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Cracking Down on Sales of Stolen Goods

Retailers push for tighter controls.

The battle against organized retail crime is being taken up on Capitol Hill.

WASHINGTON — The push by retailers for stronger cooperation from flea markets and online marketplaces to police and report stolen merchandise is gaining steam on Capitol Hill.

This story first appeared in the August 4, 2008 issue of WWD.  Subscribe Today.

Lawmakers introduced a pair of bills in the House and Senate last week aimed at cracking down on organized retail crime, a growing problem that has cast retailers as the victims of a criminal industry costing as much as $30 billion a year, according to the Federal Bureau of Investigation.

Retailers have battled shoplifting and shrinkage for years, but the proliferation of criminal gangs that steal large volumes of merchandise off store shelves and resell it on online auction sites such as eBay has forced merchants to seek help from Congress.

The new legislative proposals confront the criminal activity in several ways, ranging from strengthening the federal criminal code, new civil fines and imposing policing and information-sharing requirements on online auction sites, flea markets and pawn shops that are often used to “fence” the stolen goods.

“If the bills are enacted, this form of theft would decrease because it would increase the ability for law enforcement to go after criminals,” said Al Thompson, vice president for global supply chain at the Retail Industry Leaders Association. “It would increase the retailer’s ability to go after criminals and it would ensure that traditional fencing locations and online auction sites are taking more responsibility of policing activity that take place on their sites.”

The scope of the criminal activity and increase in sales on online marketplaces prompted 33 retail and manufacturing organizations and companies such as Wal-Mart Stores and Target Corp. to form the Coalition Against Organized Retail Crime in 2001.

Sen. Richard Durbin (D., Ill.) introduced a bill Friday that is aimed at making it easier for law enforcement to prosecute organized retail crime. The Combating Organized Retail Crime Act of 2008 would also impose “basic disclosure requirements” on online marketplaces and require them to provide more information on suspected “high volume” sellers of stolen goods. It would also require online auction sites, flea markets and pawn shops to cooperate with retailers and law enforcement in identifying and removing stolen merchandise.

Retail trade groups said one important provision in the bill would broaden the $5,000 criminal liability threshold from a one-time transaction to a cumulative total of $5,000 over 12 months.

A second bill, introduced by Rep. Bobby Scott (D., Va.), would target online auction marketplaces and require them to provide more information about high volume sellers of suspected fraudulent or stolen merchandise. The E-Fencing Enforcement Act of 2008 would also require the Web site to take down identified stolen merchandise or face possible civil court action.

A third bill known as The Organized Retail Crime Act of 2008, introduced in mid-July, would add organized retail crime to the federal code, making it more difficult for criminals to “hide behind state laws” and tighten the restrictions on online marketplaces.