Retail Industry Presses Congress to Pass Bills to Fight Organized Retail Crime

By Matthew Harwood

A congressman, a police officer, and representatives from the retailer sector today called on Congress to pass federal legislation that helps fight organized criminal gangs that resell massive amounts of stolen goods from retailers for hefty profits across state and national boundaries.

Calls for Congress to act came during a teleconference organized by the Coalition Against Organized Retail Crime, which stressed how important federal law enforcement is to fighting organized retail crime (ORC) on the eve of a congressional hearing on the same topic.
The practice consists of gangs stealing large volumes of merchandise from retailers which they then turn around and sell at pawnshops, flea markets, and online marketplaces, like eBay.
“ORC is not what is commonly known as shoplifting,” said Frank Muscato, an investigator for the drug store chain Walgreens. “It is not opportunistic theft for merchandise like food, clothing, sundries, or music that are often stolen for personal use.”
Joe LaRocca, senior asset protection advisor for the National Retail Federation (NRF), agreed.
“This isn’t little Johnny going into a grocery store and stealing a pack of bubble gum or Aunt Betty selling a vacuum cleaner on an online auction site,” he said.
Rather the sophisticated practice costs retailers billions. Rep. Brad Ellsworth (D-IN) told the teleconference that the FBI estimates ORC will result in $30 billion in retail losses annually.
“While businesses across the country are struggling, business is booming for the criminals,” he said.
Often these criminal gangs conduct countersurveillance, noting security sweeps and camera technology, before they hit a retailer. Once inside the store, the gangs use cellphones and hand signals to steal thousands of dollars worth of goods in minutes, LaRocca said.
A recent survey conducted by the NRF found that 9 out of ten retailers surveyed reported their companies were victims of ORC in the past year. That was up 8 percent from the prior year.
But ORC doesn’t only hurt retailers. State and local governments suffer from the loss of much needed sales and income tax revenue already depleted by a hurting economy. The practice also jeopardizes the health of American consumers. Many criminal gangs steal consumer goods— like baby formula and over-the-counter pharmaceuticals—that can expire or go bad, with the potential to harm or to kill a person when consumed.
Local and state law enforcement agencies have struggled to catch the criminal gangs as ORC has exploded over the past few years. According to Special Agent Danny Banks of the Florida Department of Law Enforcement, police efforts to combat retail crime were traditionally focused at the local level. But over the past five years, Banks said, police across the country have seen retail crime become well-organized, national, and very profitable.
“What was once a hundreds or thousands dollar value impact has now become a hundreds of million dollar criminal enterprise that continues to grow,” he said.
The state of Florida has made organized retail crime one of its highest priorities, allocating millions of dollars to state and local law enforcement agencies to fight rapidly expanding ORC. Banks noted that Florida is using all available criminal statutes, including white collar and traditional organized crime laws, to prosecute ORC gang members.
Nevertheless, Banks said only the federal government can effectively fight ORC.
“Our state statutes are incapable of targeting groups that operate at a national and international trade level,” he said. “It is that loophole that is being taken advantage of by criminal organizations.”
Kathleen Smith, vice president of loss prevention for the supermarket chain Safeway, told reporters her company has “watched our stolen product travel from Washington through Oregon into California across to Texas over to Florida and up to New York.”
Presently, three separate pieces of legislation have been introduced to fight ORC, two in the House and one in the Senate. One piece of bipartisan legislation in the House, H.R. 1173, introduced by Ellsworth would make online marketplaces keep basic contact information of “high volume sellers” that have sold or attempted to sell $12,000 or more in merchandise on their sites. These online marketplaces would have to keep such information—such as names, e-mail addresses, and physical addresses of high volume sellers—for three years.
The bill’s information requirements are “far less intrusive than what they do at pawn shops anywhere in the country,” Ellsworth said. “The most important thing for me in this bill is that it provides law enforcement officers and retailers with tools to remove the cloak of anonymity and bring these criminals to justice while preserving the online marketplace.”
John Emling, senior vice president of government affairs for the Retail Industry Leaders Association, said the retail industry understands that the Congress has a crowded legislative calendar ahead of them with appropriations and health care reform. He said he expects Congress to take up ORC-related bills early next year.
Tomorrow, the Subcommittee on Crime, Terrorism, and Homeland Security of the House Judiciary Committee will hold a hearing on federal law enforcement's role in fighting ORC.

♦ Photo of zingersb/Flickr


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