Saturday, May 06, 2006

Retailers Find their Stolen Merchandise for Sale on eBay

Shoplifting costs retailers billions of dollars a year and we all pay for it in the form of higher prices. On the low end, you have teenagers and opportunists "boosting" merchandise. Moving up the retail theft food chain you have people supporting drug habits and even organized gangs, who steal from retailers on a larger scale.

A common misconception is that the majority of losses stem from individuals stealing items for their own use. In fact, the majority of stolen goods are converted into cash.

With the increased focus on the traditional means of converting stolen merchandise into cash, such as refunding, common and professional "boosters" are flocking to eBay to accomplish their primary goal.

This was a matter of concern raised at the Retail Fraud Conference held in London recently. Penelope Ody of the Retail Bulletin reports:

Retailers at this week's Retail Fraud conference in London (May 4) had a new preoccupation adding to the usual concerns over dishonest cashiers, sweethearting and back door delivery thefts-eBay. According to Boots head of loss prevention and security, Robert Jennings, this is now in the top five areas of concern as retailers increasingly see their merchandise offered in bulk on the web auction site.

Link, here.

Note that the Jennings is saying for "offered in bulk," which would lead one to speculate that this isn't being done by the "opportunists" and is more likely the work of organized gangs.

Interestingly enough, there has been a lot of buzz recently on organized gangs involved in shoplift activity. Margaret Pressler of the Washington Post recently wrote:

Retailers and theft experts say criminals have discovered that large profits can be made relatively easily, and without much risk, by stealing merchandise from crowded, understaffed stores. They say the most stolen items tend to be high-priced, widely used products that are routinely sold in chain stores: over-the-counter medicines, razors, film, CDs and DVDs, baby formula, diapers, batteries, hair-growth and smoking-cessation products, hardware, tools, designer clothes and electronics.

Link, here.

AND another recent viewpoint from might lead one to believe that organized retail crime has ties to illegal immigration and terrorisim.

Liz Mart'nez wrote:

According to CIS Robert W. Nolen, a lead trainer in a course developed with Bureau of Justice Assistance grant money called "Understanding, Combating, and Surviving Terrorism," many criminals from terrorist countries specialize in the re-sale of stolen consumer goods. The profits from these enterprises are used to fund terrorist activities.

In many cases, men and women from El Salvador, Honduras and Mexico travel together, doing the actual stealing. Each person in the crew has a particular area of expertise, whether it be distracting store employees, doing the actual boosting, or driving the get-away vehicle. These professional thieves often earn $3,000 a week.

Link, here.

Although not stated in the article, if illegal immigrants are doing the stealing and criminals from terrorist countries are selling the goods, it makes me wonder how close their relationships could be?

Another issue, retailers have had with eBay is the sale of gift cards on the site. Whether purchased with bogus financial instruments, or issued as refunds (which could be a direct result of shoplifting), gift cards are another means of converting stolen proceeds into cash.

In another interesting article, again from the Washington Post, Ariana Cha wrote:

The shoplifters discovered some stores would allow them to return the goods without receipts for store credit or gift cards. They then sold those vouchers on the giant online marketplace. It was easy, instant and anonymous. The money flowed in -- they got 76 cents per dollar of stolen merchandise, a huge takeaway considering that shoplifters traditionally net 10 percent or less of the retail value of the items. The group made more than $200,000 in 10 months.

This is yet another example of many, where crimes of all sorts are occurring in the Internet auction world (particularly eBay). We can't hold auction sites accountable for being in collusion with criminals, but we can hold them accountable for not providing a safe shopping environment.

After all, how long would one of these retailers survive if they allowed the amount of crime to occur within their four walls with people walking around? My guess is that they would be out of business pretty quickly.

The same standard needs to be applied to the Internet and if this "business model" is to survive, the auctioneers needs to wake up and smell the coffee. Thus far, eBay has been able to blame everyone, but themselves; however as corporations become victims, the stakes are likely to grow.

Corporations have money and can afford a lot of lawyers.

Tiffanys might have already started this trend with it's pending litigation regarding the sale of counterfeit merchandise on eBay.


Anonymous said...

"Corporations have money and can afford a lot of lawyers."

True and meaningless. I conduct e-Bay related investigations for a national retailer with $1 billion in annual sales.

Reality is most retailers don't want the publicity involved in dealing with e-Bay fencing cases. It's no small coincidence that there's only one major survey on retail crime (conducted by the University of Florida). Reality is retailers are loathe to admit their losses.

Hands-down our biggest problem is getting law enforcement involved. We routinely go to law enforcement and show them e-Bay sellers who are selling dozens of items listed as new with tags that just so happen to be missing from our stores. The response from law enforcement is "prove they stole it". Never mind that selling stolen merchandise - even if you didn't actually steal it - is still a crime in all 50 states. If you don't have video footage of the suspect stealing the merch rarely will they bother to take action on the case. Many police departments are not even equipped to deal with e-Bay fraud. It's amazing in this day and age how many detectives still don't have laptops and regular e-mail access. On top of that, most police departments are way too busy dealing with stolen cars and firearms both of which are a much higher priority than selling stolen merchandise on e-Bay.

Anonymous said...

I just wanted to add a law enforcement perspective. It's true that firearms and cars are a priority and in most departments, there are people who specialize in that.

There are also Detectives, who specialize in financial crimes. Unless they are a small department, I don't believe someone from the auto theft detail is going to be working financial crimes. Unless they are selling stolen vehicles on eBay?

Granted, an arrest cannot be made merely by calling and saying "I think that is stolen merchandise." Developing a case with solid leads might bring forth better results.

The key is a tie between stolen merchandise and the seller on eBay.

Some corporations do have teams that work with law enforcement and do just this.

I can sympathize that there is too much work to go around, but I wouldn't give up based on a few negative law enforcement responses.

Law enforcement can't solve it all either.

Sometimes it is a matter of contacts and showing those contacts you can provide them with quality intelligence.

Anonymous said...

another problem is that in most cases, unless a manager at the store actually sees the thief put an item in their bag and then walk out of the store, they are not allowed to do anything. It doesn't matter if a person with a large bag walks into a store and an employee notices that merchandise previously on a table is now in their large bag. Because management did not actually see the merchandise being put into the bag, nobody can do anything. I have worked at two malls where security deemed that going after a shoplifter (even when management actually witnessed the theft) would cause to much of a scene to bother.

I believe that the main problem is that people get far too easily offended, causing corporations to enact strict policies for accusing people of theft. I understand no one wants to be accused of a crime they did not commit. But if you don't have any merchandise on your person, it would seem that it would be easy enough to prove and move on with your life. If people really knew what shoplifters were costing them each year they might change their tune.

Consumers can also help by asking to see a scanned copy of a receipt before buying "new with tags" merchandise online.