UPDATE: Lawmakers target e-fencing on Internet auction sites

Update: According to the Denver Post: A bill to regulate Internet auction sales of items commonly stolen and resold — known as "e-fencing" — was effectively killed Wednesday when a legislative committee voted 10-1 to table it.

Legislators in Colorado this week are hearing testimony on a state proposal many wish would become the law of the land: making online fencing, or e-fencing, of stolen property a major crime. 

The bill would ban and make a crime the Internet auctions of some of the most commonly e-fenced products – including baby formula, baby food, non-prescription drugs, cosmetics and gift cards – unless the seller provides records of where the products were obtained. The legislation would also make e-fencing a crime under Colorado’s receiving stolen property law, and require auction sites to terminate auctions if provided with information providing a “reasonable basis” to believe merchandise is stolen or fraudulently obtained. 

According to the Bill’s writer, Representative Alice Borodkin, D-Denver, e-fencing is a $37 billion a year business and the organized Internet-based retail crime in particular is a considerable  problem for the retail industry. According to the FBI, the industry loses at least $35 billion each year to organized retail crime.  The problem also has a serious effect on the citizens of Colorado, she said. The loss from organized retail crime in Colorado in 2004 was$522 million resulting in an estimated loss of $15,138,000 in sales tax revenue.  Internet auction fraud was by far the most reported offense to the Internet Crime Complaint Center in 2006, comprising 45% of complaints. 

A few states, New Jersey and Illinois among them have passed similar Internet e-fencing auction laws in recent months. Other states such as Virginia have tried and failed to pass such resolutions. And the US Congress has debated varied Bills that would for example bring crimes such as e-fencing under the Racketeer Influence and Corrupt Organizations (RICO) law, which would increase prison terms for selling stolen goods.  Such national Bills have gone no where.  

The National Retail Federation said last year it had unveiled a 10-bill package of model legislation intended to address organized retail crime that is currently being considered in a number of states.  The NRF also last year rolled out Law Enforcement Retail Partnership Network LERPnet Web site to help law enforcement agencies and retailers exchange information about retail theft and other security issues

According to Rocky Mountain News.com,  Congress last year held hearings on eBay's role in monitoring itself for stolen goods. The Coalition Against Organized Retail Crime, whose members include Wal-Mart, Target and Macy's, has been lobbying for legislation to require online auction sites to disclose more information on "high-volume" sellers and post serial numbers for products.   

While eBay has been the whipping post for the e-fencing issue: retailers say 70% of their stolen goods end up at online auction sites, and eBay is the biggest player --  myriad other sites such as Amazon, Yahoo, Overstock.com, uBid,  iSoldIt, QuikDrop and others are part of the growing issue, experts said.  

Online crime obviously hasn’t gone unnoticed. The FBI has made a number of big busts using the eBay and other online auction sites in the past  year.  Last April, the agency recovered astronaut James Lovell's - Commander of the ill-fated Apollo XIII space mission - Presidential Medal of Freedom that had been missing since April, 1970. Long story short, the medal was being offered for sale on eBay. A woman in Pennsylvania who told authorities it once belonged to her father, posted it on eBay in January and it was selling then for $5,000.  

 In August,  the FBI helped recover a rare Gastinne Renette carbine taken from a Paris military museum during World War II while the Germans occupied Paris that once belonged to Napoleon III. French authorities had searched for the 37-inch gun ever since and when it popped up on the Web site gunsamerica.com.  

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