Organized Retail Crime: Insights and Solutions for Omnichannel Retailers

Introduction

Organized retail crime (ORC) is a growing threat to the retail industry, affecting both omnichannel and online retailers. Recent statistics reveal that retail crime costs retailers $112 billion annually, with organized retail crime being a significant contributor. ORC alone drove a 15% increase in losses compared to the previous year.

As theft tactics become more sophisticated, retail executives and their loss prevention teams must take proactive steps to protect their organizations and reduce shrink. This guide provides a comprehensive overview of organized retail crime, common challenges, and actionable strategies for retail loss prevention teams.

What is organized retail crime (ORC)?

Organized retail crime refers to large-scale theft and fraud conducted by professional groups aiming to steal high-value items for resale. Unlike petty theft, ORC operations are calculated, often crossing state lines and involving a network of individuals. From the organizer who selects the locations to target, to the perpetrators (or “boosters”) who steal the physical items, and finally, to the “fencer,” who sells the stolen goods often through secondary markets such as online platforms, flea markets, or black markets.

Common tactics of organized retail crime:

• Gift Card Fraud: Criminals use stolen items or fake returns to obtain gift cards, which are then resold.
• Return Fraud: Exploiting lenient return policies to profit from stolen goods or counterfeit receipts.
• Ecommerce Exploitation: Leveraging online platforms to sell stolen goods anonymously or on the black market.
• Organized Shoplifting (Targeted Theft): Criminals systematically target high-value or high-demand items, such as electronics, luxury goods, or essentials like baby formula. These stolen goods are quickly resold on the black market, through pawnshops, or via anonymous ecommerce platforms, making them nearly untraceable.

How does organized retail crime impact the retail ecosystem?

ORC doesn’t just affect inventory. It increases operational costs, disrupts supply chains, and forces price adjustments, ultimately impacting customers. Retailers must adopt a multifaceted approach to address these challenges.

Key challenges retailers face with organized retail crime

From detection to prosecution, retailers face a myriad of challenges related to organized retail crime, including the rise of ecommerce-based crimes, prosecution complexities, escalating financial losses, and the growing prevalence of violent offenders.

The rise of ecommerce-based organized retail crime

Organized retail crime has rapidly expanded into ecommerce, where fraud rings exploit returns, claims, and appeasements at scale. Online retail’s speed, complex fulfillment chains, and lenient return policies create loopholes that are difficult to police, fueling billions in hidden losses.

Research shows fraudulent returns and claims cost U.S. retailers $103B in 2024—over 15% of all returns—while claims and appeasements fraud adds another $21–$35B annually, with roughly 1 in 10 online claims deemed fraudulent. Ecommerce retailers face the dual challenge of protecting against abuse while avoiding overly strict return policies that alienate customers. As ORC becomes increasingly digital, tackling ecommerce-driven fraud requires omnichannel data sharing, AI-driven detection, and smarter policy design.

Hidden ORC in returns and claims

One of the most pressing challenges today is that organized retail crime is no longer confined to visible theft. Increasingly, ORC operations are exploiting returns and claims systems to generate illicit profit in ways that mimic legitimate customer behavior.

In 2024, fraudulent returns and claims cost U.S. retailers $103 billion, accounting for more than 15% of all returns. With total merchandise returns reaching $685 billion—13.2% of retail sales—the returns process has become one of the largest financial exposure points for retailers.

Common tactics include:

• Wardrobing (buying, using, and then returning products).

• Returning goods with stolen or fraudulent tender such as stolen credit cards or counterfeit gift cards.

• Returning stolen merchandise for illegitimate refunds.

• Filing false claims of damage or non-receipt in ecommerce channels.

The challenge for retailers is twofold: these activities often look like normal customer transactions, and efforts to clamp down with stricter return policies can risk alienating honest shoppers. That balance between preventing abuse and maintaining customer loyalty is becoming one of the most difficult issues retailers face in combating ORC.

Fraud is hiding in plain sight. In 2024, U.S. retailers lost $103B to fraudulent returns and claims—more than 15% of all returns. Add another $21–$35B from online claims fraud, and the cost skyrockets.

Complexities of prosecution

Building cases against ORC groups requires strong evidence and law enforcement support. Without proper documentation and collaboration, prosecuting these groups becomes nearly impossible.

The financial toll of ORC

Shrink, which includes ORC-related losses, costs retailers billions annually. Add to this the expenses of additional security measures, investigative efforts, and legal proceedings, and the financial burden becomes clear.

Organized retail crime statistics:

• Retail crime costs retailers over $112 billion annually, with ORC as a major growing contributor.
• ORC costs federal and state governments nearly $15 billion in lost tax revenue, which is ultimately passed along to the American consumer, costing them more than $500 annually in additional costs.
• 81% of retailers report more violent ORC offenders, leading to an increased spend in surveillance and protection measures, as well as employee injuries and increased fear among consumers.

Strategies for combating ORC

Tips for building strong ORC cases

To effectively combat ORC, retailers must document theft and fraud meticulously. Collaborating with law enforcement is essential for prosecuting offenders.

• Use analytics to provide actionable data.
• Ensure evidence is well-organized and legally admissible.
• Partner with law enforcement to strengthen case validity.

When building your organized retail crime case, consider the following sections:

Executive Summary – Outlining your investigation, laws violated, specific jurisdictions, number of people involved, verified identity of suspects, and vehicles involved.

Incident Breakdown – Dates and times, a breakdown of all laws violated, video or pictures of suspects, and documented evidence like transaction information, credit card, debit card, or gift card information. Detailed incident breakdown (by date, time, county, state and financial losses).

Financial Breakdown – A detailed breakdown of financial losses, such as counties or states. This may be reported in a spreadsheet format, or through structured report formats such as those generated in Incident + ORC Intelligence.

Excel (Financial) Spreadsheet – Detailed breakdown of financial losses (counties, states).

Video Summary – Detailed breakdown by date of all video incidents involving suspects.

Evidence Summary – Chain of custody and where evidence is being stored (photos).

Conclusion – It’s essential you follow the process through the courts, insist on 100% prosecution, and have investigators in court for every court date. This approach also frees up having law enforcement appear and shows your 100% commitment to prosecution.

Using AI for associate incident narratives

Detailed associate experiences help investigators connect cases and target larger ORC networks. AI can quickly identify patterns, like similar weapons or fraud methods, across different crimes. Automation speeds up the process, making it faster than manual reviews. These tools also enable associates to share more insights, helping to prevent future incidents and catch fraudsters more effectively.

Flagging suspicious activity with AI-driven return and claim authorization

Machine learning and advanced analytics can look at returns and claims in real time, flagging suspicious activity without penalizing legitimate customers. For example, unusual behavior—such as repeated high-value returns, frequent no-receipt refunds, or returns made with risky tender types—can be identified instantly, enabling more targeted investigations.

Network analytics to detect ORC rings

Organized retail crime groups often coordinate across multiple stores, regions, or channels. By connecting data across the enterprise—and sharing it with industry partners—retailers can spot patterns that would otherwise go unnoticed, such as the same shopper ID or payment method used to exploit returns in multiple locations.

Fostering partnerships with law enforcement on organized retail crime cases

Collaborations between retailers and law enforcement agencies enhance accountability and improve conviction rates. Strong partnerships also serve as a deterrent for organized criminals.

When a retailer can handle investigations professionally and efficiently, with ample evidence and details, they will begin to establish a relationship and true partnership with multiple law enforcement agencies. Collaboration also ensures that the reports are given proper attention by law enforcement instead of being overlooked.

Solutions such as Incident can help organize and expedite organized retail crime cases in collaboration with law enforcement, ultimately addressing and shutting down ORC activity faster.

Leveraging technology for ORC

Retailers can use advanced analytics platforms, such as those provided by Appriss Retail, to identify trends and detect fraudulent activity in real time. These tools enable retailers to anticipate theft and implement preventative measures.

Solutions such as Incident + ORC Intelligence are designed to enhance the fight against Organized Retail Crime (ORC). The solution add-on enables retailers to create and manage cases related to fraud and abuse, utilizes automated case linking technology to connect related incidents, and facilitates seamless collaboration and case sharing with law enforcement agencies.

Key benefits of this innovative solution include:

• Inclusive sharing: Loss prevention specialists can collaborate easily by inviting colleagues and investigative partners to join investigations. They can share notes, track progress, and exchange messages in real time. Unlike traditional tools limited by regional hierarchies, this solution allows sharing with anyone, enabling faster and deeper collaboration.
• Enhanced reporting details: Generative AI enables specialists to link cases using more than basic details, like suspect names and vehicles. It analyzes physical descriptions, report narratives, weapons used, methods, and case summaries.
• Complementary workflows: The solution integrates seamlessly into a retailer’s existing workflows with customizable reporting forms and is ready to use immediately.
• Seamless integration and workflows: Fits into existing workflows with customizable reporting forms and is ready to use immediately.

Appriss Retail’s AI-driven tool simplifies investigations and supports efficient prosecutions. It generates detailed case files with evidence and photos, streamlining collaboration between retailers and law enforcement. By leveraging generative AI, Incident + ORC Intelligence helps protect profits and build stronger cases against ORC.

Conclusion: The call to action for retail leaders

Organized Retail Crime is a multifaceted issue requiring a comprehensive, data-driven approach, and retailers cannot afford to overlook the financial and operational risks posed by ORC.

To address this challenge:

• Invest in loss prevention solutions with AI capabilities, such as Incident + ORC.
• Collaborate with law enforcement.
• Educate teams on identifying and addressing ORC tactics.

Ready to safeguard your organization against ORC? Contact Appriss Retail to explore innovative solutions that help detect and prevent ORC at scale.