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Organized retail crime presents 'growing problem'

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Even in the best of times retailers operate on thin margins. But, combine a sluggish economy with organized retail crime and profits can become even more elusive.

The National Retail Federation last week released its sixth annual report on the fight against organized retail crime, which has grown to more than $30 billion a year.

According to the report, a staggering 89.5 percent of retailers surveyed said their business has been a victim of ORC in the past 12 months. The good news is that represents a slight decline from the last survey when 92.2 percent said they had been victimized.

"The relationships retailers have built with local, state and federal law enforcement agencies are making it harder for felons, but billions are still being lost each year from this exhausting battle with criminals," said Joe LaRocca, an asset protection adviser with the NRF.

For the first time the association has ranked the cities where organized retail crime affects stores and distribution centers the most. The Baltimore/Washington, D.C., region tops the list and West Coast cities Los Angeles and San Francisco are also included in the top 10. San Diego was not included.

Earlier this year the NRF joined forces with the FBI to fight retail fraud. Using the FBI's Law Enforcement Online Network retailers will be able to track and report retail crimes.

Using the FBI system in conjunction with the Law Enforcement Retail Partnership Network -- LERPnet -- retailers can work closer with law enforcement to address situations like counterfeiting, armed robberies, as well as smash-and-grab incidents.

"One good piece of intelligence can be the breakthrough needed to make a vital connection or solve a case. By arming the retail industry with the infrastructure necessary to share such intelligence, it is our hope that they, along with their partners in law enforcement, are better able to thwart criminal efforts and reduce subsequent losses," said David Johnson of the FBI.

One local clothing retailer -- Charlotte Russe -- put the LERPnet system to work in 2009 and realized positive benefits. Over a particular weekend the company prevented 87 attempts of organized retail crime and avoided a loss that would have resulted in more than $34,000.

While ORC can have a dramatic impact on a company's bottom line, it also hits consumers in the pocketbook and reduces revenues to government entities that collect sales taxes.

"Not only do consumers pay higher prices as supermarkets attempt to recover losses resulting from ORC, but state revenues are also adversely impacted. In the 46 states that have a state sales tax, these jurisdictions experience approximately $1.6 billion in lost sales taxes as a result of ORC that otherwise would have been collected," said Leslie Sarasin, CEO of the Food Marketing Institute in testimony before a Congressional committee last year.

Of course, once an item is stolen from a retailer the organized criminals have to find a way to move the product to make an illegal profit. These days that often means using the Internet. This year the National Retail Federation has teamed with eBay to crack down on those that use the online auctioneer to fence their ill-gotten goods.

"Through this partnership, NRF and eBay are putting criminals on notice that they will no longer be able to steal from retailers and abuse the online marketplace for profit," said Paul Jones, global director of asset protection at eBay.

And federal legislators have tried to join the fight but with little success. Last year four different pieces of legislation were presented to address ORC but none has been able to get out of committee.

"Organized retail crime is a growing problem that puts consumers at risk and costs retailers billions of dollars. Congress is examining this problem and considering ways to effectively deter its growth and to protect consumers from harm," said Congressman Robert Scott of Virginia, who proposed one of the legislative issues.

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