Organized retail crime has moved away from flea markets and corner stores and onto the Internet,
September 8, 2021, Los Angeles, CA – Organized crime rings are stealing billions in merchandise to peddle online -- often on Amazon, says a Wall Street Journal investigation. Online sales of stolen merchandise have plagued e-commerce sites for years, now supercharged by the pandemic and growth of unregulated websites. Consumers are on their own, left to sort through an inexhaustible supply of stolen, counterfeit, fraudulent, and replica goods from unvetted sellers allowed to sell just about anything they want.
Organized retail crime has moved away from flea markets and corner stores and onto the Internet, where criminals move their products quickly and anonymously. Professionals thieves known as "Boosters," often drug users targeted by crime rings, typically sell their stolen goods for about 5% to 10% of retail value to a street-level fence, who then sells them to a larger-scale distributor. According to retail investigators, law enforcement officers, and court documents, the goods are then peddled online, often on Amazon.com Inc.'s retail platform.
Investigators and law-enforcement officials say Amazon is complicating the battle, given its vast pool of potential customers and, in investigators' view, insufficient vetting of sellers or their listings. Amazon "may be the largest unregulated pawnshop on the face of the planet," said Sgt. Ian Ranshaw of the Thornton, Colorado police department. "It is super hard to deal with them."
The Coalition of Law Enforcement and Retail, a trade association headed by CVS Health Investigator Ben Dugan, estimates that organized retail theft accounts for around $45 billion in annual losses for retailers, up from $30 billion a decade ago. This year, Mr. Dugan expects to close 73 e-commerce cases involving $104 million of goods stolen from multiple retailers and sold on Amazon.
The CVS investigative team uncovered a San Francisco booster ring that stole up to $39,000 a day in merchandise in a nearly $30 million operation. The ring operated at least two Amazon storefronts and sold to at least three other Amazon sellers. Amazon provided correspondence with the ringleader regarding complaints about his suspended account, but didn't hand over financial details of transactions or internal notes about suspicious activities, despite repeated requests by law enforcement, said a person close to the investigation. According to the California attorney general's office, a police raid on the properties of the ring resulted in the recovery of more than $8 million in over-the-counter medication and other products from various retailers, along with $85,000 in cash.
A house in Katy, Texas was turned into a warehouse, complete with an elevator moving goods between floors, where former painting contractor Steven Skarritt allegedly ran an Amazon storefront. The operation sold almost $5 million in stolen goods between 2018 and 2020, according to a search warrant investigators served on Amazon in January. Investigators recovered 55 pallets of stolen merchandise, including power drills, levels and vacuums.
Retail and law-enforcement investigators say they struggle to obtain information about potentially illicit sellers from Amazon, which generally declines to provide information about sellers without a subpoena or other legal action. Investigators say other online selling platforms such as eBay Inc. are more willing to cooperate without legal intervention.
Amazon spokesman Alex Haurek said the company doesn't tolerate the selling of stolen goods and works with law enforcement and retailers to stop bad actors, but doesn't share customers' and sellers' personal information without a subpoena due to privacy concerns.
In recent years, retailers have pressed Congress to pass legislation requiring e-commerce sites to verify details for third-party sellers and make certain information public, making it harder for people to sell stolen goods. Amazon and other online marketplaces, including eBay, lobbied against the bill, saying such measures would invade sellers' privacy. Amazon spokesman Alex Haurek said the legislation would favor large retailers at the expense of small businesses that sell online.
Amazon is not a better marketplace that serves consumers; Amazon is an arena of creative destruction, leaving consumers on their own to sort the legitimate, honest sellers from all the bad actors under an umbrella of legal immunity. They are voracious churners of counterfeit, fraudulent items and scams, indifferent to the damage they cause to consumers, legitimate sellers, and manufacturers while fulfilling their desire to be the sole source of items for purchase. There is no incentive to clean up their website -- they make too much money. Amazon paid no federal income tax on $11.2 billion in profit in 2018 and a 1.2% tax rate on a $13.3 billion profit in 2019. First-quarter 2021 net income hit a first-ever high of $8 billion.
While Congress is engaged in partisan bickering, America is being destroyed by China, unregulated e-commerce, and big tech.
Source: Rebecca Ballhaus and Shalini Ramachandran, Alexandra Berzon, contributing, "Inside a $45 Billion Retail Crime Spree" The Wall Street Journal (September 2, 2021)
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