New Crime Bill Targets E-Fencing

MICHAEL GARRY

WASHINGTON — Organized retail crime legislation introduced last week in the U.S. House of Representatives contains provisions that for the first time address the growing role played by Internet auction sites as a venue for selling merchandise stolen from retail stores.

But prospects for the bill's passage this year may be compromised by an insufficient amount of time left on the legislative calendar in this election year.

The Organized Retail Crime Act of 2008 (H.R. 6491), introduced by U.S. Reps. Brad Ellsworth, D-Ind., and Jim Jordan, R-Ohio, would require Internet auctioneers to monitor high-volume online sellers (more than $12,000 in annual sales) and require these sellers to provide contact information and a list of all transactions over the past three years.

The bill also makes organized retail crime, known as ORC, which trade groups said accounts for $30 billion in losses annually, a federal felony.

“There needs to be accountability and transparency [on Internet auction sites], because there isn't any now,” said Ty Kelley, director of government relations for the Food Marketing Institute, Arlington, Va., and co-chair of the Coalition Against Organized Retail Crime. In addition, he noted, a federal law is needed because “if you sell stolen merchandise over the Internet, the states can't handle that.”

ORC gangs, which send teams of “boosters” into stores to steal products like batteries, razor blades, baby formula and other items, have been increasingly gravitating toward “e-fencing” the products over the Internet, said Al Thompson, vice president, global supply chain policy, Retail Industry Leaders Association, Arlington, Va. “It's anonymous, and you have access to a global marketplace, so it's low-risk, high-reward.”

E-fencing fetches around 70 cents on the dollar for stolen goods, much more than what can be had via such vehicles as flea markets or pawn shops, according to Joseph LaRocca, vice president of loss prevention, National Retail Federation here.

The legislation was uniformly praised last week by FMI, NRF and RILA for increasing the penalties for ORC activities, which are generally viewed as misdemeanors at the state level. “Most states treat ORC as garden-variety shoplifting,” said Kelley. “Criminals get a slap on the wrist, and if they are prosecuted, they serve very little jail time. This bill will modernize the federal criminal code and serve as a strong deterrent.” ORC gangs would face criminal penalties under the bill, while operators of auction sites that fail to meet its provisions would face civil penalties, said Kelley.

The association executives agreed that there may not be enough time left on the legislative calendar for the bill to be enacted. “It's possible but slim,” acknowledged Kelley. “We're going to try our best to move the bill.”