Thieves Take $41.6 Billion Graft and Construction From America's Retailers
America’s retail industry lost $41.6 billion to fraud and theft in 2006, according to the “National Retail Security Survey,” which was released at the recent National Retail Federation’s annual Loss Prevention Conference and EXPO.
More than 2,600 retailers and law-enforcement officials attended the conference, held June 11–13 at the San Diego Convention Center in San Diego.
The dollar amount for fraud and theft increased from 2005 due to a growing economy and heightened consumer demand in 2006, according to Dr. Richard Hollinger, lead author of the report and a criminology professor at the University of Florida. Retailers suffered a dollar loss of $37.5 billion in 2005.
However, fraud and theft did not increase when it was measured as a percentage of retail sales. The survey found that retail loss averaged 1.61 percent of retail sales last year, which was nearly unchanged from 1.6 percent in 2005.
According to the survey, the majority of 2006 retail loss was caused by employee theft. It cost retailers $19.5 billion and composed 47 percent of retailers’ losses. Shoplifting cost retailers $13.3 billion, or about 32 percent of the industry’s total losses. Other losses included administrative error, which cost $5.8 billion, or 14 percent of losses, and vendor fraud, which cost $1.7 billion, or 4 percent of industry losses.
The conference’s trade show exhibited many high-technology products to stop fraud and burglary. However, one of the best ways to foil shoplifters and dishonest employees is well-known, according to Paul Paglia, Bloomingdale’s director of loss prevention. He said that positioning a fixed camera above a store’s cash register can give retailers a bird’s-eye view over the spot where many instances of fraud take place.
More than 10 law-enforcement organizations, such as the Federal Bureau of Investigation and the Los Angeles Police Department, sent representatives to the convention. The California Department of Justice (DOJ) also sent a representative to meet with retailers and loss-prevention executives to tell them about the group’s new Organized Retail and Cargo Crime bureau.
Formed in April, the bureau will devote its resources to improving communications and investigative cooperation between local police departments in order to combat retail crime, according to Amber Bettar of California’s DOJ.—Andrew Asch
