The Coalition Against Organized Retail Crime, whose members include Walgreen, Wal-Mart, Target and Macy’s, has been lobbying for federal legislation to require online auction sites to disclose more information on high-volume sellers and to post serial numbers for products. CAORC also is seeking congressional action on a draft of an ORC bill.

Ty Kelley, director of government relations for the Food Marketing Institute and co-chair of CAORC, says the draft seeks to make ORC a federal felony and targets “the rings that steal at store level” as well as the fences “who fraudulently obtain goods and sell them.”

“We believe Congress needs to step in here and pass a bill so we can have better clarity in the federal codes with respect to organized retail crime and more responsibility on the part of Internet auction sites,” Kelley says. Those auction sites would be required “to keep better records, including the addresses and phone numbers” of individuals who sell $1,000 or more of a product monthly or $12,000 worth of a product in a year to protect against the sale of stolen merchandise.

State retail associations are also drafting proposed legislation that would make it a felony to knowingly buy and then resell stolen goods over the Internet.

At press time, draft legislation entitled “Theft with Intent to Resell by Internet” had passed the Wisconsin House judiciary committee. If passed, the bill would offset the fact that Wisconsin has one of the weakest deterrents for penalizing people who steal from retailers (retail theft has to total at least $2,500 before the crime can be elevated from a misdemeanor to a felony). Muscato, who helped write the draft of the proposed Wisconsin bill, strongly believes that ORC legislation should be separate and apart from e-commerce

legislation with its focus on penalizing people who knowingly sell stolen retail goods via the Internet.

Difficult to enforce
The Colorado Retail Association “worked very hard” on its draft ORC/e-commerce legislation, but it ultimately failed because it was “written too broadly,” Muscato says. The bill would have prohibited the Internet sale of items like baby formula, gift cards and FDA date-controlled OTC drugs, he says, but “whose definition do we use to describe what is a non-prescription drug? Are vitamins non-prescription drugs? Diet pills?

“The bill was just too hard to enforce, and many legislators said that,” Muscato says. “They also said that if we brought them something more specific, it would probably have a good chance to pass.”

Wisconsin’s e-commerce bill may be the first with a good chance of gaining passage, but 14 states have already instituted legislation specifically related to criminals who steal retail merchandise with the intent to resell. Those states are Washington, New Jersey, Virginia, Alabama, Oregon, Nevada, Utah, Arizona, Texas, Louisiana, Florida, North Carolina, Delaware and Colorado.

ORC legislative initiatives are also ongoing in Ohio, Connecticut, Georgia and Wisconsin, and initiatives in Indiana and Illinois are in development.

Another legislative highlight in the fight against ORC is a “buying stolen property” bill passed earlier this year in Virginia and which will go into effect in July. It allows an undercover police officer to represent property as having been stolen as he/she tries to build a case against a known fence. A similar bill has worked its way through both houses in Maryland.

Tougher ORC legislation “is one of the top loss prevention issues confronting retailers,” LaRocca says, “and it’s bigger than just the $30-plus billion a year financial losses or the loss to the state tax revenue base. You have the safety factor. Criminals don’t care” how over-the-counter drugs and infant formula are stored or handled – or whether they have expired, “which puts millions of Americans, including the elderly and children, at risk.”

NRF consumer alert
NRF issued a consumer alert in February, warning that common household items sold through online auction sites could be stolen and/or tainted.

“Criminals often take advantage of honest shoppers by selling stolen merchandise through online auction sites,” LaRocca says. “Many health and beauty products on these sites may have expired or be contaminated, posing real health risks to the buyer.

“The pennies a shopper may save buying drug store products through Internet auction sites are not worth the potential health risks,” he says.
Technologies now in testing or development will make retailers even more effective at fighting ORC, LaRocca says.

For instance, intelligent video is being enhanced with product-tracking features. “Soon, retailers will be able to pick up more accurate and actionable information when people scoop products off a shelf or when they take merchandise and do not pass through a register to pay for it,” LaRocca says. “These systems will send up red flags to alert store managers.”

LaRocca also notes that casinos and banks married facial-recognition software with the use of criminal databases to help “identify criminals as they enter parking lots or stores.”

Back