What is Organized Retail Crime (ORC)?
Organized crime continues to be a growing concern for the retail industry. 97% of those surveyed said they've been victimized by ORC in the past 12 months. When we talk about ORC, we aren’t talking about a few teenagers slipping sunglasses into their bags. We are talking about the substantial theft or defrauding of a retailer by an organized group of people as part of a larger criminal operation.
The primary objective of these criminals is to turn a profit. This means their theft is rarely, if ever for their own personal use. Instead, they employ strategies such as obtaining illegitimate refunds for stolen goods, thefts of credit card information from vendors, or reselling those aforementioned stolen goods.
Typically for these organizations to operate profitably they need to steal in substantial quantities. In fact, it is estimated that retailers had an average loss of $703,320 per $1 billion in sales directly due to ORC in 2019. The scale of the organized retail crime operations can be devastating for retailers and are responsible for billions of dollars worth of losses each year in the retail sector.
Many factors play into this, including rising felony thresholds that reduce the risk for ORC criminals. In addition, respondents say ORC gangs are becoming more violent. And over 2/3rds of those questioned said they’d seen an increase in ORC activity.
Types of Organized Retail Crime
There are two main ways that retailers are targeted. This is either through retail fraud, where the threat actors implement one of many fraudulent strategies to make a profit at the harm of the retailer. Or they steal product from the retailer and resell it usually through e-commerce channels or even dark web commerce sites.
Fraud and Organized Retail Crime
Refund or Return Fraud - This is when an individual or group returns merchandise they stole for cash or credit from the store. An alternative strategy involves attempting to return counterfeit merchandise.
Counterfeit Money - Groups use counterfeit money to make numerous purchases from across a range of stores to avoid suspicion. Then they return the products for real cash or they sell the product online. Alternatively, they might purchase gift cards and then sell those on for real cash.
Serial Number Fraud - The organization might legitimately purchase goods and then sell the serial number for a replacement claiming it has broken. Often, replacement goods are sent before the damaged ones are received by the retailer. They can then make a profit off of the fraudulently claimed item.
Gift Card Fraud - There are a few ways that gift cards can be used by organized retail crime groups. First, a stolen credit card could be used to buy gift cards. Second, gift cards often have fairly simple serial number sequencing, attackers can learn the sequence of the cards and when they are legitimately loaded, make a clone of the card to sell or use themselves.
Credit Card Fraud - Because of the amount of transactional data that retailers have they are a prime target for hackers. These hackers could be looking for credit card data, banking details, or simply, personal information data. This they will likely sell off to the highest bidder through a dark web marketplace rather than use themselves.
Theft and Organized Retail Crime
Mass Shoplifting - This can take various forms. One, a group goes around separately to various different retailers and boost a substantial amount of merchandise without anyone noticing. Alternatively they might take a smash and grab approach, where a large group rush into a store, grab what they can, and rush out just as quickly. Potentially making off with thousands worth of goods.
Robbery - This is when an individual or group targets a specific retailer, often for cash in the till. This kind of robbery can be violent and safety should always be the primary concern for the retailer.
Smash & Grab / Burglary - Organized retail crime groups have been known to target high-quality retail stores for high-value merchandise they know they can profit from. For example, designer clothing, electronics, and jewellery. This could involve smashing the front window with a brick or a more subtle entry involving access through air vents or by manipulating an employee to gain access after closing.
Cargo Theft - One of the key strategies employed by organized crime groups is the theft of cargo. Cargo is defined as merchandise that has yet to reach its final destination. Examples of this include theft from warehouses or from lorries whilst they are in transit. This allows for the criminals to steal large quantities of goods in one go.
73% of retailers surveyed said they've been a victim of cargo theft in the past year. En route from distribution center to store is the most commonplace for cargo theft to occur.
Improved Situational Awareness for Preventing and Mitigating Threats Associated with ORC
To combat the threat of organized retail crime, 65% of retail executives surveyed said they were prioritizing ORC more now than 5 years ago. To do this 56% said they have or plan to allocate additional technology resources to fight risk and 44% said they would be increasing their loss prevention budgets (source).
Loss prevention strategies include more stringent return policies, better gift card serializing, electronic article surveillance, and improved video surveillance. To improve the overall effectiveness it’s also important to support loss prevention teams with accurate and up-to-date intelligence.
Using OSINT tools like Signal you can quickly become aware of and mitigate damages from a range of potential threats from organized retail crime such as:
Cloned gift cards for sale on the dark web.
A conversation suggesting cargo was going to be targeted.
Data breaches of sensitive customer data.
Plans for after hours break-ins.
Product serial numbers found for sale on Telegram.
Stolen goods found online.