Michigan: The Latest State to Tackle ORC

As the public becomes increasingly aware of organized retail crime (ORC) through outrageous acts caught on camera and news stories of lawless, violent thefts, pressure has increased on lawmakers to do their part. In addition to the violence, implications from lost tax revenue arising from store closures and shoppers turning to the internet to avoid unsafe areas, have made this a priority among legislators. As legislation makes its way slowly through the federal level, most recently with the Combatting Organized Retail Crime Act of 2022 introduced by Senators Catherine Cortez Masto (D-Nev) and Chuck Grassley (R-Iowa), more states have stepped up to the plate. Legislation to bolster efforts to combat crime has passed in a handful of states, including Ohio, California, Florida, and, most recently, Michigan.

Damon Cavasin

According to Damon Cavasin, director of asset protection with Spartan Nash grocery stores based in Michigan, “It’s exciting to see progress with legislation targeting ORC in Michigan. The work of the Michigan Retailers Association (MRA) has been instrumental in those efforts. Providing more transparency to online marketplace sellers, increasing penalties for ORC rings, and funding an organized retail crime unit will certainly help reduce ORC, ultimately making our retail stores safer and helping us reduce shrink so that we can keep our prices as low as possible for shoppers.”

In order to understand the work that went on behind the scenes to get this legislation passed, Loss Prevention Magazine interviewed Amy Drumm, senior vice president of government affairs with the Michigan Retailers Association. MRA’s role in assisting this legislative effort is instructional and will highlight the importance of getting involved at the local and state level for retailers.

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STEFANIE HOOVER: Tell us about yourself and the MRA.

AMY DRUMM: Michigan Retailers Association is the voice of the retail industry in Michigan. Founded in 1940, the association works to promote retail‑friendly policies, protect the industry from harmful taxes and regulations, offer quality services to our members, and educate consumers on the importance of keeping their money in Michigan.

Amy Drumm

My responsibilities include day-to-day advocacy in the state capitol, as well as analysis and monitoring of all legislation and public policy. I serve as liaison to retail industry government affairs professionals and organizations and oversee the MRA Political Action Committee. In 2018, I was nationally recognized by the Food Marketing Institute for my leadership and work on Michigan’s ban on local excise taxes or fees on food and beverages—the country’s first-ever such law. In 2020, I was appointed by Gov. Gretchen Whitmer to serve on the state’s Organized Retail Crime Advisory Board on behalf of the retail industry. A University of Michigan graduate, I joined MRA in 2012 and previously was legislative director for then-State Rep. Sharon Tyler.

STEFANIE: There seems to be a positive trend of states tackling ORC in lieu of or in addition to federal level efforts. Tell us about the recent three-pronged bill that was passed in Michigan?

AMY: The states often play a key role in stepping in when the federal government and Congress moves too slowly. State-led action gives us more immediate, direct impacts to our communities and allows us to test solutions on important issues like fair sales tax collection and ORC rather than waiting for a federal solution. The goal is certainly to drive toward a uniformly applied, federal solution, which the states have led on more often than not.

As of July 21 this year, all three of MRA’s ORC initiatives have been signed into law. This three‑pronged approach includes the INFORM Act (HB 5486), adding ORC as a racketeering offense (SB 691), and a $3.5 million budget line item to create an ORC unit under the Attorney General.

The INFORM Act requires online marketplaces to verify high‑volume, third-party sellers and provide their contact information to purchasers. Adding ORC to the state’s racketeering act gives prosecutors the ability to charge criminal ORC rings with up to twenty-year felonies and require forfeiture that will help fund future Attorney General-led investigations. In addition to the two law changes, the fiscal year 2023 Michigan budget includes $3.5 million in one-time funding to be used by the Department of Attorney General to create an organized retail crime unit.

STEFANIE: What was MRA’s role in getting this legislation passed and the hard work that led to its passage?

AMY: MRA took the lead in coordinating the legislative efforts of having the three legislative pieces drafted, introduced, and moved through the legislative process. Our role is to speak for the retail industry at large. After talking with our members, we provided testimony before the House and Senate committees in support of the INFORM Act and real penalties for ORC crimes.

We built a coalition with likeminded associations to highlight the impact ORC has on not just retailers but also manufacturers in perpetuating other crimes. We worked in partnership with some of our more engaged members to educate lawmakers on the INFORM Act and the need for a statewide ORC unit within the Attorney General’s office. MRA was able to connect the dots on the three efforts and convey the message that all three pieces were needed to crack down on ORC in the state.

STEFANIE: What do you see as being the primary mission of the ORC unit?

AMY: The primary mission of the ORC unit is to connect law enforcement, legal, and retail partners on what ORC trends are happening in Michigan and to track multi-jurisdictional cases efficiently. Michigan’s advisory board is a public body, so the meeting minutes are public record. The ORC unit will be able to dive deeper into details and work cases more intimately without any public reporting requirements.

STEFANIE: Help us understand how the special ORC unit will operate.

AMY: The Attorney General’s office is taking the lead on setting up and implementing the ORC unit funded by the state budget. Their vision is for the unit to be comprised of Assistant Attorneys General dedicated to multi-jurisdictional ORC crimes working with local and state level law enforcement. The state has indicated they will seek collaborative agreements with other states to work cases that cross state lines more effectively—and MRA is committed to supporting the Attorney General however they may need.

STEFANIE: What are the qualifiers to meet the level of racketeering described in SB 691?

AMY: Michigan’s ORC Act does not have a dollar threshold, but does include specific activities including organizing, supervising, financing, managing, or assisting another person in committing an organized retail crime with the intent to resell, distribute, or otherwise reenter the retail market. The act also spells out that tampering with antitheft devices or fire exit alarms and receiving, purchasing, or possessing known or believed to be stolen retail property as an organized retail crime. If a person is charged with ORC, they will now also be able to be charged with racketeering—a significant step‑up for law enforcement.

STEFANIE: HB 5486 is of great interest. Will the ORC unit be involved in enforcing it? Retailers are particularly interested in how online sellers would be addressed.

AMY: The Attorney General’s office has the sole authority to bring action against someone who violates the INFORM Act. There may be some crossover in terms of specialized staff that works on the ORC unit and if cases involve suspected resale of items online, but we anticipate the Attorney General’s office will handle much of the enforcement of the INFORM Act under the consumer protection division, which corresponds with the section of law in which it was added. The AG’s office is looking at what other states have done that’s been effective to enforce the INFORM Act.

STEFANIE: The legislation goes into effect in January. What is happening behind the scenes to get ready?

AMY: The INFORM Act takes effect in January 2023 while the ORC unit funding was allocated on October 1, 2022, and the stricter penalties by adding ORC to the racketeering act took effect on October 19. The AG’s office is working to fill the new positions in the ORC unit. We’re partnering with the AG to help educate local prosecutors and law enforcement about the new stricter penalties for ORC.

STEFANIE: Will retailers have an opportunity to be involved in the ORC unit in some form?

AMY: Yes, the ORC unit has received much of the focus but there was also a plan to create an unofficial ORC taskforce made up of federal, state, and local law enforcement combined with retail loss prevention officers. MRA worked with our members to provide a list of key loss prevention contacts at large retail companies who want to be involved in the taskforce and work with the ORC unit.

STEFANIE: Michigan created a line item worth $3.5 million to support the ORC unit, while some states are attempting to do this work with no additional funding. Why did the MRA feel it important to fund at this level?

AMY: MRA and the Attorney General’s office had the same goal going in—to get the ORC unit to a point where it is self-funding. To get there, we needed an initial investment of state dollars. We felt it was important it was a one-time funding request so we aimed high and were successful in getting $3.5 million over two years. That gives everyone a little flexibility in timing and seed funding to get the unit to become self-sustaining based on forfeiture dollars.

STEFANIE: What role will communication, awareness, and education play in the efforts of the ORC taskforce of law enforcement, retailers, and the general community?

AMY: These efforts will largely happen behind the scenes. We do not expect the taskforce to leverage a public awareness campaign to the general community but rather to share information with those involved in stopping, catching, and charging criminals committing ORC.

STEFANIE: How closely do you anticipate your ORC team will be working with other ORC taskforces across the US?

AMY: The Attorney General’s office indicated their strong interest in collaborating with other states to prosecute these multi-state offenders.

STEFANIE: What were some of the more difficult hurdles that had to be overcome to get the legislation passed?

AMY: Some lawmakers were concerned that adding stricter penalties to our ORC law would mean simple shoplifters would end up receiving a twenty‑year felony charge. We had to overcome the difference between shoplifting for personal gain and organized retail crime activities as well as clarifying these penalties are intended for those running the organization, not the booster recruited to steal. We were also careful to avoid language that could target possible victims of organized crime as accomplices.

On the INFORM Act, our challenges were the lack of other state laws that were being enforced. There were questions about whether it was the right tool to stop ORC and if our law would be out of sync with other states or federal laws. Modifying our language to mirror the proposed federal INFORM language and legislation recently passed in Ohio alleviated much of those concerns. It took some time to draft revisions and then reconcile which bills would ultimately move across the finish line. MRA’s focus on a three‑pronged approach showed legislators that all three pieces were needed to see a true impact on ORC activity.

We also had some challenges on timing and getting the bills scheduled on committee agendas. Michigan has a year-round legislature, so our legislative agendas move more slowly than other states and there is a tendency for lots of different issues to come up for robust discussion. Working to educate committee members, committee chairs, and legislative leaders on the importance of the issue and resolving their concerns while aligning with model language helped us get the bills to move.

STEFANIE: Give our retail readers your recommendations for other states looking to have similar legislation passed.

AMY: Taking a single legislative solution approach to ORC likely won’t achieve the needed results. We were successful because we pitched the three pieces together and built a strong coalition in support of the legislative changes. Gaining USA-IT’s support on our legislative changes was also extremely helpful to leverage the additional coalition and network of support focused on stopping illicit trade. [EDITOR’S  NOTE: United to Safeguard America from Illegal Trade (USA-IT) is a public‑private sector partnership protecting Americans’ security and prosperity from black market criminals.]

STEFANIE: How will this bill specifically stop ORC activity on online marketplaces? Or will more have to happen on the national level in order to stop this activity?

AMY: The INFORM Act limits the somewhat unchecked ability for criminals to utilize online marketplaces to resell stolen or counterfeit goods without sharing their information. It provides transparency for law enforcement, loss prevention officers, and others in identifying and communicating with any suspicious online, marketplace sellers. The requirement for marketplaces to include an obvious method to report any suspicious activity should help flag this activity for marketplaces to act sooner.

Enforcement is the critical piece and the more states that adopt INFORM legislation and take enforcement seriously, the more likely we are to see ORC activity greatly reduced on online marketplaces as the marketplaces more thoroughly vet their sellers and hold them accountable for the products they sell.

Paul Jaeckle
Paul Jaeckle

STEFANIE: Retailers are clearly supportive of these efforts and excited by the prospect of strong state level partnerships. I asked Paul Jaeckle, LPC who is vice president of asset protection for Meijer Stores, which is based in Michigan, for his opinion. He said, “One of the many things that makes legislation like this so powerful at the state level is that it is developed with the support of retailers uniformly and has high parallel similarities from state to state as well as what is happening with the development of the federal INFORM Act. Having strong relationships with your government affairs partners, retail merchant associations, and other advocacy groups are the key to making legislation like this work.”

AMY: As I mentioned, MRA’s work on this legislation was based on the input and strong support we get from our retail members. I encourage all retailers to get involved in the state retail association where they can make a real difference in getting legislation passed to help impact ORC and other retail crimes.

STEFANIE: Congratulations Amy on what you and the MRA have achieved. We appreciate your insights into this important topic.

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