Durbin, Klobuchar Introduce Bill to Combat Organized Retail Crime

[WASHINGTON, D.C.] – U.S. Senators Dick Durbin (D-IL) and Amy Klobuchar (D-MN) have introduced legislation that would crack down on organized retail crime (ORC). The Combating Organized Retail Crime Act confronts the growing problem of organized criminal activity involving stolen and resold retail goods by creating stricter penalties for those found guilty of organized retail crime and by facilitating the identification and prosecution of those who participate in it.


“In the midst of the deepening economic crisis, organized retail crime seems to be flourishing,” Durbin said. “Organized theft affects struggling retailers’ bottom lines at a time when they can afford it least and the resale of these stolen goods puts consumers at tremendous risk of buying tainted or outdated products. Our bill takes immediate steps to combat these crimes by making it easier to identify and prosecute offenders and strengthening the penalties for those engaging in such crimes.”


Organized retail crime is the coordinated theft of large numbers of items from retail stores with the intent to resell those items, often at below-market prices. Organized retail crime rings typically resell their stolen merchandise in physical marketplaces as well as on Internet auction sites. Internet sites are particularly tempting avenues for these sales, since the Internet reaches a worldwide market and allows sellers to operate anonymously and maximize return. Retailers and the FBI estimate that ORC costs retailers billions of dollars in revenues and costs states hundreds of millions of dollars in sales tax revenues.


“During this economic downturn, organized crime is increasingly targeting our retailers – endangering not only our businesses, but consumers who are at risk of buying unsafe stolen goods,” said Klobuchar. “As a former prosecutor, I know that we must provide our law enforcement with the tools they need to get the job done. This bill will toughen laws against these crimes and help law enforcement fight organized retail crime.”


In addition to lost revenue, organized retail crime creates significant health and safety risks for consumers. Recent cases have revealed that it is common for ORC groups to sell expired baby formula with modified expiration dates and to dangerously mishandle diabetic test strips. ORC proceeds have also been used to finance other forms of criminal behavior, including gang activity and drug trafficking.


The current economic crisis has only exacerbated the problem of organized crime. In recent months theft and shoplifting from retailers has increased. A December 2008 survey by the Retail Industry Leaders Association found that 80 percent of the retailers surveyed reported experiencing an increase in organized retail crime since the start of the current economic downturn. In a 2008 survey of loss prevention executives performed by the National Retail Federation, 85% of the 114 retailers surveyed indicated that their company had been a victim of organized retail crime in the past 12 months. Many law enforcement officials predict that organized retail crime will continue to increase during these troubled economic times.


The Durbin-Klobuchar bill would:


• Toughen the criminal code's treatment of organized retail crime. New thresholds would be established for crimes such as the interstate transport and sale of stolen goods to prevent individuals engaged in organized retail crime from exploiting loopholes in current law. It would also require the U.S. Sentencing Commission to consider increasing penalties for organized retail crime.


• Establish a reporting system through which evidence of organized retail crime can be effectively shared between the victimized retailers, the marketplaces where items are being resold, and the Justice Department. This reporting system would ensure that the Justice Department receives information from both retailers and marketplaces in order to piece together organized retail crime investigations and prosecutions.


• Require that when the operator of a physical or Internet marketplace is presented with clear and convincing evidence that a seller on that marketplace is selling stolen goods, the operator must terminate the seller’s activities unless the seller can produce exculpatory evidence.


• Require that when a marketplace operator is presented with evidence of that a seller is offering stolen consumable goods or medical diagnostic tests on that marketplace, the operator must immediately suspend the ability of that seller to sell such goods because of the danger to consumers.


• Protects legitimate merchants by requiring high-volume sellers on Internet marketplace sites to provide a physical address to the marketplace operator.


Last week, Durbin was named Chairman of the Senate Judiciary Subcommittee on Crime and Drugs, which oversees legislation dealing with organized retail crime. Durbin plans on holding hearings on this issue this during this Congress. Klobuchar also serves on the Crime and Drugs Subcommittee.


A former prosecutor of Minnesota’s largest county and member of the Senate Commerce and Judiciary Committees, Klobuchar has taken the lead on protecting consumers. Since her election in 2006, she has led numerous efforts to pass consumer protection legislation. In 2007 she helped pass the most significant consumer product safety legislation in a generation, keeping toxic products off our shores and out of our stores. She took on the cell phone companies for more consumer-friendly policies and spurred an Federal Trade Commission investigation into price gouging practices by drug companies. Klobuchar’s consumer protection efforts have gained national recognition. Working Mother Magazine named her as a 2008 "Best in Congress" for her efforts on behalf of working families.


The bill is supported by the Illinois Retail Merchants Association, the National Retail Federation, the Retail Industry Leaders Association, the Food Marketing Institute, the National Association of Chain Drug Stores, and the Coalition to Stop Organized Retail Crime, whose members include such retail chains as Walgreens, Home Depot, Target, Wal-Mart, Safeway, and Macy's.