Stores are worrying less about teens stealing CDs than about sophisticated criminals like Samih Fadl Jamal of Mesa, Ariz., the ring leader of a major organized theft operation that stole and resold millions of dollars of baby formula throughout the country.
Such highly sophisticated groups have been targeting retailers for several years, but merchants are just starting to come together to fight organized retail theft, developing crime databases and establishing crime squads.
Organized theft costs the industry an estimated $30 billion annually and rising. Customers also pay a hefty price too. The National Retail Federation, the industry’s largest trade group, estimates that shoppers pay almost 2 cents on every dollar they spend to cover the cost of retail theft.
The increased focus on this issue was underscored earlier in July, when news broke that Wal-Mart Stores Inc., the world’s largest retailer, will no longer prosecute one-time thieves unless they are between ages 18 to 65 and steal at least $25 worth of merchandise.
Wal-Mart, which had a zero-tolerance policy, joins a number of retailers who are putting more of their energy into bigger shoplifting crimes.
But that doesn’t mean that the nation’s retailers are giving a free pass to petty shoplifters. They emphasize they are still going to catch and stop such thieves.
“This is not an invitation to petty theft,” said Sharon Weber, a Wal-Mart spokeswoman. “We are hard targets for crime and we intend to stay that way.” In fact, Weber warned that the new policy is only a guideline for stores, and such thieves will still be detained and will be prosecuted if they refuse to show identification or are violent.
Unlike average shoplifters, who steal for themselves, those who are involved in organized crime steal the goods and resell them to flea markets, pawn shops or on the Internet. They typically focus on specific brands and products that carry a high resale value, are in constant demand and have a high profit margin. Among some of the coveted items are Enfamil baby formula, diabetic strips, over-the-counter brand name drugs like Tylenol and Advil, Gillette razors and jeans, including brands like Polo Ralph Lauren.
Both the NRF and the Retail Industry Leaders Association launched password-protected national crime data bases online, which let retailers share information about thefts to detect whether they’ve been a target of organized crime. In the past, merchants had never shared information, so rings could hit various stores in one area without being detected.
Meanwhile, retailers like Gap Inc., Sears Holdings Corp. and Wal-Mart — all of which are participating in these data bases — also have their own organized crime squads. They’re also using more sophisticated cameras in their stores to detect suspicious activity. Retailers would not give details on their efforts for security reasons.
Earlier this year, Congress authorized funding for an organized retail crime task force run by the Federal Bureau of Investigation. According to Eric Ives, FBI’s unit chief for the major theft division, the agency will develop its own crime data base that may combine those of both retail associations.
Still, criminals are responding with shrewder tactics. They carry out stolen merchandise in bags lined with foil or duct tape to avoid tripping security-tag alarms at the door or use sophisticated technology to print out counterfeit receipts and labels.
These organized groups have also become shrewd about who they dispatch to do the stealing. According to Joseph LaRocca, vice president of loss prevention at the NRF, many of these rings use pregnant illegal immigrants, who if caught, are usually deported before their child is born in the States.
According to LaRocca, a growing problem over the past year is a dramatic increase in the reselling of stolen products on the Internet, an area that is harder to track than flea markets or pawn shops.
“You don’t realize that a longtime drug user that you would never do business with is behind Uncle Bob’s online store,” LaRocca said.
Ives and LaRocca both noted that there isn’t a specific profile of shoplifters, who could be from all ethnic backgrounds and regions. Investigators say they move from region to region, and could target one specific item, or even one retailer throughout the country.
Ives noted that over the last two years, violent gangs, particularly one called MS-13 which has its roots in South and Central America, have become a growing force behind organized retail theft.
Thieves could also be criminals like Jamal, who employed more than 20 others to steal infant formula at stores around the country from 1997 to 2003. The goods were then sold to other wholesalers and stores in other states through his company, Jamal Trading Co. in Tempe, Ariz. According to reports, Jamal’s company gained $11 million in profits from the sale of $22 million of stolen baby formula.
Jamal was convicted last year of 20 charges and sentenced to 10 years of prison, according to the FBI.
For a long time, it was hard to detect such organized rings because stores had been secretive about giving out information about their incidents. Even now, stores remain anonymous in the database, which allows stores to see such details as how the crime was committed to what the criminals looked like. The identity of the merchant can be limited to location of the crime and the type of retailer. Stores can identify themselves when they send an e-mail to another retailer.
State laws have been weak on shoplifting; many states have continued to raise the felony theft levels amid the overflowing of jails. That has encouraged professional shoplifters to steal more often without reaching the felony level, according to an NRF report.
Moreover, Ives pointed out that shoplifting doesn’t become a federal crime until at least $5,000 in stolen merchandise crosses state lines. And Ives noted that U.S. attorney general’s offices don’t prosecute unless the figure is $50,000 or higher.
Many stores declined to talk about what specific measures they are adopting, but said that only by joining will they make a dent in the problem.
Still, they are realistic.
“This is an ongoing issue. It is not an issue that you are going to solve,” said Bill Titus, vice president of loss prevention at Sears. Stores, he said, have all this inventory, and criminals are trying to get at that.
“Our job is to get ahead of it and prevent it,” he said.