Target, other stores battle theft rings fencing stolen goods on Web

ELLICOTT CITY, Md. — With frosted, unmarked windows and no sign hanging from the storefront, Target's retail-crime-investigations center doesn't even look like it is being used.

But inside, analysts and investigators pore over footage from surveillance cameras and inventory spreadsheets. They are searching for leads on theft rings that have replaced old-school shoplifters with sophisticated criminals.

It's a battle where major U.S. retailers are struggling to gain ground. While retailers spend $12 billion a year to battle organized retail crime, thieves pilfer $15 billion to $30 billion annually, a huge blow to businesses and, ultimately, their customers.

"These are sophisticated crime rings," said Mike Erlandson, who heads government relations for Supervalu grocery stores. "They know what to steal and how much to steal."

Target has responded by opening several crime centers. The one in suburban Baltimore recently helped break a ring of 14 people who stole $20 million in merchandise from several retailers over a three-year period.

Despite such victories, organized retail crime persists, in part, because the Internet makes it easier than ever to dispose of stolen merchandise.

Thieves snag popular, easy-to-move items — everything from Enfamil baby formula to Gillette razors to Olay lotion, often by the case. They work fast and efficiently, snatching a couple Dyson vacuum cleaners and busting out the fire doors of stores into waiting getaway cars.

"We're talking about people who steal for a living," said Mike Serio, who leads Target's Maryland crime center.

When it's time to turn the loot into cash, the crime rings go online. Anonymity and a worldwide market make Internet sales safer than ever for criminals, retailers contend — safe enough that some rings take pre-orders, confident they can steal what's in demand.

"The ease of selling on the Internet has made for crime waves," Erlandson said.

For that reason, Target, Supervalu, Wal-Mart and other retailers are pushing federal legislation to fight what they call "e-fencing."

Online markets make retail crime too "low risk, high reward," said Brad Brekke, corporate vice president for loss prevention at Target, the No. 2 U.S. retailer. "It's much easier to deal in stolen property than to deal drugs."

Retailers' efforts to curtail the online sales of stolen goods have created a political tussle against Internet companies, with both sides coordinating strong lobbying efforts.

To date, the online industry has fought off bills in Congress that, among other things, would have required eBay, Amazon.com and other online brokers to keep serial numbers of certain items and reveal records of high-volume sellers to businesses that suspect those sellers traffic in their stolen merchandise.

"We have 94.5 million active users," said Paul Jones, a former retail executive who directs global asset protection for eBay. "They're saying, 'You now need to put their names and addresses out there because of a small number of bad actors.' That would be like retailers making customers wear name tags when they come into a store."

Amazon.com didn't respond to a request for comment.

Jones disputes the notion that the ease of selling stolen goods online has spurred more retail crime. Overall, retail theft seems to be going down, not up, Jones maintained.

A 2010 survey by the National Retail Federation showed that 90 percent of those questioned believed they had been victims of organized retail crime in the previous 12 months, and 59 percent thought there had been an increase from the previous year. That compared with 92 percent and 73 percent, respectively, in 2009.

Supported by retailers and eBay, a bill that would have established an Organized Retail Theft Investigation and Prosecution Unit in the U.S. Department of Justice passed the House in 2010. It died from inaction in the Senate Judiciary Committee.

However, political diplomacy inevitably seems to break down around codified accountability for online markets. And that, retailers insist, is the only thing that can really deter e-fencing.

"We've been at the table with eBay," said Lisa LaBruno, a former prosecutor who is vice president of loss prevention and legal affairs at the Retail Industry Leaders Association.

"But eBay is not the only player. We've got to have a global solution. We need federal legislation that compels all the players. ... Right now, nothing compels them to do anything."

In fact, Brekke pointed out, online markets "make a certain profit on every sale, legitimate or not."