Tags: downturn | retail | crime

Discount Demand Means Organized Retail Crime

Wednesday, 25 Feb 2009 08:00 AM

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SAN FRANCISCO -- Consumer demand for hot new products at huge discounts is fueling organized retail crime, with goods stolen from retailers finding an audience in secondary markets like the web, a retail trade group said.

High on the list are the latest video games or trendiest new handbags that can be easily resold, executives with the National Retail Federation said on Tuesday.

"The demand for product at a reduced price is significantly up. Consumers are looking at alternative resources to find products," said Joe LaRocca, the group's vice president of loss prevention.

"Unfortunately consumers and the economy are fueling a drive for this illegal or anonymous commerce that is taking place across the country."

Black markets for stolen goods can be deceptively bright: flea markets, swap meets and corner markets teeming with bargain hunters, as well as online auction sites like eBay and classified sites like craigslist.com, LaRocca said.

Three federal anti-retail crime bills are expected to be introduced this week in Congress, designed to give law enforcement more authority to fight organized retail theft, including online, the NRF said.

EBay's deputy general counsel, Tod Cohen, said in a statement that the company has been working cooperatively with other companies and law enforcement in order to fight the online sale of stolen goods.

He called discriminatory the legislation soon to be introduced in Congress.

"These bills are less about fighting shoplifting and more about big box retailers wanting to crush legitimate small-business online competition that delivers real value and greater choice to consumers," Cohen said.

Craigslist called misuse of its site for illegal purposes "absolutely unacceptable" and cited its work with law enforcement to combat it.

"Criminals are unwise to use craigslist, since they create an electronic trail to themselves that police can follow," said Chief Executive Jim Buckmaster in a statement.

Some 85 percent of retailers surveyed by the NRF last year said they had been victims of organized retail crime.

Moreover, respondents estimated that nearly 40 percent of goods sold on auction websites advertised as "new in box" were stolen or fraudulently obtained.

Those trends have picked up as the economy has worsened, LaRocca said. For example, he said, various members of the Gambino crime family were arrested in New Jersey last year for defrauding major retailers like Lowe's Companies Inc.

"These cases are not little Johnny walking in and stealing a pack of bubblegum," LaRocca said.

The Federal Bureau of Investigation has estimated that U.S. retailers lose $15 billion to $30 billion each year from organized retail crime.

To combat the escalating crime, retailers have been using global positioning systems (GPS) to track cartons and suspect vehicles. They are also hiring staff from law enforcement, sharing intelligence information and putting their investigators through specialized training, the NRF said.

But lower staffing levels at stores trying to cut costs are leaving a door open to some criminals.

"When staffing is removed from stores or loss prevention isn't at its prime, criminals will take advantage of those vulnerabilities," LaRocca said.

© Thomson Reuters 2009 All rights reserved

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