law enforcement in fighting ORC. California, Colorado, Connecticut, Illinois, and Washington have set up task forces to address these crimes and target perpetrators. For example, the California Highway Patrol recovered $50 million in stolen goods, including cars, clothing, electronics, and small appliances. Retailers have responded to ORC by increasing security; for example, they may put higher-end products in locked cases.
Congress has attempted to address the issue by passing the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act (INFORM Consumers Act) in 2023. It requires online marketplaces that cater to high-volume, third-party sellers to verify and disclose some information about the sellers to help consumers make informed decisions. Supporters of the act said it would make the sale of stolen or counterfeit goods more difficult. Between 2022 and 2023, nine states imposed harsher penalties for ORC offenses. In 2024, California made organized retail theft a distinct crime.
Bibliography
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