government Organized retail theft: The Q&A

Texas fights organized retail theft in changing criminal landscape

December 2024 | By Moise Julot

Organized retail theft (ORT) — the planned, large-scale theft of retail merchandise by career criminals with the intention of reselling stolen items for a profit — is becoming a rapidly growing challenge nationwide, according to retailers. ORT criminals can offload merchandise with relative ease and anonymity after they have targeted numerous retailers, often in different geographical areas, making it difficult to combat. 

The Legislature tasked Texas Comptroller Glenn Hegar to lead Texas’ ORT Task Force. This critical effort across a range of disciplines representing a variety of jurisdictions will help ensure ORT does not spread into our state as it has elsewhere across the nation. Fiscal Notes staff gathered insights from some ORT task force members, including Texas Comptroller Glenn Hegar; Field Investigator, Asset Protections Investigator for JCPenney Corey Yates; Fellow in Public Finance at the Rice University's Baker Institute for Public Policy Joyce Beebe; Director/Chief Investigator of the Texas Financial Crimes Intelligence Center Adam Colby; and Montgomery County Assistant District Attorney Tiana Sanford.

Fiscal Notes: Why is it important that Texas tackle the issue of ORT? How can we deter bad actors?

Comptroller Hegar: First and foremost, we must tackle ORT because it threatens the safety of Texans working and shopping in our state. We must send a very clear message that we will not tolerate ORT to run rampant in Texas, with increased resources dedicated to fighting ORT, better coordination among law enforcement entities and increased penalties for prosecutors.

Fiscal Notes: How would you best explain ORT and its impact on everyday Texans?

Corey Yates: Organized retail theft involves groups systematically stealing large quantities of goods from stores to resell them, often online or through black markets. It’s not just shoplifting. It’s a coordinated effort, sometimes involving violence or fraud, to steal on a much larger scale. This crime costs Texas businesses millions of dollars annually, driving up costs that are passed on to everyday Texans through higher prices. It also affects public safety, as criminals often reinvest their profits into other illegal activities, such as drug trafficking or human smuggling. Ultimately, it undermines the sense of security in our communities.

Fiscal Notes: Can you speak to some of the different ways criminals conduct retail theft?

Adam Colby: We’d probably need several hours to cover all of these, but in short, there are two levels of crimes being committed — fraud and direct in-store thefts. The more prevalent examples of retail fraud are point-of-sale overlay skimming and gift card draining (see text box).

As for in-store retail theft, a group of thieves enter a store and steal thousands of dollars’ worth of merchandise at a time. The merchandise is either resold or fenced [sold to a person who deals in stolen goods].

These are very organized operations where thieves send their boosters (which is what the folks that are actually in the stores are called) in with a shopping list. Items are then either resold directly to the buyer or on online marketplaces. And in some cases, you're talking about the actual hijacking of trucks [of merchandise].

Fiscal Notes: What are some of the challenges law enforcement agencies may have in catching ORT offenders?

Adam Colby: The first challenge is the way you charge these folks when you do apprehend them. The statute that we have right now needs to be readdressed and rewritten to make it more prosecutable. Another issue is that with virtually every law enforcement agency being shorthanded, there is not enough time to investigate every incident. And when people do get caught shoplifting, law enforcement has no idea the magnitude of what the criminals have done. The average patrol officer dispatched to a shoplifting has no idea that offenders are part of a much larger crew and are responsible for stealing hundreds of thousands, if not millions, of dollars. That case doesn’t go to a detective for more work unless they have an inkling that there's something bigger to it.

The only way you get to investigate these incidents is through intelligence and task forcing, meaning that you get several detectives or special agents working together in a region. But you must have continuous intelligence that spreads out beyond that city or region because these criminals are constantly moving. And you must have a database on these folks.

Fiscal Notes: What would you say are some of the challenges prosecutors face in prosecuting offenders, particularly ORT offenders?

Tiana Sanford: The challenge in prosecution, specifically under the organized retail theft statute, lies in the competing option of prosecuting under the simple theft statute. That is because both of those statutes have the same punishment range. The punishment range for organized retail theft can increase if someone is identified as a leader in the scheme or the conduct, but generally speaking, those who are involved in organized retail thefts can be prosecuted under the simpler theft statutes, and it results in the same punishment range.

The challenge is in connecting the specific individual theft conduct with the large-scale, organized retail theft conduct. Prosecutors must consider the resources that are used and whether they're going to be effective in their criminal charges. Generally speaking, if you have a more direct pathway to hold someone accountable for the criminal conduct for the theft, [a prosecutor is] going to take that, and the theft statute offers a more direct pathway to hold folks accountable. So, in practice, you may see more prosecutors choosing to prosecute under the theft statute versus the organized retail statute.

Fiscal Notes: Is the task force recommending any ways to improve this process?

Tiana Sanford: Yes. Because every single one of Texas’ counties has a different approach to organized retail theft and law enforcement, it would be beneficial to have a broader group of prosecutors to talk about what this looks like in all of the multiple counties instead of a one-size-fits-all approach. So, one of the recommendations of the task force is to do a bit more work on the charging and prosecuting and to identify potential pathways to organized retail theft.

Another challenge that prosecutors face, which is not unlike a lot of other criminal offenses that we prosecute, is the sharing of information between all the different counties. Accordingly, the task force has a recommendation to share information more intentionally and effectively between counties, so that those who engage in organized retail theft can be held more accountable. When we share information, we have an opportunity to get ahead of some of the large-scale schemes that are being committed across the state, and we can also follow up when offenders jump from county to county and hold them accountable.

Fiscal Notes: Can you speak on the significance and challenges of data collection in finding effective solutions to ORT? Is the task force recommending ways to improve data collection?

Joyce Beebe: To understand the severity of the ORT issue, it is important to first know the scope of the ORT. Quality data will help policymakers understand how much retailers have lost from ORT, the products more susceptible to theft and types of retailers most likely being targeted. Policies and resources can therefore be designed to focus on the most needed areas, or areas that can generate the most effective results.

The lack of reliable data is not an issue unique to Texas. Some of the most widely cited ORT data are based on national surveys and may encompass multiple channels of retail loss. For example, National Retail Federation (NRF)’s National Retail Security Survey (PDF) estimated the 2022 average shrink rate (all types of retail loss) was 1.6 percent, which translates to $112.1 billion in retail losses. Another industry group, Retail Industry Leaders Association (RILA), estimates $68.9 billion of products were stolen from retailers in 2019 nationwide.

ORT disrupts not only business activities and the economy, but also employee safety and consumer confidence. However, misappropriation of data to emphasize the importance of the issue is not going to promote awareness and advance actions against the ORT.

Fiscal Notes: As the state cracks down on this very complex issue, are there ways consumers can protect themselves?

Adam Colby: The average citizen would more likely have a card number stolen or become a victim of card draining. To combat becoming a victim of card draining, take a very close look at the packaging and make sure it has not been tampered with in any way. If you think it has been tampered with, don't buy that card and alert store personnel.

As for getting your card number stolen, it's a little bit trickier because it’s really tough for the average citizen to spot these overlay skimmers on a point-of-sale device. It comes down to monitoring your card activity and also being very careful about who can see your card number when you're inputting into a PIN pad. There is really no end into the ingenuity of these organized criminals.

For video interviews with subject matter experts, visit our media center and learn more about ORT.