Retail theft, including organized theft rings, is top of mind at all retail organizations today given that thefts seem to be at an all-time high as we end 2023. The National Retail Federation (NRF) held a lobbying day in Congress, October 26, 2023, and dubbed this day “Fight Retail Crime Day.” It should be noted that shoplifting is not only directed at high-end luxury goods. Goods that are targeted for stealing include price points ranging from high price and high fashion to everyday items, with newer categories including outerwear, batteries, energy drinks, footwear and kitchen accessories. The key attraction for all these goods is their high resaleability.
In this article, we examine the legislation proposed, loss control best practices, and risks of detaining retail criminals in store.
There are few legislative actions that may help as well as loss prevention techniques that retailers can employ.
According to the NRF, the retail industry is the nation’s largest employer. The industry equates to roughly 14% of the $26.95 trillion gross domestic product or $3.9 trillion annually. Closing stores, especially those of large-box retailers, can deprive areas of both jobs and easy access to a place to buy goods. Thus, there are concerns about lost jobs and the inability for consumers to purchase items they need, such as food, diapers, medications and sundries. The following retailers have claimed to close stores in certain areas due to retail crime:
Right now, there are several legislative measures designed to help retail organizations. The new and proposed laws aim to deter retail crime and go after the leaders of organized theft groups. The NRF created “Fight Retail Crime Day” for a day to advocate for change with congressional leaders. On October 26, 2023, the NRF along with 50 leaders from about 30 retailers went to Washington D.C. to advocate for retail crime laws to be enacted.
The INFORM Act became effective June 27, 2023. This statute is referred to as INFORM Consumers Act, which stands for: Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers. The goal of the act is to make online transactions more transparent and to deter criminals from acquiring stolen, counterfeit or other unsafe items and selling them via online marketplaces. The Act helps online marketplace users by providing them a way to report suspicious conduct concerning high-volume third-party sellers.
CORCA proposes penalties for theft and calls for a change in the threshold prosecutors must meet before bringing federal cases. At this time, thieves can be charged with federal crimes only if the stolen goods are worth $5,000 or more in a single instance. This Act would allow federal prosecutors to bring cases if the aggregate value of the goods reaches $5,000 or more over a 12-month period. This act is like racketeering or RICO acts.
Like CORCA, some of the new state laws and bills allow prosecutors to aggregate the total value of stolen goods over a given time so they can charge repeat offenders with stiffer felonies instead of misdemeanors.
Florida changed its law so people can be charged with felonies after they steal an aggregate amount of goods over 30 days. It also added a provision that says a person who takes 20 or more items during five or more instances within a 30-day period can be charged with a second-degree felony.
What else can you as a retailer do? Several prevention techniques are being used across the industry:
A retailer makes a choice in detention policy whether to: (1) apprehend those who attempt to steal from their stores or (2) ignore the parties suspected of or observed stealing merchandise. Both choices have pros and cons. Detaining shoplifters can help protect revenues, and at times, enhance a retailers reputation as being a tough place to steal from, thus, perhaps deterring thieves from targeting those stores. On the other side of the coin, retailers also must consider potential liabilities of false arrest and possible employee and/or third-party injury if they chose to detain thieves in the act of stealing or those suspected of shoplifting.
In the U.S., due to the value placed on civil liberties and constitutional rights, unlawful search and seizure can lead to suits filed against retail organizations in the event a customer is wrongly accused of stealing. Therefore, the loss-prevention industry has developed six accepted steps to minimize the potential for false arrest claims:
There can be significant costs to your organization to using detention techniques; some can be covered under insurance. These costs can include:
Potential insurance coverage that may respond to costs:
As part of underwriting and pricing general liability, workers compensation and cyber insurance, and in light of increasing retail crime, organizations may be asked
As retail theft continues to increase, retail organizations must ensure that their businesses are protected from losses. Not only are high-end fashion houses being targeted, so are convenience stores, pharmacies, big-box retailers and grocers. This issue is impacting all of retail across North America. In addition to protecting revenue, retailers must also make certain that their employees and customers are at the forefront of decisions made to deter retail crime. Policies on detention should be clear and incorporated into store and security staff training. We are all hopeful that new laws and legislation along with solid policies on theft loss prevention will be an aid to reducing the staggering losses seen in the last few years.
Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).