Bills take aim at online sale of stolen goods

Three bills focusing on the sale of stolen goods online would impose new obligations on Web auction sites while not putting enough responsibility on brick-and-mortar stores to protect themselves against shoplifting, two e-commerce representatives said Monday.

The National Retail Federation (NRF), in pushing for the legislation, is trying to blame the Internet for shoplifting, when the problem existed before the Internet, said Steve DelBianco, executive director for NetChoice, an e-commerce trade group.

"That's like saying the back seats of cars cause teenage sex," DelBianco said at a hearing of the U.S. House of Representatives Judiciary Committee's Subcommittee on Crime, Terrorism, and Homeland Security.

But Joseph LaRocca, the NRF's vice president of loss prevention, told lawmakers that the Internet encourages shoplifting. Organized retail crime rings are able to steal products, such as prescription medicine and baby formula, from brick-and-mortar stores and anonymously sell them online, often without regard for the health and safety of consumers, he said.

Some estimates suggest that shoplifting costs U.S. retailers US$30 billion a year, and sales of stolen goods through online marketplaces is a growing problem, LaRocca said.

"People have quickly learned that the Internet presents a low-risk way to sell stolen goods," he added. "More disturbing, however, is that the Internet seems to be contributing to the creation of a brand-new retail thief -- people who have never stolen before but are lured by the convenience and anonymity of the Internet."

The subcommittee hearing Monday focused on three bills, the E-fencing Enforcement Act, the Organized Retail Crime Act and the Combating Organized Retail Crime Act.

DelBianco and eBay senior regulatory counsel Edward Torpoco focused much of their criticism on the E-fencing Enforcement Act, which would require e-commerce marketplace sites to keep records of high-volume sellers and take down listings for goods when given evidence by retailers that the goods are stolen.

They also raised concerns about the Organized Retail Crime Act, which focuses partly on creating penalties for organized retail crime by defining what it is. The bill would also require online marketplaces to "expeditiously investigate" reports of stolen goods and to maintain records of high-volume sellers. Both bills would allow retailers to file civil lawsuits against the operators of online marketplaces that offer stolen goods for sale.

The bills would force online sites to take down products when retailers demand it, without any involvement of law enforcement, DelBianco said. The bills would give retailers their own law enforcement arms, he said.

The three bills are unlikely to pass this year because Congress winds up its work for the year within weeks. However, the House hearing could help build momentum for similar legislation to be introduced in 2009.

EBay has about 2,000 employees who investigate reports of stolen goods, and it has offered to work more closely with retailers in shoplifting investigations, but several major retailers have declined that offer, Torpoco said.

The IDG News Service is a Network World affiliate.