COVID-19 has accelerated changes in how Americans shop, and this year’s holiday shopping season will continue this trend. Promotions and deals have started earlier than ever before, and retailers are encouraging more online ordering and home delivery. This trend has also exacerbated a growing problem in retail, the explosion of counterfeit and stolen goods being sold online via third-party marketplaces.
While organized retail crime (ORC) has always been a concern for retailers, it has become an even bigger issue in recent years as third-party platforms like Amazon, Facebook Marketplace, and others have made it easy for criminal networks to anonymously sell fake or stolen products to unwitting consumers. According to the Department of Homeland Security’s report on counterfeit and pirated goods, multiple accounts can easily be set up across different platforms, allowing bad actors to simply establish new profiles in the event that one of their pages is taken down. Pursuing them is a game of whack-a-mole for asset protection professionals and our partners in law enforcement.
While third-party marketplaces have attempted to downplay the incidence of such crimes, the evidence is mounting that their scope and sophistication is growing. These attacks are more than simple property crimes; they are organized and put store employees in harm’s way. And it’s not just a concern for local retailers. ORC networks are often tied to other criminal activities, including human trafficking, money laundering, and narcotics.
The key to reversing this trend is basic transparency. One of the top priorities for retailers in the next Congress will be an effort to modernize consumer protections laws by passing the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers (INFORM) Act. The INFORM Act will shine a bright light on the dark corners of the Internet and make it much more difficult for fraudsters and criminals to create a business selling counterfeit and stolen goods. The INFORM Act is quite simple. It will require online marketplaces to collect and verify third-party sellers’ government ID, tax ID, bank account information, and contact information, as well as require high-volume sellers to disclose contact information to consumers.
Basic transparency and verification requirements will not hurt legitimate businesses, but it will remove anonymity on these platforms and make it harder for bad actors to catfish consumers with fake and deceptive profiles. And importantly, it will provide retail asset protection teams and law enforcement agencies with greater visibility to track illicit sales and organized criminal activity.
Nobody has figured out how to eliminate criminal activity, but we can make it harder and less lucrative to profit from theft. The INFORM Act will make it more difficult for bad actors to build an illegal business by targeting local retailers and stealing mass quantities of merchandise for resale. Without the ability to hide behind fake accounts, the risks will be greater, and the odds will be even. And the days of playing whack-a-mole will be over.