As online identity verification and transaction security improve, making it more difficult for cyberthieves to impersonate legit eCommerce customers, bad actors are reverting to low-tech “smash-and-grab” approaches more often, stealing everything from luxury goods to cannabis to shaving supplies.
On Sunday (Nov. 21), arrests were made and firearms were found after a rash of shoplifting incidents at stores and boutiques throughout San Francisco, in what the Los Angeles Times called “an organized theft involving approximately 80 people” focused on the Nordstrom store in the downtown area.
Starting last Friday evening, “thieves burglarized Louis Vuitton on Union Square, Burberry and Bloomingdale’s in the Westfield mall, Yves Saint Laurent on Geary Street, Walgreens on Market Street and multiple cannabis dispensaries across the city. Police were able to prevent thefts at other locations … including at Fendi and Hermès stores,” according to the report.
A similar scene played out in Chicago last month, as a coordinated shoplifting ring hit upscale stores along the Windy City’s Miracle Mile, including Bottega Veneta and Louis Vuitton. It’s now happening in many parts of the country with large concentrations of retail stores.
As PYMNTS recently reported, this organized retail theft “involves stealing goods from brick-and-mortar stores in bulk and selling items online,” adding that “large-scale shoplifting rings account for about $45 billion in annual losses for stores, a 50% increase from 10 years ago.”
See also: Retailers Fight Theft Rings That Steal and Resell Goods Online
Shoplifting Shapeshifts During Digital Shift
A seasonal spike in shoplifting before gifting holidays is a familiar phenomenon to law enforcement. This is a bit different, with the new wave of thieves coming prepared with foil-lined bags to prevent sensors from detecting security tags used in electronic article surveillance (EAS) systems, and working in concert with accomplices who distract store personnel.
They’re not just taregeting high-end merchandise. One curious case involves a fence that the police call “Daniel the Medicine Man,” recently found to have an estimated $10 million in stolen over-the-counter (OTC) medications, razor blades and more stored in an illegal warehouse.
Ben Dugan, director of organized retail crime and corporate investigations for CVS Health, told The Wall Street Journal that this individual “maintained a website [where] he sold to the top sellers on Amazon. So, anyone who was a big Amazon seller, he would reach out for, independently, and say, ‘I’ll give you all the product that you need.’”
As crime rings systematically remove all tags and sensors from stolen goods, they can then be repackaged and resold — especially online — arousing little if any suspicion.
In response, earlier this year, four U.S. senators co-sponsored The Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers (INFORM Consumers) Act to combat the online sales of stolen goods.
Co-sponsor Sen. Chuck Grassley said: “Online shoppers deserve to have confidence that they’re getting exactly what they’re paying for, but all too often, fraudsters and thieves take advantage of unsuspecting consumers to offload their ill-gotten inventory. This bill helps provide better verification and greater transparency of online marketplace practices, so consumers can trust that the products they purchase are legitimate and sold by legitimate vendors.”
Another fraud vector that bears scrutiny is promotional policy abuse, which is a problem with fraudsters as well as otherwise “good” consumers engaging in item not received (INR) and refund abuse, which is becoming more rampant as eCommerce continues to scale.
The new study “Beyond eCommerce Fraud: How Retailers Can Prevent Customer Policy Abuse,” a PYMNTS and Forter collaboration, puts the price tag of promotions and policy abuse in the range of $89 billion annually for large retailers.
A three-pronged approach to combating policy abuse suggested in the study combines real-time decision-making to block serial abusers instantly; choosing partners “that can tune models to match your requirements and deliver desired outcomes as your audience and sales volume changes;” and adjusting policies to match personas to filter out repeat offenders.
Get the study: Beyond eCommerce Fraud: How Retailers Can Prevent Customer Policy Abuse
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