Colo. AG Sets Task Force to Support Online Anti-Theft Crackdown

Colorado Attorney General Phil Weiser (D) announced Wednesday a task force formed to provide better coordination among law enforcement to identify, disrupt and prosecute organized criminal rings that steal goods from retailers and resell them through online marketplaces.

That’s ahead of the state’s implementation of a new state law, HB 22-1099, Online Marketplaces and Third-Party Sellers, which goes into effect Monday, one of numerous legislative initiatives around the country designed to stem the sales of counterfeit or stolen goods through online marketplaces by high-volume third-party sellers. Colorado’s task force will create resources for cross-jurisdictional investigations, share best practices and provide a “point of engagement” for private sector and nonprofit organizations, Weiser said.

Colorado’s law stipulates that an online marketplace must require each high-volume third-party seller with $20,000 or more in annual gross revenue on the marketplace to disclose to the consumer the seller’s full name, physical address and whether it used a different seller to supply the consumer product to the consumer upon purchase. If requested by the purchaser, the marketplace must disclose information relating to any seller that supplied the product if the seller is different from the third-party seller shown on the product listing prior to purchase.

Congress took up the battle in the Integrity, Notification and Fairness in Online Retail Marketplaces (Inform) for Consumers Act, which was wrapped into the $1.7 trillion omnibus spending bill President Joe Biden signed last week. Co-sponsor Sen. Dick Durbin, D-Ill., said the Inform Consumers Act will “shine a light that will deter online sales of stolen, counterfeit, and unsafe goods and protect consumers.” Co-sponsor Bill Cassidy, R-La., said criminal organizations are “putting consumers in danger by tricking them into buying counterfeit and hazardous products online.” The Inform Act is “crucial to protecting Americans from scammers on the internet,” he said.

The National Retail Federation hailed the inclusion of the Inform Act in the omnibus legislation, saying it will bring “transparency to online marketplaces by requiring them to verify the identities of high-volume third-party sellers,” to help curb the “fencing” of stolen merchandise and address the sale of counterfeit goods by organized crime retail groups.

The Inform Act directs online marketplaces to verify high-volume third-party sellers by authenticating the seller’s government ID, tax ID, bank account information and contact information. High-volume third-party sellers are defined as vendors with 200 or more discrete sales in a 12-month period amounting to $5,000 or more.

An Oct. 4 letter from the Buy Safe America coalition signed by organizations including Best Buy, the Communications Cable and Connectivity Association, HP, Target, Transnational Alliance to Combat Illicit Trade, the U.S. Chamber of Commerce and Walmart, said the legislation will provide law enforcement with additional tools to stop and prosecute criminal rings from selling illicit goods and who are putting retail workers and customers in harm’s way.

As of Monday in Colorado, companies that operate online marketplace platforms will have to identify online sellers, verify seller information and provide seller disclosures to consumers, Weiser said. The law also requires online marketplaces to place an “easily identifiable” reporting tool on their platforms for consumers to use to flag and report suspicious activity. Weiser is also seeking more resources from the General Assembly Joint Budget Committee for a special prosecutions unit to staff new efforts designed for investigating and disrupting organized retail theft rings, plus enforcing the new online retail theft law.

A 2022 NRF survey found that retail shrink, as a percentage of total retail sales, accounted for $94.5 billion in losses in 2021, primarily driven by external theft, including that attributable to organized retail crime.

A U.S. Chamber of Commerce report cited a 50% rise in retail losses due to organized retail crime over a five-year period, reaching $700,000 for each $1 billion in sales in 2020, said Weiser. In 2019, $68.9 billion worth of products were stolen from U.S. retailers, said Colorado Retail Council President Chris Howes.