Tag Archives: Best Buy

Best Buy Shares Plunge on Margin Pressures, “Organized Retail Crime”: A Look at Organized Retail Crime in the US and How Ecommerce Turned it into a Big Business, by Wolf Richter

Brick and mortar retail is plagued by crime. The Internet has turned into the greatest “fence” ever invented. Laws making thefts less than $950 don’t help either. From Wolf Richter at wolfstreet.com:

Stolen goods get sold to law-abiding Americans by third-party vendors on big ecommerce sites that profit from it. Legislation to control it struggles.

It’s a big profitable business across the US because the cost of the merchandise is zero: Organize a bunch of people via the social media, raid a store and and run out, arms-full of merchandise, and then sell this stuff into specialized distribution channels from where it gets sold by third-party vendors on some of the best-known ecommerce platforms in the US, such as eBay and Amazon and many others.

Shares of Best Buy [BBY] plunged 12.4% today after the company’s earnings call, during which it discussed a laundry list of headwinds and pressures on its gross profit margins, which, for US sales, fell 60 basis points to 23.4%, “primarily driven,” as CFO Matt Bilunas put it, by product damages and returns compared to last year, lower margins of services, and the infamous “inventory shrink.”

Inventory shrinkage or inventory shrink are the retail industry’s long-established terms for the phenomenon of inventory vanishing from the company due to vendor fraud, employee theft, and retail theft, including organized retail crime.

The total amount of shrink across the US from vendor fraud, employee theft, and retail theft in 2020 was roughly $62 billion, about the same as in 2019 despite many stores being closed for part of 2020, according to the National Retail Federation’s “2021 Retail Security Survey: The state of national retail security and organized retail crime.”

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So, Best Buy’s Geek Squad Are Basically Snitches for the FBI, by Kevin Gosztola

If you’ve got anything incriminating on your hard disk and its broken, don’t take it to Best Buy’s Geek Squad to get it fixed. From Kevin Gosztola at theantimedia.org:

Throughout the past ten years, the FBI has at varying points in time maintained a particularly close relationship with Best Buy officials and used the company’s Geek Squad employees as informants. But the FBI refuses to confirm or deny key information about how the agency may potentially circumvent computer owners’ Fourth Amendment rights.

The Electronic Frontier Foundation (EFF) obtained a handful of documents in response to a Freedom of Information Act (FOIA) lawsuit filed in February of last year. EFF says they show the relationship between the FBI and Geek Squad employees is much “cozier” than they thought.

Nevertheless, the documents released were previously highlighted in a Washington Post report in April 2017. They were covered in the context of a child pornography case brought against a doctor named Mark Rettenmaier, and revelations led EFF to file a FOIA request for records.

The defense called attention in court filings to cooperation between the Louisville Division of the FBI and the Geek Squad as it tried to convince a judge to suppress evidence found on Rettenmaier’s hard drive. Attorneys referenced a memo on a “Cyber Working Group” meeting held at the Brooks, Kentucky, repair facility on September 9, 2008, which EFF obtained.

“The Louisville Division [of the FBI] has maintained close liaison with the Geek Squad management in an effort to glean case initiations and to support the division’s computer intrusion and cyber crime programs,” the memo states.

The memo acknowledges how the facility is “the principal repair location for all Best Buy computers east of the Rocky Mountains.”

“Computers taken to local Best Buy retail outlets west of the Rocky Mountains are sent to a repair facility in Chino, California. The Brooks facility is Best Buy’s largest facility, and it handles approximately five times the repair and recovery work than the Chino facility.” The facility “repairs and conducts data recovery on thousands of computers every day.”

In court filings, the defense mentioned there were “eight FBI informants at Geek Squad City” from 2007 to 2012. Multiple employees received payments ranging from $500-1000 for work as informants.

To continue reading: So, Best Buy’s Geek Squad Are Basically Snitches for the FBI