Statements on Introduced Bills and Joint Resolutions

Floor Speech

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - August 01, 2008)

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By Mr. DURBIN:

S. 3434. A bill to combat organized crime involving the illegal acquisition of retail goods for the purpose of selling those illegally obtained goods through physical and online retail marketplaces; to the Committee on the Judiciary.

Mr. DURBIN. Mr. President, I rise to discuss legislation that I am introducing today, the it Combating Organized Retail Crime Act of 2008.

This bill addresses a persistent and growing problem that costs retailers billions of dollars and poses serious health and safety risks for consumers. Organized retail crime involves the coordinated theft of large numbers of items from retail stores with the intent to resell those items. Typically, crime organizations hire teams of professional shoplifters to steal over-the-counter drugs, health and beauty aids, designer clothing, razor blades, baby formula, electronic devices and other items from retail stores. Using sophisticated means for evading anti-theft measures, and often the assistance of employees at stores, the thieves target 10-15 stores per day. They steal thousands of dollars worth of items from each store and deliver the items to a processing and storage location. There, teams of workers sort the items, remove anti-theft tracking devices, and remove labels that identify the items with a particular store. In some instances, they change the expiration date, replace the label with that of a more expensive product, or dilute the product and repackage the modified contents in seemingly-authentic packaging. The items are then stored in a warehouse, often under poor conditions that result in the deterioration of the contents.

Organized retail crime rings typically sell their stolen merchandise in different markets, including flea markets, swap-meets, and online auction sites. Online sales are of particular concern, since the internet reaches a worldwide market and allows sellers to operate anonymously and maximize return. A growing number of multi-million dollar organized retail crime cases involve internet sales. For example, in Florida recently law enforcement agents arrested 20 people in a $100 million case involving the sale of stolen health and beauty aids on an online auction site and at flea markets.

Organized retail crime has a variety of harmful effects. Retailers and the FBI estimate that it costs retailers billions of dollars in revenues and costs states hundreds of millions of dollars in sales tax revenues. With respect to certain products, such as baby formula and diabetic test strips, improper storage and handling by thieves creates a serious public safety risk when the products are resold. The proceeds of organized retail crime are often used to finance other forms of criminal behavior, including gang activity and drug trafficking.

The Combating Organized Retail Crime Act would address this problem in several ways. First, it would toughen the criminal code's treatment of organized retail crime by refining certain offenses to capture conduct that is currently being committed by individuals engaged in organized retail crime, and by requiring the U.S. Sentencing Commission to consider relevant sentencing guideline enhancements.

Second, the bill would require physical retail marketplaces, such as flea markets, and online retail marketplaces, such as auction websites, to review the account of a seller and file a suspicious activity report with the Justice Department when presented with documentary evidence showing that the seller is selling items that were illegally obtained. If the physical or online retail marketplace is presented with clear and convincing evidence that the seller is engaged in such illegal activity, it must terminate the activities of the seller. This requirement will lead to greater cooperation between retail marketplaces, retailers and law enforcement, and will result in an increased number of organized retail crime prosecutions.

Third, the bill would require high-volume sellers on online auction sites (meaning sellers that have obtained at least $10,000 in annual gross revenues on the site) to display a physical address, post office box, or private mail box registered with a commercial mail receiving agency. This requirement will help online buyers get in touch with sellers, and assist law enforcement agents who wish to identify people who may be selling stolen goods online. It is analogous to a provision in the federal CAN-SPAM Act, which also requires persons who send mass emails to disclose their physical addresses.

This legislation has broad support in the retail industry in my home state of Illinois and nationwide. It 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 giants as Home Depot, Target, Wal-Mart, Safeway, Walgreens, and Macy's.

In summary, the Combating Organized Retail Crime Act addresses a serious problem that hurts businesses that are struggling to survive in a weak economy, and that harms consumers who unknowingly purchase stolen items that have been subjected to tampering. It heightens the penalties for organized retail crime, shuts down criminals who are selling stolen goods, and places valuable information about illegal activity into the hands of law enforcement. This bill is a big step forward in the fight against a nationwide problem, and I urge my colleagues to support it.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

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