Organized Retail Theft Investigation and Prosecution Act of 2010

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 5932) to establish the Organized Retail Theft Investigation and Prosecution Unit in the Department of Justice, and for other purposes, as amended.

Mr. Speaker, I ask unanimous consent that all Members have 5 legislative days to revise and extend their remarks and include extraneous material on the legislation under consideration.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, H.R. 5932 directs the Attorney General to establish an Organized Retail Theft Investigation and Prosecution Unit to combat the growing problem of organized retail crime.

Theft from retail establishments has been a problem as long as stores have existed. The problem has gradually grown beyond simple isolated cases of shoplifting and burglary into something far more complex.

It wasn't until the 1980s that organized retail theft was recognized as a phenomenon, and the problem has continued to grow in volume, sophistication and scope. Today, sophisticated, multilevel criminal organizations steal large amounts of high volume products, focusing on small and easily resalable items, and then they resell the goods through a variety means, including flea markets, smaller stores, and, increasingly the Internet. Sales of stolen items over the Internet have evolved to the point where there has been a new crime phenomenon referred to as ``E-fencing.''

With organized retail theft reaching an estimated $30 billion to $42 billion, it impacts everyone from the Big Box retailers to the small independent stores. This type of crime obviously has a direct impact on stores from which the items are stolen. They have fewer items in their inventory to sell and their profits suffer. To make up for it, they must pass along the burden to consumers in the form of higher prices.

Consumer safety is also at risk when retail crime organizations steal consumable products, especially over-the-counter drug items and infant formula, two popular items for organized theft rings. In many cases, after merchandise has been stolen, the products are not stored properly, which can render the products ineffective or even dangerous.

Retailers spend lots of time and resources trying to prevent such thefts and trying to catch the thieves, but it is becoming increasingly difficult to do so. Last year, the Judiciary Committee Subcommittee on Crime held a hearing about the role of the Federal law enforcement in combating this kind of crime. I was encouraged to see that agencies such as the FBI; Immigration and Customs Enforcement, ICE; the Secret Service; and postal inspectors all play a role in investigating organized retail theft.

Through this hearing we learned that there is a definite need for Federal law enforcement agencies in this area because local enforcement agencies face unique challenges in combating organized retail theft. In particular, organized retail theft rings often operate in multiple jurisdictions, making it impossible for any one State or local law enforcement agency to investigate them and prosecute them effectively. In addition, the Internet has made it

easier for such sellers to access a national, even international market, for buyers of stolen goods. Finally, the proceeds of these crimes are often laundered with tremendous sophistication.

Because of these challenges and the threat this type of crime poses to our businesses, I believe we must have a better coordinated and much more concentrated Federal effort. H.R. 5932 accordingly directs the Attorney General to establish an Organized Retail Theft Investigation and Prosecution Unit comprised of Federal prosecutors and investigators from the FBI, ICE, the Secret Service, and the Postal Inspection Service. This unit will investigate and prosecute instances of organized retail theft under Federal jurisdiction as well as assist State and local law enforcement agencies in their efforts against these crimes.

I want to thank the retail and online community for their support of this bill, and I commend their efforts to find ways to work together on this effort. We have also received letters in support of the bill from a number of major business groups, including the Coalition Against Retail Crime, the Food Marketing Institute, the National Association of Chain Drugstores, the Entertainment Merchants Association, the Retail Industry Leaders Association, and the National Retail Federation. EBay has also expressed support for the bill.

I am pleased this bill has strong bipartisan support, and I would like to thank the committee chairman, the gentleman from Michigan, Mr. Conyers, the ranking member, the gentleman from Texas, Mr. Smith, and my colleague from Virginia, Mr. Goodlatte, for cosponsoring this important legislation and for their consistent commitment to this issue. I urge my colleagues to support H.R. 5932.

Coalition Against

Organized Retail Crime

Hon. Robert Scott,

House Judiciary Committee, House of Representatives,

Washington, DC.

Dear Congressman Scott: On behalf of the Coalition Against

Organized Retail Crime (CAORC) and our membership, we urge

you to support and pass H.R. 5932 the ``Organized Retail

Theft Investigation and Prosecution Act of 2010.'' This

bipartisan legislation, introduced by Representatives

Conyers, Smith, Scott and Goodlatte, is an important first

step in addressing this serious issue.

The CAORC, formed in 2001, is comprised of major retailers,

grocers, product manufacturers and trade associations

committed to bringing attention to the harmful effects and

public safety risks associated with organized retail crime.

As you know, sophisticated and methodical organized retail

crime rings operate across state and local jurisdictions.

These crime rings often use organized retail crime to fund

other violent activities and utilize traditional money

laundering techniques to conceal their profits. It is time

the Department of Justice have the resources it needs to

effectively investigate and prosecute these criminals.

Retailers spend millions of dollars on robust a security

and loss prevention effort, that protects their goods and

ensures consumer safety. They are continually upgrading and

adapting these programs to limit retail crime. Nevertheless,

this criminal activity continues to grow despite our best

efforts.

We thank you for your consideration of H.R. 5932 and urge

its passage. We look forward to seeing this legislation

become law and working with you in the future to continue to

work on this crime epidemic.

Sincerely,

John G. Emling,

Senior Vice President, Government Affairs, Retail Industry

Leaders Association.

Mr. Speaker, I have no further requests for time, and I reserve the balance of my time.

As has been said, Mr. Speaker, I have no further requests for time. I would like to thank the gentleman from Texas for his strong support.

Mr. Speaker, I yield such time as he may consume to my colleague, the gentleman from Virginia (Mr. Goodlatte).

Mr. Speaker, I would urge my colleagues to support H.R. 5932, and I yield back the balance of my time.

Mr. Speaker, I rise in support of H.R. 5932, the Organized Retail Theft Investigation and Prosecution Act of 2010. This legislation is an important step in combating a growing threat to retailers and consumers.

I am pleased to join my Judiciary Committee colleagues Chairman Conyers, Ranking Member Smith and Chairman Scott as an original sponsor of this legislation, and I thank the gentleman for true bipartisanship in allowing me to catch my breath in order to be able to give these remarks.

Organized retail theft is a huge and growing problem in the United States. According to FBI estimates, organized retail theft rings cost businesses more than $30 billion in losses annually. Organized retail theft groups target anything from everyday household commodities to health products to baby formula that can be easily sold through flea markets, swap meets, shady storefront operations, and through online marketplaces.

Thieves often travel from retail store to retail store, stealing relatively small amounts of goods from each store but cumulatively stealing significant amounts of goods. Once stolen, these products are sold back to fencing operations, which can dilute, alter, repackage the goods, and then resell them, sometimes back to the same stores from which the products were originally stolen. These goods are also sold at flea markets, pawn shops and increasingly on the Internet.

When a product does not travel through the authorized channels of distribution, there is an increased potential that the product has been altered, diluted, reproduced, and/or repackaged. These so-called ``diverted products'' pose significant health risks to the public, especially the diverted medications and food products. Diverted products also cause considerable financial losses for legitimate manufacturers and retailers. Ultimately, the consumers bear the brunt of these losses as retail establishments are forced to raise prices to cover the additional costs of security and theft prevention measures.

Even more troubling is where the money is going. We have seen evidence that organized retail theft is increasingly being used to fund international organized crime and other nefarious activities. At the State level, organized retail theft crimes are normally prosecuted under State shoplifting statutes as mere misdemeanors. As a result, the thieves who participate in organized retail crime rings typically receive the same punishment as common shoplifters. The thieves who are convicted usually see very limited jail time or are placed on probation.

I believe that the punishment does not fit the crime in these situations. Mere slaps on the wrists of these criminals have practically no deterrent effect. In addition, the low-level criminals who are actually stealing these goods from the shelves are easily replaced by the criminal organization's higher level coordinators.

During my 8 years of working on ways to combat organized retail theft, I found that the Federal law enforcement community believed it had adequate Federal laws to prosecute organized retail theft crimes, but that poor communication, lack of coordination among State and local law enforcement and lack of resources were major impediments to effective enforcement.

In order to improve the communications and intelligence-sharing between industry and law enforcement, I offered an amendment to the Department of Justice's reauthorization bill back in 2005, which created a Federal definition of organized retail theft crimes and directed the FBI to contribute to the construction of a national database housed in the private sector where retail establishments, as well as Federal, State and local law enforcement, could compile evidence on specific organized retail theft crimes to aid investigations and prosecutions. This database, which has now become the current LERPnet, has helped to put the pieces together to show the organized and multi-state nature of these crimes as well as to provide important evidence for prosecutions.

I am also pleased to report that the private sector is working together to address this problem. Earlier this year, the National Retail Federation partnered with eBay to develop greater information sharing between eBay and participating retailers. This partnership will hopefully increase the likelihood that more organized retail theft will be detected and prosecuted. H.R. 5932 will build upon the successes of these efforts to provide additional resources to the FBI to investigate organized retail theft.

The bill funds and requires the Attorney General to establish an organized retail theft investigation and prosecution unit within the Department of Justice. This unit will include representatives from the FBI, ICE, U.S. Secret Service, and postal inspectors, as well as prosecutors. The unit will investigate and prosecute large-scale organized retail thefts and will provide assistance to State and local law enforcement agencies. The unit will also work in consultation with retailers and online marketplaces to gather information about and identify trends in organized retail thefts.

In addition, H.R. 5932 instructs the Attorney General to prepare a report to Congress on how retailers and law enforcement agencies can best combat organized retail theft. This legislation is supported by the National Retail Federation, the Retail Industry Leaders Association, the Coalition Against Organized Retail Crime, the Food Marketing Institute, the National Association of Chain Drug Stores, eBay, and the Entertainment Merchants Association.

Again, I wish to thank my colleagues Chairman Conyers, Ranking Member Smith and Chairman Scott for their dedication to this issue and for working with me to draft this bipartisan legislation. I urge my colleagues to support the bill.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, H.R. 5932, the Organized Retail Theft Investigation and Prosecution Act of 2010, is an important step in combating a crime that costs retailers and taxpayers billions of dollars every year. I am pleased to join my Judiciary Committee colleagues Chairman Conyers, Chairman Scott, and Congressman Goodlatte as an original sponsor of this legislation.

Organized retail theft involves the theft of large quantities of merchandise from retail stores. Unlike shoplifters, these thieves steal the merchandise with the intention of selling it back into the marketplace.

In the past, the majority of these stolen goods were resold at swap meets, flea markets, or pawn shops. Today, the most popular venue for selling stolen goods is the Internet. Web sites such as eBay, Craigslist, and Amazon are being exploited by organized retail thieves to sell their stolen goods with relative ease and anonymity. This dynamic makes it increasingly more difficult for retailers and law enforcement agents to identify and apprehend these thieves.

According to FBI estimates, organized retail theft rings cost businesses more than $30 billion in losses annually. A recent survey conducted by the National Retail Federation found that nearly 90 percent of the retailers surveyed have been victimized by organized retail theft, an 11 percent increase from 2007. The survey also found that roughly 6 out of 10 retailers have seen an increase in organized retail theft in just the last 12 months.

In 2003, the FBI established an Organized Retail Crime Initiative to identify and dismantle large multijurisdictional organized retail crime rings. This initiative included the formation of a National Retail Federation FBI intelligence network. The network is intended to establish an effective means of sharing organized retail crime information and intelligence to discuss trends as they relate to specific sectors and regions of the retail market, and to identify and target the more sophisticated criminal enterprises.

Earlier this year, the National Retail Federation partnered with eBay to develop greater information sharing between eBay and participating retailers. This partnership is a significant step forward in the fight against organized retail theft. Bringing these two industries together will hopefully increase the likelihood of linking thefts from retail stores to goods offered for sale on eBay's Web site.

H.R. 5932 builds upon these efforts by increasing the Federal resources dedicated to organized retail theft investigation. The bill requires the Attorney General to establish an Organized Retail Theft Investigation and Prosecution Unit within the Department of Justice. This unit will include representatives from the FBI, ICE, the U.S. Secret Service and postal inspectors, as well as prosecutors.

The unit will investigate and prosecute large-scale organized retail thefts and provide assistance to State and local law enforcement agencies. The unit will also work in consultation with retailers and online marketplaces to gather information about and identify trends in organized retail thefts.

H.R. 5932 instructs the Attorney General to prepare a report to Congress on how retailers and law enforcement agencies can best combat OCR. The bill authorizes $5 million a year over 5 years to operate the unit.

This legislation is supported by the National Retail Federation, the Retail Industry Leaders Association, the Coalition Against Organized Retail Crime, the Food Marketing Institute, the National Association of Chain Drugstores, eBay, and the Entertainment Merchants Association.

I would like to thank my colleagues again, Chairman Conyers, Chairman Scott, and Congressman Goodlatte for their dedication to this issue and for working together to draft this bipartisan legislation. I urge my colleagues to support this bill.

Mr. Speaker, I hope the individual I just mentioned, the gentleman from Virginia, Mr. Goodlatte, is on his way to the floor, and I hope he will be able to speak on this bill shortly. So I reserve the balance of my time.

Mr. Speaker, I appreciate the indulgence of the gentleman from Virginia (Mr. Scott), but since our expected speaker is not yet on the floor and I am not entirely certain of the time of his arrival, although I am stalling slightly, I will yield back the balance of my time.

Mr. Speaker, I yield back the balance of my time.