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NRF, EBay Join Forces to Fight Retail Crime

Ebay had taken a stance against tougher legislation.

WASHINGTON — The National Retail Federation and eBay, long at odds over the scope of legislation cracking down on organized retail crime, are changing course and forging a strategic alliance to go after the bad guys.

This story first appeared in the March 22, 2010 issue of WWD.  Subscribe Today.

Retailers, who lose an estimated $30 billion a year in organized retail crime theft, according to the Federal Bureau of Investigation, are hopeful the alliance will lead to a dramatic reduction in criminal activity, either through legislation or new joint strategies.

In an NRF survey conducted last year, 92 percent of retailers said they were “victimized” by criminal gangs and 73 percent reported an increase in the level of retail crime activity.

“This gives us an opportunity to work in partnership, versus at odds, with eBay, which is obviously a very important player in online marketplaces,” said Joe La Rocca, senior adviser of asset protection for the NRF. “Now, rather than working independently with each party…we can work together [with law enforcement] and collaborate on sharing information and go after criminal enterprises.”

As part of the partnership, which is being unveiled today, the retail trade and lobbying group and the online marketplace will enhance their information-sharing in organized retail crime investigations, set up working groups to develop strategies for targeting crimes, identify technologies to assist law enforcement in tracking the criminal gangs, strengthen collaboration with the FBI and work closer on legislative proposals that have divided them in the past.

“Through this partnership, NRF and eBay are putting criminals on notice that they will no longer be able to steal from retailers and abuse the online marketplace for profit,” said Paul Jones, global director of asset protection at eBay.

La Rocca said the biggest challenge retailers faced in the past in trying to work with eBay was the lack of receptivity in taking direct queries from merchants about an investigation that was taking place.

“The policy [on the part of eBay] historically was, ‘Call law enforcement and then we’ll deal with you,’” he said.

The alliance with eBay is designed to close that communication and cooperation gap, he said, and intensify the collaborative efforts to track down criminal operations.

The retail industry has addressed the growing problem of organized crime on several fronts. It launched a collaborative database called the Law Enforcement Retail Partnership Network, or LERPnet, in 2007 that connects retailers with each other and law enforcement officials sharing statistics on suspected thieves and criminal activity. It also started the Coalition Against Organized Retail Crime that includes members such as Target Corp., Macy’s Inc., Wal-Mart Stores Inc., the NRF and the mass merchant-based Retail Industry Leaders Association.

To combat the increase in sales of stolen property on its Web site, eBay created the Partnering With Retailers Offensively Against Crime and Theft, or PROACT, program in 2008. The company said it helped in the arrest of 237 people for selling stolen merchandise in 2008 and assisted law enforcement in some 7,400 stolen property investigations. Major retailers have signed on to take part in PROACT and pledged to work with eBay in cracking down on the sale of stolen merchandise.

Despite those inroads, retailers and eBay were still at loggerheads over several legislative proposals, differences La Rocca said he hopes will be lessened by the new alliance. There are three pending bills in the House and one pending in the Senate that confront criminal activity, from strengthening the federal criminal code and increasing resources for law enforcement to creating new civil fines and imposing policies and information-sharing requirements on online auction sites and in flea markets and pawn shops that are often used to fence the stolen goods.

EBay voiced strong opposition to the legislative proposals that targeted online marketplaces and imposed new restrictions on them, rather than focusing on the criminals themselves. La Rocca said the alliance will not negate the need for legislation and could provide momentum for further cooperation between eBay and retailers in finding a compromise.