EBay Pushes Its Crime-Fighting Efforts

Auction site eBay.com has become the target of Congressional action.

WASHINGTON — EBay attempted to raise the profile of its policing efforts against online crime Tuesday as legislation aimed at cracking down on organized retail crime and imposing new requirements on online auction sites faces consideration in Congress this year.

This story first appeared in the April 22, 2009 issue of WWD.  Subscribe Today.

EBay, which claims to be a target of three legislative proposals containing tighter restrictions on online auction sites that have become a hub for selling stolen merchandise, held a Law Enforcement Training Day here touting its layered crime prevention approach and engaging with 200 law enforcement and federal agency officials.

Tod Cohen, vice president and deputy general counsel for government relations at eBay, told the attendees the auction site assisted law enforcement agencies in more than 50,000 investigations around the globe last year, helped agencies arrest or convict 500 individuals or entities, reported more than 500 significant cases to law enforcement and helped train up to 4,000 law enforcement officials.

But eBay has come under fire in recent years from major retail groups and brands that charge it has done an inadequate job in cracking down on stolen or counterfeit merchandise, and have set out to increase the liability of online auction sites such as eBay and Amazon. Major luxury companies, including Tiffany, L’Oréal and LVMH Moët Hennessy Louis Vuitton have sued the site, with mixed success, in the U.S. and Europe over the sale of counterfeits.

Retailers have battled shoplifting and shrinkage for years, but they argue 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 them to seek help from Congress. It is a growing problem that has cast merchants as the victims of a criminal industry costing as much as $30 billion a year, according to the Federal Bureau of Investigation.

Lawmakers have introduced three bills this year that collectively redefine organized retail crime as a federal offense and impose new requirements on online auction sites, ranging from requiring them to halt the sale of goods deemed stolen to imposing duties on online marketplaces to collect information for law enforcement. In an effort to partner closely with retailers, eBay launched the Partnering with Retailers Offensively Against Crime and Theft, or PROACT, program last year.

Edward Torpoco, senior regulatory counsel for eBay, said the company assisted in the arrest of 237 people for selling stolen merchandise in 2008 and assisted law enforcement in some 7,400 stolen property investigations. Torpoco said 47 major retailers in the country have signed on to take part in PROACT and pledged to work with eBay in cracking down on the sale of stolen merchandise.

Retailers feel more is needed and that the proposed legislation would give them the ability to go after criminals and ensure online auction sites are taking more responsibility in policing illegal activity on their sites.

But eBay has vigorously opposed the legislative proposals.

“We applaud any legislative effort in increasing penalties and consequences on criminals for illegal behavior,” said Torpoco. “Our concern with some of the current legislative proposals is they unfairly target online marketplaces and seek to hold them liable either criminally or civilly for the conduct of third parties.”