EcommerceBytes-NewsFlash, Number 1835 - July 16, 2008     3 of 4

Legislation Targets eFencing on Sites Like eBay

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US Representative Brad Ellsworth of Indiana introduced legislation on Tuesday that would make organized retail crime a federal offense and would make marketplaces like eBay more accountable for stolen goods listed on their sites. The National Retail Federation (NRF) issued a press release applauding legislation and said this week's ruling in the Tiffany-eBay counterfeiting case, which eBay won, demonstrated that current laws are not adequate to police online marketplaces.

NRF Vice President for Loss Prevention Joseph LaRocca said, "A significant portion of this bill deals with on-line fencing of stolen goods. On-line auctions and other markets on the Internet provide a Wild West environment where thieves can re-sell stolen property to customers on a national or even international level with virtually no questions asked."

House Resolution 6491, the Organized Retail Crime Act of 2008, was introduced on Tuesday and was referred to the House Committee on the Judiciary. The text of the bill is not yet available online. According to the NRF:

The bill would define organized retail crime as "the acquiring of retail merchandise by illegal means for the purpose of reselling the items" and make such activity - including transportation, sale or receipt of stolen retail goods, - a federal crime. Among other provisions, sale of stolen or counterfeit gift cards, or items with faked Universal Product Codes or Radio Frequency Identification chips would be considered fraud. Those found guilty of committing or facilitating organized retail crimes would be subject to appropriate existing fines, prison terms and forfeiture, and the legislation would require the U.S. Sentencing Commission to review its guidelines for cases involving such crimes.

The bill would also establish that operation of on-line marketplaces such as auction sites can be considered "facilitation" of organized retail crime unless the operator can show that specific steps had been taken to ensure that goods being sold were not obtained by theft or fraud. Site operators would be required to "expeditiously" investigate complaints that stolen items are being sold, maintain records of the names and physical addresses of high-volume sellers, and require high-volume sellers to either post that information along with merchandise offerings or make it available upon request to any business with a reasonable suspicion about the merchandise. Operators of on-line marketplaces could also be sued by any business whose stolen goods were sold.

eBay did not respond to AuctionBytes' request for comment about H.R. 6491 by press time. NetChoice, a coalition of trade associations and ecommerce businesses - including eBay - has a statement on its homepage about such ecommerce-related legislation:

Online retail sites are being blamed for offline shoplifting, and some legislative proposals would make online marketplaces liable for making sure that items sold on their sites are not stolen. Yet given that almost half of all retail inventory losses are due to thefts by store employees, we know that e-Commerce is not to blame. Laws targeting online auction sites would therefore fail to correct core retail security problems while unfairly burdening e-Commerce.

Website Politico.com published a comprehensive article last month about the push for such legislation by the Coalition Against Organized Retail Crime and the pushback from NetChoice and online auction users.

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About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.


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