The Fraud Examiner

Retail Schemes Make for Big Business

By Zach Capers, CFE

January 2015

Now that the holidays are over and presents have been exchanged, vast amounts of clothing, electronic devices and various other retail items are being returned to merchants by purchasers and gift recipients — and criminals. According to the 2014 Return Fraud Survey recently released by the National Retail Federation (NRF), retailers estimate that they will lose $3.8 billion to return fraud during the holiday season, amounting to 35 percent of the nearly $11 billion total losses expected for the year. However, despite return fraud's prevalence during the holidays, it is only one facet of organized retail crime's annual $30 billion impact on retailers.


Organized Retail Crime

While for some the term organized retail crime might evoke little more than an enhanced shoplifting scheme, it is defined by the NRF as "theft/fraudulent activity conducted with the intent to convert illegally obtained merchandise, cargo, cash, or cash equivalent into financial gain, typically through online or offline sales." Organized retail crime rings typically consist of several members, each with specific responsibilities in the execution of sophisticated criminal operations.

Professional shoplifters, known as boosters, work in groups comprised of members with defined roles such as pickerlookout and driver. To more easily access merchandise and overcome security systems, boosters sometimes work in collusion with corrupt store employees. Boosters usually have very specific items in mind when perpetrating their schemes. Heavily targeted items tend to be those that are in high demand and of a high value relative to their size, ease of theft and profitability on the black market.

Commonly stolen items include:

Allergy medication

Teeth whitening strips

Razor blades

Small electronic devices

Baby formula




Energy drinks

Designer clothing


Boosters use numerous methods to inconspicuously remove large amounts of merchandise from store shelves, inventory storage rooms and cargo trucks parked in store loading docks. Tactics often include the use of powerful magnets and other tools needed to remove security tags, or foil-lined bags and clothing intended to shield security tags from anti-theft sensors. A 2013 NRF survey found that 11 percent of all apprehended shoplifters reportedly possessed foil-lined bags.

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