National Report Shows ORC and Return of Stolen Merchandise on the Rise

November 28, 2017   By Ryan Kearney

A report recently released by the National Retail Federation found that organized retail crime (ORC) and return fraud continue to be on the rise across the country. This troubling news for the retail industry and honest consumers came just days after the Massachusetts House of Representatives agreed with the Senate to increase the felony threshold found in a number of the state’s property crimes which are commonly utilized by retailers, law enforcement and prosecutors to curtail such professional criminal behavior. In light of these findings during the holiday shopping season, the Legislature should strongly reconsider finalizing these changes to the felony thresholds.

At the current felony threshold level of $250, Massachusetts retailers already experience significant losses due to theft with an estimated $1 billion in merchandise stolen from their stores annually—a cost ultimately paid for by honest consumers. The majority of these losses are attributed to professional criminals who see theft as a low risk, high reward activity due to weak property crime laws. The proposed increases— $1,500 in the Senate and $1,000 in the House—would further weaken these criminal laws by removing the threat of meaningful criminal penalties from an expanded number of serious theft incidents.

ORC is a wide-spread problem for the retail industry and is growing annually. At 96%, nearly all of the NRF’s survey respondents reported experiencing ORC activity in the past year and 67% reported an increase in such activity over last year. The report also found there to be an increase in return fraud, pointing to the return of stolen merchandise as the most common method of such fraud. At a time when ORC and return of stolen merchandise continue to present significant challenges for retailers of all sizes, Massachusetts is poised to incentivize further growth of such activity by increasing the amount of merchandise an individual may steal before running the risk of facing serious criminal penalties.

While Massachusetts is one of thirty-five states which have adopted criminal laws specifically targeting ORC related activity, our existing larceny, credit card fraud and receipt of stolen property crimes, which are impacted by these legislative proposals, remain the primary tools in the fight against ORC and the theft crimes underlying the most prevalent form of return fraud. The integrity of these laws must be retained to protect our businesses, their workers and all honest consumers.

Nationally, thirty-seven states have increased their felony threshold for larceny crimes since 2000. But the average nationally and regionally is far below the Senate proposed $1,500 level. For professional criminals operating in the region, states with higher threshold amounts become more attractive targets. If an increase in Massachusetts is warranted it should be to a level more reflective of the regional and national average to mitigate exposure to our businesses and our consumers.

The retail industry does not want to see a first time offender or misguided youth labeled a felon. However, the industry does need the ability to protect itself from the negative impacts associated with the trends identified in the NRF report. ORC and return fraud both require some level of planning and criminal sophistication. These are not kids making mistakes but professionals making a conscious decision to steal. For such bad actors, increasing the felony threshold only incentivizes their behavior and reduces their risk of conviction.

We are in the middle of the all-important holiday shopping season, when our consumers should be viewed as the priority of our stores and our public policy leaders. When the House and Senate appoint a conference committee to reconcile the differences between their two proposals, the criminal realities facing the retail industry as illustrated by the NRF report should be strongly considered before a final decision to increase the felony threshold is made so as not to exacerbate these already costly trends impacting the retail industry and their honest customers.

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