'E-fencing' bill to target organized retail crime

By Joyzelle Davis, Rocky Mountain News (Contact)

Published January 15, 2008 at 12:05 a.m.

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Baby formula, gift cards and cold medicine could not be sold at online auction Web sites in Colorado under a proposal that will be introduced in the legislature today that's intended to crack down on Internet fencing rings.

Rep. Alice Borodkin, a Denver Democrat, plans to introduce the bill, which also would make it illegal to sell manufacturer or store coupons and prescription drugs on auction sites.

New Jersey passed a similar law in 2006.

Retailers say "e-fencing" laws are needed to combat organized retail crime, which racks up an estimated $522 million a year in losses in Colorado alone and $37 billion nationwide. Internet sites such as eBay, the world's biggest online auction site, are particularly good outlets for thieves because they can sell the stolen items anonymously, said Chris Howes, president of the Colorado Retail Council.

"It doesn't matter if there's a storefront or a virtual store on the Internet, fencing is fencing, and we have to keep Colorado's statutes up to date," Howes said.

Congress last year held hearings on eBay's role in monitoring itself for stolen goods. The Coalition Against Organized Retail Crime, whose members include Wal-Mart, Target and Macy's, has been lobbying for legislation to require online auction sites to disclose more information on "high-volume" sellers and post serial numbers for products.

Illinois in 2005 also passed a law that doesn't list product categories but makes it an offense to sell stolen property online.

A call to San Jose, Calif.-based eBay wasn't returned. The company, founded in 1995, has more than 240 million registered users worldwide and in 2006 posted $52.5 billion in gross merchandise volume.

Organized crime differs from shoplifting because the stolen goods are resold rather than retained for personal use.

What the proposal would do

The Internet Auction Sales Act, sponsored by state Rep. Alice Borodkin, D-Denver, would make it illegal to sell these products via Internet auction:

* Infant formula or baby food

* Prescription and nonprescription drugs

* Gift cards or other value-loaded cards

* Manufacturer or store coupons

* Any product containing pseudoephedrine sold in quantities exceeding the amount allowed under federal law

How the crime works

Organized crime often involves several people working together to steal large quantities of goods from retailers. They then turn around and resell the products on street corners, flea markets, pawn shops and over the Internet.

davisj@RockyMountainNews.com or 303-954-2514

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