Shoplifting syndicates are costing retailers billions every year. Industry insiders are pointing to the ease of online reselling for helping crime rings thrive.

OSTN Staff

a power drill on top of a yellow background with a large padlock and alarm symbols
Home Depot’s special power tools are just the latest anti-theft measure for a brick-and-mortar retailer.

  • Retailers are voicing concerns that e-commerce has prompted a spike in professional shoplifters boosting high-value items to sell online.
  • Brick-and-mortar advocates are arguing that online sellers need to take more action to stop theft.
  • But critics say some anti-theft measures could hurt small online sellers.
  • See more stories on Insider’s business page.

Among well-lit rows of drills, lawn care equipment, and power washers, all still carefully packaged, a small American flag hangs over a shelf of Milwaukee Tools, a Home Depot-exclusive brand.

Without context, it looks like it could have been any Home Depot warehouse. But this video footage, viewed by Insider, doesn’t depict a fulfillment center, or even the stock room of a Home Depot store. It captures a secret California warehouse stocked with goods stolen from the home improvement giant. It was shot by one of Home Depot’s own organized retail crime investigators in 2020, as police served a search warrant on the storage facility. All in all, the warehouse contained millions of dollars in stolen products.

That’s just one snapshot of a crime wave that’s been building for years. Back in 2011, the FBI posited that “organized retail crime” was a $30 billion industry. And industry operators say the problem has only grown since then. A 2020 survey from the National Retail Federation found that organized retail theft has seen a nearly 60% increase from 2015, now averaging $719,548 for every $1 billion in sales.

Retailers are now sounding the alarm on spiking theft statistics and the role of e-commerce platforms as “fences.” Traditionally, fences have taken the form of pawn shops or flea markets, but the rise of online shopping has turned this on its head. Brick-and-mortar retailers complaining that thieves are increasingly hawking pilfered products online, but e-commerce platforms argue that regulating sites will just stifle competition.

home depot organized retail crime
Police seize items, including some stolen from a Home Depot.

Retail companies have implemented a number of initiatives to combat these targeted thefts. Recently, Home Depot released power tools that won’t work unless they’re properly scanned and activated at the register via Bluetooth technology. The retailer is also looking to continue to introduce technology to combat theft, rather than locking up products. Stores have experimented with lockable cart wheels that freeze up if a person shoves a cartload of goods outside without paying. Others resort to controversial facial recognition tools, often in addition to other security measures, to assist in identifying thieves. Critics say that, without regulation, this technology could end up violating human rights.

Jason Brewer, the spokesperson for the Buy Safe America Coalition, a lobby group for the retail industry, spoke with Insider about the efficient, intricate shadow businesses of professional shoplifters.

“This is a professional criminal,” Brewer said. “They’re not looking to steal food for dinner, or something they need because they can’t afford it. They are stealing specific items that they know they can resell online.”

Brewer said that organized retail crime rings vary in terms of their size, origin, and specialty. He said that some could be connected to larger organized crime outfits. For those major players, organized retail crime is yet another business in a portfolio that may also include narcotics sales, human trafficking, and gunrunning. Smaller rings could just be a group led by a figure that can convince desperate people – sometimes impoverished, unhoused, and drug-dependent persons – to steal in exchange for a small cut of money. Shoplifting ring “CEOs” will pass down a product list to low-level members, who then must go out and steal those items in order to get paid.

“The leaders don’t really care what happens to the runners,” Scott Glenn, Home Depot’s vice president of asset protection, told Insider. “They’re just paying them a hundred bucks a day, but the runners will bring back thousands of dollars worth of product that then gets resold for profit.”

But despite their ubiquity, Glenn said it is important not to underestimate shoplifting groups. He said that they can be helmed by “good administrators” and function somewhat akin to shadow businesses. Glenn said that in some cases, these professional shoplifters will steal “right up to that felony threshold” without ever crossing the line.

Most states have a felony theft threshold, meaning that a person who steals money or property valued over a certain amount can be charged with felony, rather than misdemeanor, theft. The NRF notes that these syndicates often look for “a mix of valuable high-end products and cheap but easier to fence everyday necessities.”

“They know that nothing’s going to happen if it doesn’t pass that certain level,” Glenn said. “They’ll steal up to that amount and they’ll go to the next door and they’ll steal up to that amount.”

‘It really hits retailers from multiple directions’

Brewer and Glenn said the proliferation of e-commerce has also led to a boom in criminals fencing stolen goods online. Glenn said that not all online sales platforms “have the same level of control and vetting” when it comes to merchants, while Brewer said that no online platform is currently doing enough to combat crime.

And all this means that retailers feel they are battling exponential growth in organized theft that everyday shoppers are likely not aware of. In the 2020 NRF survey, 59% of respondents said they’d spotted stolen merchandise from their company being sold on websites – that’s up 9% from 2018.

Brewer also said that online platforms need to do away with anonymity for sellers in order to combat organized retail crime. The Buy Safe Coalition is backing the INFORM Consumers Act, a bill that would force online platforms to authenticate “high-volume third-party sellers.”

Home Depot organized retail crime
Police seize items, including some stolen from a Home Depot.

“If the marketplaces have to start verifying the people selling on their platform and providing that information to the public, it’s going to be a lot harder for people to sell stolen goods,” Brewer said.

Online platforms have pushed back against the idea that they’re allowing thieves to run rampant on their sites. eBay has touted its efforts to remove suspicious listings, as well as its initiatives to protect copyright and trademark owners, community members dealing with unsafe goods, and third-party brands.

“eBay is fully committed to providing a safe and secure online shopping experience to millions of people globally and we have zero tolerance for criminal activity on our platform,” an eBay spokesperson told Insider. “We believe collaboration and cooperation between law enforcement, retailers and marketplaces is the best way to combat fraud and organized retail crime.”

An Amazon spokesperson told Insider that the company in 2020 invested $700 million and a workforce of 10,000 to “prevent fraud and abuse in our store.”

“Amazon does not allow third-party sellers to list stolen goods in our store, and we work closely with law enforcement, retailers, and brands to stop bad actors and hold them accountable, including withholding funds, terminating accounts, and making law enforcement referrals,” an Amazon spokesperson told Insider.

Home Depot organized retail crime
Police seize items, including some stolen from a Home Depot.

The Makers and Merchants Coalition, a trade group that represents third-party online sellers, has come out against the INFORM Act. It argues that there “is no need to require private citizens to disclose their personal information to the public to sell a small number of products online.”

“The true mission of the INFORM Act is to eliminate big-box retail’s competition by hurting small sellers,” spokesperson Katie Wright said in a statement sent to Insider. “The Act does nothing to stop stolen goods at their main source, brick and mortar retail stores, but does threaten to compromise the safety and personal information of small online sellers who use larger marketplaces to sell their products.”

Wright said that online marketplaces already “collect personal information from sellers as one of the many measures taken to prevent the sale of millions of stolen and counterfeit products every year.”

But Glenn and Brewer stressed the threat that organized retail crime posed. Both said that, when desperate, professional shoplifters could pose a physical threat to shoppers and retail employees. Glenn said if left unchecked, mass theft could push higher prices onto consumers, while Brewer said that smaller stores could shutter.

“Not only is the retailer having the merchandise stolen from them, but then somebody is competing with them online by selling the same product for half the price because it’s stolen,” he said. “So it really hits retailers from multiple directions.”

Read the original article on Business Insider

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