WASHINGTON--The National Retail Federation is reporting in its recently released organized retail crime survey that nine out of 10 retailers--92 percent--report that their companies were victims of organized retail crime during the past year, up eight percent from 2008. 

Nearly 73 percent of retailers who responded to the survey also reported the level of organized retail crime activity has increased over the past 12 months, an increase of 11 percent from 2008.

Joe LaRocca, senior asset protection advisor with NRF, said the economic events of the past year have significantly contributed to this increase, commenting that ORC rings have found new business opportunities as more consumers are looking for deals.

The report, released last week, reported that 42 percent of retailers say their company is allocating additional resources to address ORC, even in light of the tough economic situation. According to the survey, the average retailer spends approximately $215,000 annually on labor costs alone to fight organized retail crime. Some retailers surveyed spend far more, with six percent of respondents spending more than $1 million a year to employ loss prevention executives devoted to organized retail crime.

The survey also found that 49 percent of respondents believe senior management in their company understands the seriousness of the issue. For the first time, NRF also asked loss prevention executives whether they felt law enforcement had a firm grasp on the issue--38 percent agreed that police officers, detectives and federal law enforcement understood the complexity and severity of organized retail crime.

Retailers report that they have had some success identifying stolen merchandise or gift cards at physical fence locations such as pawn shops and temporary stores (60 percent) and through online e-fencing operations (60 percent). Respondents reported a perceived increase in e-fencing activity in the past 12 months compared with 63 percent who said they'd noticed an increase last year--a decrease of 13 percent.

The report states that thieves sell "new in box" or "new with tags" merchandise and gift cards online and in pawn shops. Because this merchandise has never been opened or unwrapped it can provide more peace of mind to a customer buying from an unknown third party. Criminals can make close to 70 cents on the dollar on this merchandise through an online sale as opposed to roughly 30 cents on the dollar through more conventional black markets or physical fence locations, according to the report.

Similarly, preliminary figures released Tuesday from the National Retail Security Survey found that the average number of ORC cases amounted to 1,079 per firm. "This number has really shot  up," said Richard Hollinger, criminology professor at the University of Florida during the NRF Conference. Hollinger also noted that 20.7 percent of retailers have a dedicated ORC task force to deal with this growing issue, which the survey found costs companies an average of $5,321 per ORC case.

The retail community has fought hard to regain stolen property from ORC gangs and is working with law enforcement partners to identify items at brick-and-mortar locations and online auction sites. The relationship between online sites, such as eBay, have been contentious at times as both sides try to find a common ground that enables retailers to identify stolen goods while allowing auction sites to protect their customers. EBay "devotes substantial resources to monitoring our marketplace and have zero tolerance for criminal activity," said Tod Cohen, vice president and deputy general counsel for government relations at eBay, said in a prepared statement. "In fact, eBay is the least safe place for a criminal to sell stolen goods because we maintain extensive records of transactions and actively help law enforcement to investigate, arrest and prosecute criminals."

Cohen cited the company's PROACT program, a partnership with LP departments, as an example of its commitment to reduce crime on its sites, but provided no additional information on the number of retailers involved.

"However, rather than work with us, some retailers unfairly blame the Internet as the cause of the problem," Cohen's statement continued. "The truth is, faced with challenging economic times, some retail giants have made a number of decisions that they were aware would contribute to their theft losses, including cuts in loss prevention staff and tools, as well as major reductions in sales staff, who serve as a powerful deterrent to potential thieves. They also continue to have major problems in dealing with the number one cause of inventory shrinkage -- employee theft.  Retailers that are truly serious about this problem must invest resources to attack the problem at its source."

Although NRF's report focuses on ORC from different angles, Cohen said "NRF's recent report on organized retail crime is filled with best guesses versus facts and hard numbers. It simply doesn't make sense to blame online marketplaces for a problem that has existed since well before the Internet was invented."

For more on this story including additional comments from NRF's Joe LaRocca, look for updates on SDN's Web site.