By  on March 3, 2010

WASHINGTON — Organized retail crime is on the upswing — and the gangs are becoming even more sophisticated and violent.

Those were the key findings of a new retail “Current Crime Trends” survey being released by the Retail Industry Leaders Association today. The findings could help ignite action on Capitol Hill this year.

“We are now seeing how other much more nefarious designs are benefiting from organized retail crime,” said John Emling, senior vice president for government affairs for RILA. “A lot of times, crime rings are using the profits to fund drug operations or much more criminal activity. In cases with [U.S. Immigration and Customs Enforcement], we have seen South American and Central American gangs receiving profits from organized crime rings here in this country.”

The Federal Bureau of Investigation estimates retail thieves steal $30 billion worth of merchandise a year.

Sixty-five percent of a broad array of retailers — mass merchants, specialty stores, electronics and appliance stores, groceries, and fabric and craft shops — surveyed in January reported an increase in organized retail crime, while 74 percent said they experienced an increase in stolen items being sold on online marketplaces. Forty-seven percent said there was an increase in hot goods being sold both in traditional fencing operations and flea markets, and another 16 percent said there were more stolen goods being sold in pawn shops. In addition, 78 percent said there was an increase in amateur shoplifting.

“These trends are deeply troubling,” Casey Chroust, executive director and vice president of retail operations for RILA, wrote in the survey. “We have seen a steady increase in retail crimes over the last year as criminals continue to take advantage of the current economic climate to expand their activity.”

Los Angeles was by far the market with the highest increase in retail theft, with Houston, Miami and Baltimore tied for the second highest.

Organized retail crime long has been a policy issue debate in Congress, but four legislative proposals have failed to move, even while criminal gangs continue to steal large volumes of merchandise off store shelves and resell it on online auction sites.

Daniel J. Doyle, senior vice president of human resources and loss prevention administration at Bealls Inc., a retailer with 520 department stores and outlets, based in Bradenton, Fla., said, “The problem is still as bad as it has been over the last four or five years. Where we’re seeing the biggest difference is in the heightened violence, where these groups have become more physically or verbally abusive to the store personnel.”

Thieves and gangs are targeting well-known sportswear and outerwear brands in Bealls stores, Doyle said.

Since e-fencing is a “significant component” in organized retail crime, Doyle said there is a need for legislation, although he thinks a comprehensive, single bill with new penalties and funding for law enforcement is needed, as opposed to individual bills that have stalled.

While Congress has failed to act on several legislative proposals, some Washington insiders said the gridlock on this issue might finally be broken this year.



Retailers have poured tens of thousands of dollars into lobbying lawmakers and the Obama administration for help in cracking down on organized retail crime.

The Coalition Against Organized Retail Crime, with members such as Target Corp., Macy’s Inc., Wal-Mart Stores Inc., RILA and the National Retail Federation, spent $170,000 on lobbying in Washington in 2008 and 2009, according to the Center for Responsive Politics. That number does not include lobbying expenses the trade groups and retailers themselves have invested in an effort to get legislation passed.

“We are optimistic we will see a bipartisan organized retail crime bill come out of the House Judiciary Committee in the near future,” said Emling. “When you look at the millions of dollars we have lost annually from our supply chains and stores due to organized retail crime, this is a key issue for us.”

The House is sitting on three bills that confront the criminal activity in several ways, ranging from strengthening the federal criminal code, 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. One bill is pending in the Senate.

In addition to Congressional gridlock, opposition from eBay, which has concerns that some of the proposals unfairly target online marketplaces and impose “unfair” restrictions on them, also has impeded the legislative process and stood in the way of legislation moving forward.

EBay launched the Partnering With Retailers Offensively Against Crime and Theft, or PROACT, program in 2008, to partner more closely with retailers. The company said it assisted 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.

Tod Cohen, vice president and deputy general counsel of government relations for eBay, said the number of complaints about stolen goods being sold on its online auction site has “decreased over the last two years.”

“Fencing goods is prohibited and something we actively spend an enormous amount of resources on to prevent and prosecute those that violate laws in those ways,” said Cohen. “The most disheartening thing is that every single legislative proposal that tries to actively deal with the marketplace has a far more anticompetitive impact and does literally nothing to stop the fencing of stolen property.”

Countering that argument, Joe LaRocca, senior adviser of asset protection for the NRF, said, “This legislation is about criminals stealing and fraudulently obtaining merchandise and selling it at a profit through online marketplaces and other venues. We need tough new laws that go after criminals and give law enforcement and prosecutors the tools to convict people.”

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