Wednesday, December 07, 2005

Russian Gang Members Busted at Circuit City

In my last post, High Tech Theft Not the Only Loss Category Rising, I discussed a retail theft survey, which deducted that an increase in shoplifting losses was attributable to organized gang activity. I noted that the loss categories mentioned in the press release from the survey failed to include fraud (check and credit) and e-commerce fraud. These are also areas that seemed to be consistently targeted by organized activity and have the ability to impact the profitability of the retail industry.

Here is an interesting story from WOOD TV in Grand Rapids Michigan, which shows how organized activity is impacting retailers in other ways besides shoplifting.

WOOD TV reported, "It appears the suspects were hitting stores across the state, particularly Circuit City and Best Buy. The Muskegon County prosecutor tells 24 Hour News 8 two men were arrested with more than $10,000 worth of electronics in their possession after providing stolen identification at a local home electronics store."

When arrested, the alleged low level Russian gang members were in possession of $10,000.00 worth of merchandise and there are ties to numerous other thefts from Best Buy and Circuit City.

In this scam, high-end electronic merchandise would be ordered over the internet using fraudulent credit cards. Individuals would then appear at the stores to pick up the merchandise using fake identification.

I'm assuming that when arrested they merely had the merchandise from one haul. According to the local authorities the merchandise was going to be shipped overseas to Holland. WOOD TV also reported, there were other indicators that this is a very organized operation.

"Authorities confiscated a global positioning device to help navigate fast getaways and map out the next hit.

Authorities believe the two men are part of a sophisticated Russian organized crime ring after discovering high-tech items and cell phones in their van. The high-tech devices are capable of altering magnetic strips on credit cards.

The phone was ringing throughout our proceedings from a variety of individuals speaking Russian, also with code names including Godfather.

The investigation is now spreading to other sites after authorities traced stolen credit cards "including Illinois, Indiana, Arizona, Colorado," Tague says. "So we're certainly seeing contacts throughout the country in terms of ID theft and contacts with this organization."

For the full story from WOOD TV go to: Nationwide identity theft ring busted in Muskegon. County.

It would be pretty hard to shoplift a van full of big screen televisions.

My recommendation to those implementing security strategy for the retail industry is that while they need to continue to monitor employee theft, shoplifting, vendor theft and administrative errors; ignoring the increases in fraud fueled by technology and the internet could be deadly to the profitability of the industry as a whole.

For my previous post regarding the retail survey, click on the title of this one.


prying1 said...

Do you think that the 'powers that be' will connect this with the war on terrorism and put any sort of priority on it?


Do you think the retailers will recognize the problem in time to keep their profits from evaporating?

I'm hoping for both.

Anonymous said...

********************THIS COULD HAPPEN TO YOU******************
October 5, 2006

Our Church purchased a Hitachi 42 inch plasma TV, Model 42HDS52, from Circuit City and paid $2849.99 on 8/26/2005. The Television never worked correctly.

The left speaker often buzzed, and the picture didn't seem to be any better than a very cheap TV. The store was called, and we were told that since we hadn't reported the problems within 60 days we'd have to deal directly with Hitachi. Hitachi told us to contact Alex Audio Video and informed us that they were the ONLY authorized service center for our area.

Alex Audio Video, said they’d pick it up, do the repair at their facility, and return it promptly. We told them we'd like it back for the 4th of July because we had something we'd like to watch at that time. They said, "That should be no problem". They finally sent someone to pick it up in late June 2006, well within the warranty period. The Forth of July Holiday passed, and the TV was not returned.

The service center informed us that there were no speakers available for the TV, and they would have to be ordered. When weeks elapsed, and we’d heard nothing, they were again contacted. We were now informed that the speakers had come in but that there was an additional problem. It seems that there had never been a “high definition digital signal” because of a problem in the manufacture of the digital circuit board (thus the poor picture quality). They said they'd have to order one. Weeks elapsed with no word. When we again contacted them, they said there was not a “digital circuit board” available anywhere in the United States, and that it would have to be ordered directly from Hitachi.

Finally, by mid September we had expended all our patience in dealing with Alex Audio Video, Circuit City Store 3624, Circuit City Corporate Headquarters, and Hitachi. We had paid $2849.99 for a new plasma television, and had nothing to show for it.

We had the expectation when we initiated the purchase from Circuit City that we would receive a television that worked properly.

We also had the expectation that Circuit City would deal ethically with us, and that should anything should fail to function correctly, that Circuit City would promptly "make it right".

Neither of those expectations was met.

The television for which we paid $2849.99 has been under the control of Circuit City, or their authorized service center for one fourth of a year. Circuit City (along with their authorized service center) had our money, and our television.

Out of frustration, we contacted Circuit City and told them, that since we were making little if any progress in getting the television repaired, we no longer wanted the television. We explained that we had purchased the television to watch, and that it wasn't doing us any good, since it had been in their service center for 3 months.

Circuit City told us that they were not going to do anything about our problems. They claimed no responsibility for selling us a faulty television, and were very "curt" with us, and were told that they had no responsibility (even though their store had sold us an improperly manufactured television). They told us to go ahead and file a lawsuit against them if we wanted to.

At that point, we asked store #3624 for Circuit City Corporate address for "Service of Legal Papers" (we were in the process of preparing documents for the filing of a law suit). They claimed not to know the address. Another time that we asked, they would not give us the address, but told us to have our lawyer contact them for the address. We finally went in to the store and demanded the address of Circuit City Corporate from Mike Arndt, Sales Manager. Very reluctantly he gave it to us.

We also contacted Hitachi and asked for their legal address. Hitachi acted very concerned with the way we had been treated by Circuit City, and asked if we'd give them some time to try to work this out. We did so.

Hitachi said they would issue a "Merchandise Return Authorization" to Circuit City, giving them full credit for the television. They told us that we could then go into the store and use that credit toward the purchase of another television.

Mike Arndt, Sales Manager for Circuit City Store 3624, called us on September 29, 2006 and insisted that we go to Alex Audio Video and pick up the television and return it to his store. We returned the TV to the store on on September 30, 2006. Circuit City has possession of both our $2849.99 and the television.

Mike Arndt called us on Tuesday, October 3, 2006 and told us that Circuit City was issuing us a credit for only $1750 toward the purchase of another television., when we’d paid them $2849.99.

Circuit City plans to confiscate $1099.99 of our money, after selling us an improperly manufactured television and dragging their feet for over 3 months to settle the matter, while we're without a television. (And now, they want to allow us only 61% of what we paid them.)

After discussing this with only two other people, I was shocked to learn that both had experienced similar horror stories in dealing with Circuit City, and had vowed to never enter another Circuit City store.

This could happen to any consumer. Circuit City apparently is only interested in getting the consumer's money, and apparently has no intention of serving the customer, or rectifying any wrong that has occurred.

Unfortunately, Circuit City has just thumbed their nose at us, and insulted us with an offer of 61% of what they charged us for the television ... after having it in their authorized service center for 1/4 of a year.

Every potential customer should ask himself or herself, "Since there are so many reputable companies that sell high end electronics, is it worth taking a risk to deal with Circuit City? Am I willing to just hope and pray that everything works correctly, and that I won't need any help … once Circuit City has my money? Am I willing to give Circuit City my money, wait for a fourth of a year for the item to be repaired, and then be insulted by Circuit City offering me 61% of what I just paid them?"

In a discussion with Hitachi on October 4, 2006, we were informed that Hitachi had credited Circuit City with the full amount of their purchase, and that the insulting 61% offer was from Circuit City ... and not from Hitachi.

We just wish we'd heard those other horror stories before we did business with Circuit City; maybe it would have saved us from this experience.

Oh well ... maybe our sounding the alarm, will cause others to check out Circuit City's reputation before laying down their hard earned cash ... and losing it.

Maybe we can turn our sorry experience with Circuit City into a positive. If making our experience known to others, saves them from falling into the same trap as others and ourselves... then some good will have come from this terrible situation.

Meanwhile, we will do everything in our power to recover our attorney fees, court costs, the $2849.99 we paid Circuit City for a properly operating TV, and reasonable compensation for the months of phone calls, time, and loss of our television.