Before you plunk down money for that deeply discounted Prada bag or rationalize buying the fake Fendi, check out Black Market Billions: How Organized Retail Crime Funds Global Terrorists (FT Press, 2011), by Hitha Prabhakar ’98, a Bloomberg Television business journalist who focuses on the fashion and retail industries. Black Market Billions looks at organized retail crime (ORC), where pilfered products and counterfeit goods make up a $38 billion industry that funds a host of deadly criminal groups, from terrorist organizations like Al-Qaeda to Central American drug lords. The book has drawn rave reviews for its in-depth reporting and reader-friendly thriller tone. An accompanying app (free in the iTunes store) helps consumers spot suspicious activity and alert other consumers and authorities.
Prabhakar joined Bloomberg Television in 2011 after writing for a number of publications (Time, People, Elle), covering the luxury and men’s fashion industries as a correspondent for Forbes Media, and appearing as a financial/retail/style expert on a slew of television and radio networks (E! Entertainment, MSNBC, Bravo, NPR). She is also a former celebrity stylist (Pussycat Dolls, Samuel L. Jackson) and has had her own retail-consulting firm, advising hedge funds and other clients with long-term holdings in retail companies.
Prabhakar recently talked with Smith about ORC, her career path, and her take on today’s retail and fashion trends.
How did you first become aware of ORC?
The day after Christmas in 2007, a former colleague asked me if I wanted to buy two handbags. One was a Lanvin bag; I think it went for $1,200 retail. The other was a Givenchy bag, which went for $1,100. He was selling them for $300 and $400. When I questioned where these bags came from he told me they were “off the truck.” That meant they were stolen, and that a group of people who worked for Barneys New York a.k.a. an organized retail crime ring was stealing them. Needless to say, I was shocked. I shop at Barneys—not often—but I do get shoes there!
What inspired you to write Black Market Billions?
I met with my editor at Financial Times Press, and told her about “handbag-gate.” She told me that it would be interesting to see if we could somehow follow the money trail of where the proceeds of these black market handbags were going. When I did more research, I found the connection to terrorist organizations overseas in places like Paraguay, Mexico, and Somalia. That’s when my editor and I knew we had a book.
While you were doing the investigative reporting for the book, did you ever feel you were in danger?
I was really lucky to work with organizations like the Los Angeles Police Department and Immigration and Customs Enforcement, when it came to my research. Yes, there were dangerous situations, but I was in the hands of good people, so I didn’t feel too threatened.
What do you hope it will accomplish?
I really want to raise consumer awareness. Yes, everyone wants to get a bargain. There are reasons why shows like TLC’s Extreme Couponing are popular. What angers me is that criminals take advantage of that. I think if consumers were aware of where their less expensive merchandise was coming from, they would think twice about buying it.
Does ORC occur mostly in urban areas?
It happens everywhere. In my book, I profile a woman in an organized retail crime ring who spends two weeks out of the month driving up and down the East and West coasts ripping off Walmarts and Targets in small, unsuspecting towns. Some of these ring members make half a million dollars a year selling merchandise, like stolen beauty products, over-the-counter medicine, and clothing. Where is this stolen merchandise being sold? Mostly in places that are relatively unregulated, like auction sites, flea markets, and even those makeup parties that a “friend of a friend” invited you to, where you can get brand-name makeup for up to 70 percent off. My mantra when it comes to purchasing suspect items is this: If the price is too good to be true, it probably is.
How does the Black Market Billions app work?
Let’s say you are out shopping and you come across merchandise you suspect is stolen or counterfeit. You can take a picture of it, and the app automatically “geo tags” it in Google maps. What’s cool is that other shoppers can log on to the app and find out where app users found suspect items. And law enforcement can use it to help locate merchants who are selling stolen merchandise.
What is your take on the state of legitimate retail today?
Retail right now is hopeful and exciting. Retailers are realizing there are multiple channels to sell their merchandise—via the Web or through social media, and it feels like there is a whole new energy being injected into the industry. Consumers can expect to spend less time in the car driving from store to store and purchase more online in the future. Shopping is going mobile via smartphones and tablets. Spending hours in the mall to find what you need is going to be a thing of the past.
What fashion trends are you seeing now?
It’s all about color right now—color that I haven’t seen since I was listening to Madonna and wearing jelly bracelets. Bright neons, colored denim, and, of course, shoes are making everyone think a wardrobe upgrade is in order. In fact, I’m about to go purchase a pair of yellow jeans. I may regret it next year, but at this moment it just feels right!
Cheryl Dellecese is associate director, print and new media