Do you remember before the Internet existed? When contact information was just address and phone number, not email and Skype? If you’re on the better side of 30, probably. Now can you imagine living without it? Probably not. The Internet and corresponding technologies have given us many benefits, made us more efficient, and even found some of us the loves of our lives.
But all is not well in the land of the www’s. In addition to making things easier for scam artists and child predators, the Internet has also made it easier for people to sell stolen goods. A whole new area of criminal activity, e-fencing, has emerged, where thieves and organized retail crime (ORC) rings can easily and anonymously get rid of purloined panties and Nike tennis shoes by selling them on online auction sites.
E-fencing is the second most profitable way for crooks to get rid of stolen merchandise. The most profitable is just to return the item to the store from which it was stolen. Sounds a bit risky but it happens all the time. And people do get away with it because the traditional systems for detecting retail returns fraud (exception based reporting and returns authorization systems) are not as sophisticated as they could be. Returning the stolen goods will get you about $1.08 on the dollar because you also get the tax returned. Not a bad profit. But you do have to show your face and risk being caught.
E-fencing will get you about $.70 on the dollar, and it’s less risky because there is a certain degree of anonymity. Bottom line, it’s become a big problem for the retail industry. So much so that retailers are taking it to the Hill. Several retail execs recently testified before the House Judiciary Committee’s Subcommittee on Crime, Terrorism and Homeland Security about the problems of ORC and e-fencing.
Fencing use to be a face-to-face process, [Brad] Brekke, [vice president of assets protection for Target Corp], said, but with the emergence of online sites, such as auction site eBay and classified listing Craig’s List, has created a worldwide market for stolen goods. “Sellers are anonymous and buyers are unaware of the source of the product,” he said. “The enormous profits of the crime have fueled criminal activity that hurts our communities.” . . . “As the problem has grown, our industry has invested tens of millions of dollars to combat the problem,” he said. “But the Internet marketplace has dramatically transformed the fencing of stolen property.”
This issue has created some tension between the retailers and online auction sites. The retailers are demanding additional steps to combat the problem such as identifying high-volume sellers and adding serial numbers to product listings. And eBay, who had a representative at the subcommittee hearing, is insisting that they’re doing all that can be reasonably expected.
Hence the involvement by Congress:
[Karl] Langhorst, [director of loss prevention at Randalls/Tom Thumb Food and Pharmacy], said despite best efforts, retailers continue to suffer significant losses. He said there needs to be “strong federal legislation” developed that defines ORC and holds online auction sites accountable to the sale of stolen property. “It would be nice to have some regulations in place to limit this to begin with,” he said. “Then we’d have loss prevention instead of loss reaction.”
While we wait for Congress to make a move, we’ve been thinking that this is another problem that could benefit from an identity resolution solution. Identity resolution software could analyze data from retailers on recent large volume thefts and then search online auction sites for postings of corresponding goods. It could find similarities in item type, color, size, quantity, location of the theft, and location of the seller and return possible matches. This would allow loss prevention experts to contact the seller to get further information, which could also be fed into the system to help determine if the seller is the thief and how to find them if they are.
Maybe this technology stuff isn’t too bad after all.