Shoplifters fuel a wave of economic crime. Can fintech fight back? | Payment source

NEW YORK—A New Yorker cartoon from 2006 depicts a criminal who robs a bank at gunpoint. The teller says, “You know, you can do this just as easily online.”

By 2023, criminals are no longer swayed by that argument, at least when it comes to organized retail crime.

“The post-COVID era of retail crime has changed the landscape. Today’s criminals are much more brazen than they have been in the past,” Millie Kresevich, senior director of asset protection at global eyewear retailer EssilorLuxottica, said in a panel discussion at The National Retail Federation’s Big Show this week in New York.

Thieves sweep store shelves and confront employees, she said. Some stores use checkout technology to cover their losses, but overall, these organized crime groups are responsible not only for store-by-store theft, but also for billions of dollars in financial crime.

Taylor Weidman/Bloomberg

“One of our top priorities is financial crime, and with that comes other crimes that these organized crime retail organizations commit,” said Maria Michel-Manzo, division chief of the Transnational Organized Crime, Financial and Fraud Division of the U.S. Department of Homeland Security.

In 2019, nearly $70 billion in dealer losses were passed through U.S. financial institutions, “and that’s money we want to go after,” she said.

In one example where retail products were stolen en masse, criminals stored them in warehouses where people spent all day removing retailer tags before those products were moved on for resale or other illegal use. The same group was likely involved in human trafficking and arms smuggling, Michel-Manzo said.

The issue of organized crime will not be resolved at the individual dealer level, but new payment technology can prevent small-scale thieves.

Store level security

Checkout-free models like Amazon’s Just Walk Out track customers from the moment they walk into a store, so a retailer like Amazon Go knows what each person is carrying — even if the customer tries to subvert the system that charges them for it. point.

Verizon has taken a stake in AiFi, a company that offers a competing checkout-free system, and theft reduction is part of the benefit, according to James Hughes, managing principal of Verizon Enterprise Solutions.

Aldi, a European supermarket chain that works with AiFi, saw shrinkage decrease after implementing AiFi’s technology, Hughes said in an interview.

“Because you’re being recorded all the time, it’s harder to put things in your pocket,” Hughes said. At Aldi, “they saw the shrinkage reduce quite significantly,” despite a broader trend of shrinkage increasing across retail, he said.

If a store didn’t want to eliminate checkout entirely, it could still use the AiFi technology to detect instances of shoplifting and potentially crack down, Hughes said.

The checkout-less section is actually optional, according to Mike Webster, general manager and senior vice president of Oracle Retail.

Amazon Go and similar models “to me represent more of a process innovation, certainly not a technology innovation,” Webster said in an interview. “Having spent a bit of my life in the self-checkout space, I can assure you that the same tricks work” in both settings, he said.

Merges together

EssilorLuxottica’s Kresevich emphasized that the problem is much bigger than what can be solved by individual stores spending on security.

“The days of hiding property when they are in the stores are over,” she said. “Today’s criminals … sweep shelves and aggressively influence employees while they are in stores, and that makes it very difficult for retailers to protect stores because the costs are much higher than they were in the past.”

Dealers will have more success working together than focusing on just their own losses, Kresevich said. She advised retailers to work with lawmakers and law enforcement, and to advocate for legislation that focuses on shoplifting and increases penalties for perpetrators. “We need to come together as a coalition,” she said.

Adam Braun, executive deputy attorney general of the Illinois Attorney General’s Office, said many of these organized crime rings are knowledgeable about existing laws and know what they need to do to detect or prosecute.

“When our office began investigating these crimes, we were impressed by the sophistication of the organizers,” Braun said. “These were clearly not isolated cases of someone stealing a particular item from a shelf.”

The organizers stayed below the thresholds for grand larceny and spread their crimes across jurisdictions, Braun said. A group could steal from stores in one county in the morning, then focus on another county in the afternoon and a third in the evening, knowing that the police in each jurisdiction would not be able to communicate quickly enough to detect the pattern.

“The level of sophistication has gone up. The organized part, I think, is expanding,” Kresevich said. “So today’s orchestrators of these crimes, they know the trade, they understand how to get the product from the store and then put it back into the system to be sold in large quantities.”