Law Would Combat Crimes That Cost $30 Billion a Year, Endanger Public Health

ARLINGTON, VA — July 15, 2008 — The Food Marketing Institute (FMI) praised the introduction of legislation today to make organized retail crimes a federal felony for the sophisticated gangs of thieves that commit them. FMI lauded U.S. Reps. Brad Ellsworth (D-IN) and Jim Jordan (R-OH) for introducing the measure, which is titled the Organized Retail Crime Act of 2008 (H.R. 6491).

     “Organized retail crime is one of the most serious threats we face today,” said John J. Motley III, FMI senior vice president of government and public affairs. “These thieves steal more than $30 billion in merchandise a year. They endanger public health by adulterating products such as infant formula and medicines and selling them to unsuspecting consumers often through illegitimate retail outlets. Numerous stolen goods are fenced on Internet auction sites.”

     “Too often,” he added, “the gang members who are apprehended are charged with petty shoplifting misdemeanors, and receive minimal fines, probation or jail time. Complicit wholesalers, flea market operators, pawn shops and Internet auctioneers cannot be easily prosecuted. This legislation would help reduce the billions in retail store losses and, most important, protect the safety of American consumers.”

     The legislation for the first time would specifically recognize organized retail crime under the U.S. Criminal Code. It broadly defines the crime to include the theft, transport and resale of goods stolen by these criminals. It would cover criminals, for example, who repackage medicines and infant formula to fraudulently extend their shelf life, exposing consumers to useless or unsafe products.

     The measure would require Internet auctioneers to monitor high-volume online sellers, defined as those who generate at least $12,000 in sales over a 12-month period. It would require these sellers to provide contact information and a list of all transactions over the past three years. The legislation would require auctioneers to help investigate online sales in which there is a reasonable cause to believe the goods were acquired through organized retail crime.

     These crimes are a growing problem for food retailers. Six in 10 retailers (59.6 percent) reported that these crimes increased in their stores in 2006, according to FMI’s Supermarket Security and Loss Prevention 2007 report. Companies of all sizes are dedicating more resources to combat the problem, and many large retailers have loss prevention units focusing exclusively on it.

     States are victims as well, losing about $1.6 billion each year in sales taxes not collected on transactions involving goods stolen by these organized gangs.

     As co-chair of the 32-member Coalition Against Organized Retail Crime, FMI has been spearheading efforts to combat this illegal activity for years at the state and federal levels.