- Retailers raise concerns that e-commerce has led to a surge in professional shoplifters driving high-quality items to sell online.
- Brick and mortar advocates argue that online sellers need to take more action to stop theft.
- However, critics say some anti-theft measures could harm small online sellers.
- Check out Insider’s business page for more stories.
Between well-lit rows of drills, lawn care tools, and pressure washers, all of which are carefully packed, a small American flag hangs over a shelf owned by Milwaukee Tools, an exclusive Home Depot brand.
With no context, it looks like it could have been any Home Depot warehouse. But this insider-viewed footage doesn’t show a fulfillment center or even the storage room of a Home Depot store. It captures a secret California warehouse with stolen goods from the home improvement giant. It was shot dead by one of Home Depot’s retail organized crime investigators in 2020 when police issued a search warrant against the warehouse. All in all, the warehouse contained millions of dollars in stolen products.
This is just a snapshot of a wave of crime that has been building for years. As early as 2011, the FBI postulated that “organized retail crime” was a $ 30 billion industry. And industry operators say the problem has only grown since then. A 2020 survey by the National Retail Federation found that organized retail theft was up nearly 60% from 2015, and now averages $ 719,548 per $ 1 billion in sales.
Retailers are now sounding the alarm over rising theft statistics and the role of e-commerce platforms as “fences”. Traditionally, fences have taken the form of pawn shops or flea markets, but the rise of online shopping has turned this on its head. Stationary retailers complain that thieves are increasingly selling stolen products online, but ecommerce platforms argue that regulating websites will only stifle competition.
Retail companies have taken a number of initiatives to combat these targeted thefts. Recently, Home Depot released power tools that won’t work unless they’re properly scanned and activated via at checkout
Technology. The retailer also wants to continue adopting anti-theft technologies instead of locking products. Stores have experimented with lockable wagon wheels that freeze when a person pushes a truckload of goods outside without paying. Others often resort to controversial facial recognition tools in addition to other security measures to identify thieves. Critics say that without regulation, this technology could violate human rights.
Jason Brewer, spokesman for the Buy Safe America Coalition, a retail lobby group, spoke to Insider about the efficient, intricate shadow business of professional shoplifters.
“That’s a professional criminal,” Brewer said. “They don’t want to steal dinner food or something they need because they can’t afford it. They steal certain items that they know they can resell online.”
Brewer said the organized retail crime rings differ in size, origin, and specialty. He said some may be linked to larger organized crime organizations. For these big players, organized retail crime is another business in a portfolio that may include narcotics sales, human trafficking, and arms trafficking. Smaller rings could simply be a group led by a person who can convince desperate people – sometimes impoverished, homeless, and drug addicts – to steal money in exchange for a small fraction. The “CEOs” of the shoplifting ring give a list of products to low-level members who then have to steal those items in order to get paid.
“Executives don’t care what happens to the runners,” Scott Glenn, Home Depot’s vice president of asset protection, told Insider. “You only pay them a hundred dollars a day, but the runners will bring back thousands of dollars worth of products that will then be resold for profit.”
But despite their ubiquity, Glenn said, it’s important not to underestimate shoplifting groups. He said they can be run by “good administrators” and operate in a similar way to shadow companies. Glenn said that in some cases these professional shoplifters steal “up to this crime threshold” without ever crossing the line.
Most states have a crime theft threshold, which means that a person who steals money or property over a certain amount is more likely to be charged with the crime than the theft of misdemeanors. The NRF notes that these syndicates are often looking for a “mix of valuable high-end products and cheap but easier-to-lock everyday necessities”.
“They know that if it doesn’t go above that certain level, nothing is going to happen,” said Glenn. “You will steal up to that amount and go to the next door and steal up to that amount.”
“It really hits retailers from multiple directions”
Brewer and Glenn said the proliferation of e-commerce has also led to a boom in criminals fencing stolen goods online. Glenn said that not all online sales platforms have “the same level of scrutiny and scrutiny” when it comes to merchants, while Brewer said that no online platform is currently doing enough to fight crime.
All of this means that retailers feel like they are grappling with an exponential growth in organized theft that everyday shoppers are likely to be unaware of. In the 2020 NRF survey, 59% of respondents said they discovered stolen goods from their business while selling on websites – 9% more than in 2018.
Brewer also said online platforms need to de-anonymize sellers in order to fight organized retail crime. The Buy Safe Coalition supports the INFORM Consumers Act, a bill that would force online platforms to authenticate “large third-party sellers”.
“If the marketplaces have to start scrutinizing the people who are selling on their platform and making that information available to the public, it will be a lot harder for people to sell stolen goods,” Brewer said.
Online platforms have resisted the idea of ââallowing thieves to spread on their websites. eBay has commended its efforts to remove suspicious entries and its initiatives to protect copyright and trademark owners, community members who trade unsafe goods, and third-party brands.
“EBay strives to provide a safe online shopping experience for millions of people worldwide, and we have no tolerance for criminal activity on our platform,” an eBay spokesman told Insider. “We believe that collaboration and cooperation between law enforcement agencies, retailers and marketplaces is the best way to fight fraud and organized retail crime.”
An Amazon spokesman told Insider that in 2020 the company invested $ 700 million and 10,000 employees to “prevent fraud and abuse in our business.”
“Amazon doesn’t allow third-party sellers to list stolen goods on our store, and we are working closely with law enforcement, retailers, and brands to stop malicious actors and hold them accountable, including withhold funds, account termination and referral by law enforcement agencies, “an Amazon spokesman told Insider.
The Makers and Merchants Coalition, a trading group that represents external online sellers, has spoken out against the INFORM law. It argues that “there is no reason to require individuals to give their personal information to the public in order to sell a small number of products online”.
“The INFORM Act’s true mission is to eliminate competition from big retailers by hurting small sellers,” spokeswoman Katie Wright said in a statement sent to Insider. “The law does nothing to stop stolen goods from their primary source, brick and mortar retail stores, but threatens to compromise the security and personal information of small online sellers who use larger marketplaces to sell their products.”
Wright said online marketplaces are already “collecting personally identifiable information from sellers as one of the many measures being taken to prevent millions of stolen and counterfeit products from being sold each year.”
However, Glenn and Brewer emphasized the threat posed by organized retail crime. Both said that when professional shoplifters are desperate, they could pose a physical threat to shoppers and retail workers. Glenn said that if left unchecked, bulk theft could push higher prices down on consumers, while Brewer said smaller stores could close.
“Not only does the retailer have their merchandise stolen, but someone is competing with them online by selling the same product at half price because it was stolen,” he said. “So it really hits retailers from several directions.”