Organized retail crime is silently taking place in cities and towns across the country. It wasn’t until a spate of armed robberies took place over the holidays last year that Americans realized just how pervasive retail crime was in their communities. While a number of states have taken action, the majority of law enforcement officials across the country still lack the tools to prosecute this criminal activity, as thieving rings can operate in the shadow of the Internet. It is imperative that Congress pass legislation that addresses this problem before it creates additional pain for retailers, their hard-working employees, and the customers they serve.
Shoplifters and organized retail crime networks are not the same thing. ORC rings, also known as organized thieves groups, steal goods with high resale value – drugs or over-the-counter cosmetics – and then sell these products while posing as legitimate businesses. More often than not, they pose as legitimate sellers on major e-commerce platforms such as Amazon and Facebook Marketplace, scamming even the most sophisticated buyers.
A revealing report just released by the Association of Certified Anti-Money Laundering Specialists and Homeland Security Investigations revealed the scale and sophistication of these theft rings. They contrast sharply with the small-scale shoplifters who rob neighborhood convenience stores. According to the report, organized theft rings can be linked to a host of other criminal enterprises, such as human trafficking, violent gangs, narcotics and even terrorism.
Theft networks will sometimes maintain a hierarchical structure that rivals that of legitimate businesses. Yes, stolen merchandise has its own supply chain, starting with a booster robbing a physical store. Before you know it, that stolen product has just arrived at your doorstep looking like new. The economic cost of these criminal enterprises is telling. A study released last year estimated that retail theft is a $68.9 billion industry, or 1.5% of all retail sales. In total, this represents more than $125 billion in lost economic activity and more than 600,000 fewer jobs.
What remains most difficult to quantify is the human impact of retail theft. Employees are the ones who suffer the most because they come face to face with these criminals. A survey found nearly 90% of major retailers said an organized criminal had verbally threatened a store associate with bodily harm. These thieves will do anything to make a profit, pulling out pepper spray or even a gun just to get the job done.
And customers, even if they don’t always realize it, are impacted by this spiral of crisis. The brands comply with strict federal and state product safety regulations – unsurprisingly, retail thieving rings do not. These criminals do not carefully handle stolen products that sit for days in their warehouses and will even add a fake expiration label to the packaging. When it comes to consumables or beauty products, like formula and makeup, there are serious reasons to worry.
ORC has remained a thorn in the side of retailers and their employees for years, but the unprecedented increase in e-commerce activity has only made it easier to create storefronts for thieves – now in the marketplaces in line that consumers tend to use daily. Online marketplace sites have limited verification procedures, which means theft rings can easily set up a third-party seller account and go through with their schemes without ever getting caught red-handed.
Despite the growth of this criminal industry, law enforcement officials find themselves ill-equipped to crack down on retail theft. With this in mind, the US House of Representatives included the INFORM Consumers Act in the sweeping America COMPETES Act, which would require online marketplaces to verify their high-volume third-party sellers and curb the sale of stolen products. and counterfeits. The policy proposal received broad support, including from manufacturers, e-commerce platforms and law enforcement officials.
Organized systemic theft is far too serious a problem to remain in legislative purgatory. Lawmakers must pass this common-sense law this year. The criminals who loot retailers are far more brazen than the shoplifters companies have encountered in the past. If retail crime is changing, our laws must follow suit.
• Michael Hanson is the spokesperson for the Buy Safe America Coalition, which represents retailers, consumer groups, manufacturers, intellectual property advocates and law enforcement officials who support efforts to protect consumers. consumers and communities against the sale of counterfeit and stolen goods.