Food Fraud Prevention by John W. Spink

Author:John W. Spink
Language: eng
Format: epub
ISBN: 9781493996216
Publisher: Springer New York

Organized Retail Theft (ORT)– Sometimes We Cannot Test Our Way to Safety (MSU-FFI 2018):

Title: Organized Retail Theft (ORT) – Sometimes We Cannot Test Our Way to Safety

By John Spink • July 6, 2013 • Blog

Organized Retail Theft (ORT) is mass shoplifting and is a type of food fraud that results in a public health vulnerability that costs businesses billions and erodes consumer confidence. Since it involves authentic packaging and genuine product […], we cannot test our way to safety. This is an immense fraud opportunity that requires a holistic, all-encompassing preventative approach.

Organized Retail Theft (ORT): For the lawyers, ORT is defined in Federal Law as shoplifting more product than for personal use. The broader Organized Retail Crime (ORC) includes cargo theft, warranty fraud and other forms of retail fraud-related activities. ORT is a primary concern for the industry since it costs billions in lost product and lost sales from a product not being on the shelves, and there is a public health vulnerability to the stolen goods. In 2011, the Government Accountability Office (GAO) report on Organized Retail Theft noted of the “billions” of dollars of genuine product stolen and reintroduced to commerce… though more precise estimates are hard to come by, as with other fraud and counterfeiting activities. ORT is perpetrated by professional shoplifters or boosters, and the act is referred to as boosting. The stolen goods are sold to a person referred to as a “fence,” and when sold online this is called e-fencing . In many cases, the fences provide a shopping list for the boosters to steal. The GAO report specifically identified infant formula as a primary target but any products that are high value – especially high value and small size – are targets. Think of small, reasonably expensive food or beverages you see at a corner gas station market. Food products are definitely ORT targets.

How it Works: The fences ask boosters to shoplift specific items. The boosters are paid pennies on the dollar for the product that they stole. The fences are connected to some retail outlet or scam that sells the product. In some cases, they sell this through traditional fencing venues such as flea markets, pawn shops, or privately owned stores (at 30% of market price). In other cases, they sell it through online sales sites (at 70% of market price). They can also conduct return fraud to the retailers (100% market value plus tax!). Generally, returned food products are not returned to store shelves by the retailers, so that product is either written off as a loss or, at best, counted against a return or damaged-goods allowance. In some sophisticated operations, the product is “cleaned” (retail markings removed, such as date codes, lot numbers, and store price tags – also referred to as de-coded) and the product is re-packaged to re-enter the wholesale market.

Why It’s a Public Health Vulnerability: The GAO ORT report mentioned, “However, it is not currently known if the second-hand sale of these goods has actually resulted in a public health problem.

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