A Comprehensive Look at Fraud Identification and Prevention

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Chapter 6

Organized Retail

Fraud/ Theft

6.1 Organized Retail Crime/ Fraud

Retail locations provide a great opportunity for individuals who want to commit

fraud or theft. ese crimes can range from the simple taking of a candy bar to a

loss of thousands of dollars in merchandise from organized retail fraud schemes.

e theft of a candy bar affects the bottom line of the retail location. Organized

retail crime/ fraud can affect the bottom line of the retail location through losses

in inventory. With the larger crime of organized retail crime/ fraud, the merchant

is not the only victim. In addition to the loss suffered by the retailer, individual

consumers can be follow- up victims.

With a majority of fraudulent activity, the individuals who want to commit the

fraud develop a scheme and find a victim to target. If the fraudulent activity is suc-

cessful, the person committing the activity receives the desired monetary outcome

and the targeted victim suffers a loss. e crime of organized retail fraud has the

merchant as the initial victim, with a follow- up victim of the consumer who pur-

chases repackaged and out- of- date consumables. e following is a list of popular

items targeted by organized retail crime/ fraud operators:

◾ Electronic merchandise, including cell phones, digital cameras, laptop com-

puters, tablets, GPS (global positioning system) devices, and the like

◾ Grocery store items, including diabetes test strips, razor blades, batteries,

infant formula, high- dollar spirits and wine, and so on

92 ◾ A Comprehensive Look at Fraud Identification and Prevention

◾ Over- the- counter medicines, including diabetic test strips, allergy medica-

tion, pain relievers, weight loss pills, smoking cessation products, and more

◾ Designer clothing, furs, handbags, and so on

◾ Drugstore items, including pregnancy test kits, beauty items, skin lotions and

creams, electronic toothbrushes, and the like

◾ Kitchen products, including coffeemakers, high- quality mixers, and others

In contrast to the individual candy bar thief, organized retail crime/ fraud

involves the participation of many. ese detailed fraud schemes typically involve

the individuals stealing the merchandise (boosters), people who make the items

ready for resale (cleansers), and those who actually resell the stolen merchan-

dise (fences).

Beginning with the actual theft of the merchandise, the boosters work using a

variety of methods:

◾ Enter the store with several individuals who steal merchandise and with other

participants who work as lookouts. ese lookouts will also create distrac-

tions within the retail location to take the employees’ attention away from

the boosters.

◾ Enter the location with actual shopping bags from the store targeted. e

boosters fill the shopping bags with merchandise and hope to walk out of

the store undetected.

◾ Individuals working in organized retail crime/ fraud operations will hide out

in the store and wait until closing when all employees have left. After the

location is empty of employees, the thieves will quickly grab targeted items

and depart through emergency exits.

◾ ieves will also participate in smash- and- grab- type operations, for exam-

ple, ramming a vehicle into the front door of the targeted location, entering

en masse, and grabbing as much merchandise as possible.

◾ Organized retail crime/ fraud boosters will also work with current or former

store employees. Employees have been known to provide boosters with items

directly from the store inventory or products from the receiving area.

◾ Former or current store employees will also assist the boosters by leaving store

doors unlocked or providing alarm codes, security information, and manage-

ment working schedules.

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Once the merchandise has been stolen by the boosters, many items go through

what is referred to as cleansing or cleaning operations. e goal of the cleaning

process is to ready the merchandise for resale. Cleaning operations involve remov-

ing any security devices and store- specific labels. Items are also repackaged to give

the appearance of coming directly from the manufacturer. With perishable items,

cleansers will change the expiration date.