ORC Growth Endangers Consumers and Communities: House Testimony

In testimony before the House Judiciary Subcommittee on Crime Terrorism and Homeland Security, representatives of four federal law enforcement agencies reported growth in organized retail crime (ORC) and highlighted the many risks the activity poses to consumers and communities.

The hearing, “Combating Organized Retail Crime: The Role of Federal Law Enforcement,” included pointed comments from federal law enforcement on the growing problem of organized retail crime and the challenges faced in combating and deterring it.

“This crime problem [ORC] also has the potential to negatively impact consumer health and safety,” said David Johnson, section chief, Criminal Investigative Division at the Federal Bureau of Investigation. “Specifically, the unsuspecting consumer faces potential health and safety risks from legitimate products which may have been mishandled by the criminal enterprises who stole them for resale to consumers. The potential threat is perhaps most evident in cases in which infant formula is stolen, repackaged and then resold to both knowing and unknowing wholesalers, who often sell the infant formula to government food programs and discount stores.”

He added that the lack of available resources to state and local police departments — who have the primary responsibility for investigating most retail crimes — “is a huge challenge, as is the sharing of information between public and private enterprise.”

The Food Marketing Institute (FMI) praised Rep. Bobby Scott (D-Va.), chairman of the House Judiciary Subcommittee on Crime, Terrorism, and Homeland Security, for holding the hearing on strengthening anti-crime laws to combat the growing problem of ORC.

“Organized retail crime is more sophisticated and more dangerous than petty shoplifting, as organized rings of criminals move from store to store stealing large quantities of goods,” said Leslie G. Sarasin, president and CEO of FMI. “They jeopardize the health and safety of consumers by fencing goods to buyers unaware of their origins and increasingly use Internet auction sites, which conceal their identity. We support legislation that gives law enforcement the tools they need to fight these criminals and makes organized retail crime a federal felony for all the perpetrators involved.”

Three legislative proposals have been introduced in Congress to address ORC. Scott introduced the E-Fencing Enforcement Act of 2009 (H.R. 1166), which deals with e-fencing or reselling stolen goods over the Internet. A measure sponsored by U.S. Reps. Brad Ellsworth (D-Ind.) and Jim Jordan (R-Ohio), the Combating Organized Retail Crime Act of 2009 (H.R. 1173), calls for a comprehensive solution to ORC and the resale of stolen or fraudulently obtained merchandise through Internet auction sites, flea markets, pawn shops, swap meets and shady retail storefronts. Richard Durbin (D-Ill.), the second-ranking Democrat in the Senate, introduced a bill similar to the Ellsworth-Jordan bill (S. 470), the Combating Organized Retail Crime Act of 2009.

“The growing congressional support for legislation to combat organized retail crime and e-fencing is critical to ensure these criminals face stringent federal penalties,” noted Sarasin. “We need to protect consumers by making it harder for criminals to hide behind state laws and the Internet.”

FMI said that consumer health and safety are particularly at risk when ORC gangs store stolen infant formula and medicines in unsafe conditions and repackage them to falsely extend expiration dates.

Organized crime gangs steal and resell as much as $30 billion in retail merchandise each year, according to federal authorities, and cost the 46 states that have a sales tax approximately $1.6 billion each year in lost tax revenue, according to the Coalition Against Organized Retail Crime (CAORC).

The CAORC, formed in 2001, is composed of 37 national manufacturing and retail organizations as well as individual companies that have come together to fight ORC. More information is available at www.stopretailcrime.com.
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