On February 25, the coalition, led by RILA, succeeded in the introduction of the same pieces of ORC legislation in 111^th Congress.  In the House, Reps. Ellsworth and Jordan introduced H.R. 1173, the Organized Retail Crime Act of 2009, and Rep. Scott introduced H.R. 1166, the E-Fencing Enforcement Act of 2009. In the Senate, Sen. Durbin introduced S. 470, the Combating Organized Retail Crime Act of 2009.

H.R. 1173 amends the federal criminal code to make activities involved in furthering organized retail crime illegal. In addition, the bill would criminalize facilitation of this activity and impose specific responsibilities on online marketplaces to limit illegal activity that is occurring online and that involves organized retail crime. Rep. Scott’s bill requires online marketplaces to collect information that retailers can use to complete investigations, enabling them to go to law enforcement to prosecute individuals who fence goods on these online websites. Further, the bill requires that online marketplaces investigate suspicious activity and halt the sale of goods reasonably known to be stolen. Both bills in the House have been referred to the House Judiciary Committee and will be addressed by the Subcommittee on Crime, Terrorism, and Homeland Security, which is chaired by Scott. It is likely that Chairman Scott will hold a hearing in the House on ORC before the August recess.

S. 470 amends federal law to give law enforcement the legal clarity to prosecute organized retail crime. The bill would also place basic disclosure requirements on online marketplaces. Finally, the legislation requires both online marketplaces and traditional fencing locations, such as flea markets and pawn shops, to cooperate with retailers and law enforcement to ensure stolen goods are identified and removed.

In addition to working with key members of the Judiciary Committees, the coalition is also working to include language in food safety legislation that would prohibit the sale of baby formula through online marketplaces.  The coalition is also engaging the Department of Justice on the legislation. Conversations with DOJ will be pertinent to the success among key Judiciary members in both chambers.

• Support RILA and coalition efforts to enact federal ORC legislation by participating in the Coalition Against Organized Retail Crime.
• Retailers should contact their members of Congress and Senators urging them to support the ORC bills introduced by Reps. Ellsworth, Jordan and Scott and Sen. Durbin.
• Enact state legislation that would address ORC rings and create reasonable felony theft levels.

Estimates report that ORC costs retailers tens of billions of dollars annually. These crimes are attributable to groups of well-organized thieves who steal goods and resell them into the stream of commerce – a characteristic that distinguishes ORC from petty thievery or shoplifting. Furthermore, ORC gangs often rely on the money received from fencing stolen merchandise to fund other criminal activity.

Working with member companies and trade association partners, RILA has taken the lead in advocating for federal legislation that would recognize ORC as a federal crime because no federal law specifically addresses it.  The growth of ORC has clear interstate commerce relevance because criminals have increasingly sold these stolen goods online as well as transported the merchandise across state lines to fence them and avoid tougher criminal penalties.

In 34 states, the felony theft level (FTL) is more than $500; in 17 of the 34, the FTL is $1,000 or more. As a result, thieves can move from store to store stealing hundreds of dollars of merchandise and risking little more than a misdemeanor charge and small fine.

The growth of the online marketplace has also given criminals an unfettered avenue to fence their goods to unwitting customers. The absence of face-to-face contact with buyers allows ORC gangs to sell the stolen merchandise at prices close to 70 cents on the dollar compared with the average 30 cents on the dollar a product would sell for at a flea market or pawn shop. Given the still largely unrestricted environment that the Internet provides, criminals view e-fencing as a low-risk, high-reward venture.

Federal legislation would strengthen retailers’ ability to provide law enforcement officials with the information required to track and apprehend ORC gangs. It would also establish a policy framework for addressing criminal behavior on the Internet with regard to stolen merchandise. In addition, legislation would clearly define ORC and address growing concerns such as:

• ORC puts public safety at risk since ORC rings often resort to violence. The continued presence of organized criminals in retail settings threatens the safety of shoppers and employees alike.
• ORC hurts everyone. Retailers lose money though reduced profits and additional expenditures for security personnel, training and equipment – dollars that could be better spent on business expansion and job creation or better prices and selection.
• ORC presents a serious threat to public health and safety. ORC gangs steal high-cost items, including infant formula, pharmaceuticals and other consumer health care products. These products require proper storage and handling – issues for which ORC thieves have little regard.
• ORC costs state and local governments more than a billion dollars per year in lost tax revenue that would have been generated through legitimate sales.[1]
• ORC hurts consumers through higher prices and the inconvenience of more limited product selection or more difficult access to products that are secured as a preventative measure.

Addressing these concerns and creating new federal and state laws will assist in making ORC a high-risk, low-profit crime.

In the last congress, RILA led the Coalition Against Organized Retail Crime, a coalition of retailers organized to advocate for federal ORC legislation and to have three federal ORC bills introduced.  Reps. Brad Ellsworth (D-IN) and Jim Jordan (R-OH) introduced H.R. 6491, the Organized Retail Crime Act of 2008 on July 15, 2008. Similarly, Rep. Bobby Scott (D-VA) introduced H.R. 6713, the E-Fencing Enforcement Act of 2008, and Sen. Richard Durbin (D-IL), introduced S. 3434, the Organized Retail Crime Act of 2008. Rep. Scott held a hearing on all three bills in September 2008.

[1] “Organized Retail Crime: Describing a Major Problem,” Read Hayes, PhD, CPP and King Rogers. (Paper presented at RILA conference, Orlando, Fla., Nov 2003.)

For more information, please contact John Emling, senior vice president of government affairs at john.emling@rila.org, or Amber Landis, manager of government affairs, at amber.landis@rila.org.