Organized retail crime is silently taking place in every town and city across the country. It wasn’t until a spree of smash-and-grab robberies took place last year during the holidays that Americans understood how pervasive retail crime is in their communities. While a number of states have taken action, a majority of law enforcement officials across the country still lack the tools they need to prosecute this criminal activity, because theft rings are able to operate in the shadows of the internet. It is imperative for Congress to pass legislation that tackles this issue before it creates additional pain for retailers, their hard-working employees, and the customers they serve.
Shoplifters and organized retail crime rings are not one and the same. ORC rings, also known as organized theft groups, are stealing merchandise with a high-resale value — over-the-counter medication or cosmetics — and then will hawk these products while posing as legitimate businesses. More often than not, they’re masquerading as legitimate sellers on leading e-commerce platforms such as Amazon and Facebook Marketplace, ripping off even the savviest of shoppers.
An eye-opening report that was just published by the Association of Certified Anti-Money Laundering Specialists and Homeland Security Investigations revealed the sheer size and sophistication of these theft networks. They are a stark contrast from the small-scale shoplifters robbing neighborhood convenience stores. According to the report, organized theft rings can be tied back to a slew of other criminal enterprises, such as human trafficking, violent gangs, narcotics and even terrorism.
Theft rings will sometimes maintain a hierarchical structure that rivals those of legitimate businesses. Yes, stolen merchandise has its own supply chain, beginning with a booster that robs a brick-and-mortar store. Before you even know it, that stolen product just arrived on your doorstep, appearing to be as good as new. The economic cost of these criminal endeavors is eye-opening. A study published last year estimates that retail theft is a $68.9 billion industry — 1.5% of all retail sales. Altogether, this comes out to over $125 billion in lost economic activity and over 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 find themselves being confronted by these criminals. One survey found that almost 90% of leading retailers said an organized retail criminal has 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, although they may not always realize it, are impacted by this spiraling crisis. Brands comply with strict federal and state regulations pertaining to product safety — to no surprise, retail theft rings do not. These criminals are not carefully handling the stolen products that sit for days on end in their warehouses and will even go so far as to add a fake expiration label on the packaging. When we’re dealing with consumable or beauty products — the likes of baby formula and makeup — there is serious cause for concern.
ORC has remained a constant thorn in the side of retailers and their employees for years, but the unprecedented increase in e-commerce activity has only made it easier for thieves to set up storefronts — now on the online marketplaces that consumers tend to use daily. The online marketplace sites have limited vetting procedures, which means that theft rings can easily set up a third-party seller account and carry out their schemes without ever getting caught red-handed.
Despite the growth of this criminal industry, law enforcement officials find themselves ill-equipped to clamp down on retail theft. With this in mind, the U.S. House 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 and counterfeit products. The policy proposal has attracted broad support, including from manufacturers, e-commerce platforms and law enforcement officials.
Systemic organized theft is far too severe of an issue for this measure to remain in legislative purgatory. Lawmakers need to pass this commonsense piece of legislation this year. The criminals pillaging retailers are far more brazen than the shoplifters that businesses encountered in the past. If retail crime is evolving, then our laws must follow suit.
• Michael Hanson is the spokesperson for Buy Safe America Coalition, which represents retailers, consumer groups, manufacturers, intellectual property advocates and law enforcement officials who support efforts to protect consumers and communities from the sale of counterfeit and stolen goods.
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