Retail Theft Rises, Driven by Online Reselling - TheStreet

Retail Theft Rises, Driven by Online Reselling

Online marketplaces are making it easier for thieves to resell stolen goods.
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BOSTON (TheStreet) -- Police in Fort Worth, Texas, spent five weeks investigating a case of stolen merchandise from Target (TGT) - Get Report found in a warehouse.

Investigators from the police department and the retailer busted a local flea market for storing and selling $3 million in goods that had been stolen. Items included razors, detergent, pseudoephedrine and shampoo.

Some of the products, such as baby formula and over-the-counter medications, had been sitting in the warehouse so long that they had become expired, Target spokeswoman Bethany Zucco said. But that wasn't stopping the thieves from selling them.

"One of our biggest concerns was that people were being sold expired goods," Zucco said. "People were buying goods that were outdated and that had been stored in unsafe conditions."

More companies are seeing their stolen merchandise for sale in online marketplaces. The sluggish economy and the development of online marketplaces and auction sites have given rise to a new wave of retail theft. Companies are losing billions of dollars in merchandise each year, and it's only getting worse.

Theft is nothing new in the retail the industry, though the advancement of technology is making it easier for thieves to move their goods, says Rhett Asher, vice president of loss prevention at the National Retail Federation.

"Online auctions give new anonymity that we haven't seen before," Asher says. "It's hard because every time security gets better, thieves find a new way around it."

People caught shoplifting are often ordered by the court system to complete a program run by the National Association for Shoplifting Prevention. NASP communications director Barbara Staib says the number of people in the program has been steadily increasing since 2008, when the full brunt of the economic recession bore down.

When shoplifters are admitted to the program, they're asked a series of questions. The NASP has started querying if shoplifters ever sold stolen merchandise online.

"People are becoming too comfortable on the Internet," Staib says. "They steal it and sell it online, where social graces don't exist. People feel like they can say and do anything online as if the Internet is separate from reality."

According to a survey conducted by the National Retail Federation last year, 92% of retailers reported that they were victims of organized retail crime in the previous 12 months, up from 84% in 2008 and 79% in 2007.

Paul Jones, global director of asset protection at online auction site

eBay

(EBAY) - Get Report

, says retailers laid off 300,000 workers, including security staff, during the recession. "There were fewer people on the floor to keep the store secure, and criminals took advantage of that," he says.

The retail industry is now pushing for legislation that would make organized retail crime a federal offense. Such crimes would be defined as "the acquiring of retail merchandise by illegal means for the purpose of reselling the items."

Target,

Home Depot

(HD) - Get Report

and several other large retail companies want laws that make it more difficult to sell stolen goods online. According to Staib of the National Association for Shoplifting Prevention, such laws would require high-volume Internet sellers to identify themselves and register goods that they sell.

The National Retail Federation has a partnership with eBay to help mitigate the amount of stolen products sold on the Internet.

"If a retailer has a loss of 50 iPods, we will be notified immediately, and we will be able to look at that information, match it against what's going on at eBay and make sure there is no connection," eBay's Jones says.

-- Reported by Theresa McCabe in Boston.

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