Retail theft a growing Issue

he cost of retail crime has skyrocketed.

That’s because studies on and the reporting of retail crime have been extremely segmented. Retail loss prevention and law enforcement experts believe that if taken together, the figure would be more than $60 billion.

For example, a $33.5 billion figure cited in the 2009 National Retail Security Survey from the University of Florida refers only to shrinkage, the industry term for internal theft that includes shoplifting and accounting errors. Organized retail crime involving stolen property transported across state lines accounts for $30 billion in annual losses, according to the FBI’s Web site. Neither report takes account of check kiting and credit card or gift card fraud.

Eric Ives, a special agent in the FBI’s Violent Crimes/Major Offenders Unit in Washington, said the dollar figure attached to retail crime could be much higher due to discrepancies in data collection, underreporting of crimes and varying interpretations of ownership. “There’s disparity in the numbers,” said Ives. “Take cargo theft, for example. Part of the difficulty is determining at what point the retailer takes possession” of the shipping container. “Is it when the container is packed and sealed at an overseas factory or when it arrives at the store’s loading dock? It could be reported as a robbery, burglary or hijacking,” he said.

“There’s a lot of missing data,” agreed Richard Hollinger, a professor in the department of sociology and criminology and law at the University of Florida, who oversees the survey. “A lot of stores don’t keep track of [gift card and credit card fraud] or define the losses differently.”

In terms of shoplifting and employee theft, “not all retailers report the crimes,” Ives said. “Some don’t arrest and report shoplifters. Until it’s fully reported, you wouldn’t know there’s a crime problem. Also, retailers use different algorithms to calculate shrinkage.”

The FBI’s interest in organized retail crime has been on the rise since it discovered that “it’s a gateway to larger crimes, in many cases,” Ives said. Joe Pistone, an FBI agent whose life story became the basis for the film “Donnie Brasco,” “would leverage these major [jewelry] thefts to ingratiate himself into organized crime groups. Also, organized retail theft cases always have the potential for funding terrorism.”

While organized retail crime has had its Hollywood moments, Hollinger said the most common form of theft is far less glamorous: employee theft, which accounts for 43 percent of shrinkage.

“There’s a lot of theft that’s lost in the distribution system,” Hollinger said. “From the factories in Guangdong Province, China, to the actual stores, there’s a lot of places for loss [to occur]. My study has not and does not intend to quantify that. My number is at the lower end because it only includes what’s lost in the store.”