As every online shopper knows, there are a lot of bargains out there in the proliferation of social media venues.
But what you might not know is that some of the merchandise you find on eBay, Craigslist and Facebook Marketplace is so cheap because it’s stolen from stores.
Websites have accelerated increasingly sophisticated organized retail theft rings, which have long relied on shoplifters known as “boosters” clearing store shelves of in-demand goods and then selling and reselling to higher levels of fences who deal in truckloads of stolen property.
Now the rings can sell shoplifted bottles of aspirin, infant formula or jeans in the same virtual marketplaces where legitimate items are sold. Investigators are also seeing more of what they call “e-fencing,” where fences sell store merchandise credit or gift cards obtained by returning stolen goods.
“There’s a lot of them out there,” said Raleigh police Sgt. Scott Womack. “People can outsource stolen property very quickly that way.”
The cost to retailers is estimated at $30 billion a year – a cost ultimately passed along to shoppers. But customers risk being hurt by more than higher prices. Expired or improperly stored medicine and infant formula often end up back on shelves, putting people’s health at risk. And then there’s the chance that people are shopping next to drug-addicted thieves.
“All of that goes into a big safety risk for consumers,” said Womack, who serves on the board of the Carolinas Organized Retail Crime Alliance. “That’s obviously the biggest concern for us is the safety of the general public.”
North Carolina has begun to address the problem. The legislature enacted a new law this year that cracks down on organized retail theft. Retailers and law enforcement have also banded together to track the crime, and next week in Durham will hold their second annual statewide conference.
Cracking down on rings
“There’s not a retailer who isn’t affected,” said Andy Ellen, president and general counsel of the N.C. Retail Merchants Association. “For a long time, because it was not a crime against a person, it was not robbing a bank, it was not in the forefront. Law enforcement has taken a much more renewed interest.”
Once thought of as merely an isolated shoplifting offense, law enforcement has come to understand the sophistication and far-reaching effects of these operations.
The increased attention is due, in part, to the recognition that many of the boosters are stealing to pay for their opioid addictions. The increase in opioid abuse was one of the forces behind the new law, Womack said.
Womack worked with legislators to update the law for the first time in about a decade to make it easier to prosecute suspected stolen property ring members and to increase penalties on them if convicted.
Mack Mclamb, president of the 25-store Carlie C’s grocery chain, said businesses have long figured shoplifting losses into the cost of their operations. But the proliferation of organized fencing and illicit sales over the internet has posed a bigger impact.
Businesses like Mclamb’s are increasingly using software that allows them to keep much more accurate and immediate track of products. That alerts them to sudden losses that might otherwise take longer to discover when a store employee is just replacing them on the shelf.
It is typically the boosters who are arrested, and that’s where investigators try to determine if the suspects are shoplifters stealing to sell on their own or are feeding a bigger operation. Womack said local prosecutors take the cases seriously, as do federal agents, who will take on an interstate ring if it is big enough.
In 2010, police detectives in Gastonia noticed that local heroin addicts were shoplifting over-the-counter medicine and health and beauty aids every day and selling them for drug money. Several of them told police about a woman who was their fence.
Surveillance confirmed that she was receiving daily deliveries in garbage bags, plastic bins and boxes and storing them in a nondescript warehouse in Denver, a small town just north of Charlotte.
The owner of the warehouse, Steven Michael Hale, had been indicted federally in 1994, in a large statewide fencing operation based in Wake County that implicated law enforcement officers.
Hale had been accused of being a high-level fence dealing in over-the-counter and health and beauty aids. He and 10 other defendants were convicted, but most of the convictions, including Hale’s, were thrown out on appeal. Judges ruled the evidence didn’t show that the defendants had been “willfully blind” to the fact they were dealing with stolen property.
The defendants contended there is a legitimate secondary market in salvage and liquidation sales. Also, there are companies that buy closed-out goods either directly from retailers or through suppliers that have access to the goods. Winn Dixie, for instance, had agreements with the manufacturers of Tylenol and other over-the-counter products to sell recalled, damaged or discontinued products.
Federal prosecutors argued there was only a sparse secondary market, which gave cover to large-scale fencing operations.
The Gastonia investigation, with help from federal agents, led to new federal charges against Hale and seven others and a trial in 2014. They were convicted on charges that they were involved in an organized retail theft ring that stole more than $16 million between 2006 and 2011. Prosecutors said Hale was “living an opulent lifestyle” while feeding addicts’ drug abuse.
Hale was sentenced to more than eight years in prison, and ordered to forfeit a boat and $332,195 in seized money. His co-defendants were also sent to prison, forfeited cash, 20 vehicles and two pieces of property and ordered to pay $1 million.
Hale’s conviction was upheld this May. This time the judges discounted the argument that the government had failed to prove that Hale had made himself “deliberately ignorant” that the goods were stolen.
Meanwhile, investigators continue to pursue organized retail theft rings around the state. High Point police say they broke up a ring in April. In February, police in Albemarle arrested several suspected boosters who had struck a number of pharmacies.
How it works
▪ Shoplifters, often doing it to earn drug money, steal in-demand merchandise from store shelves.
▪ They sell the goods to fences who, in turn, sell them at flea markets and to higher-level fences who deal in large quantities of stolen goods. A high-level fence will pay substantially less than the wholesale price.
▪ Some high-level fences have cleaning operations where store security labels, tags, stickers and price tags are removed.
▪ The goods are then sold to distribution operations that move them around the country.
What the new law does
House Bill 384, passed by the General Assembly in June and signed into law by the governor in July, expands state law on organized retail theft, and regulates the use of gift cards and merchandise cards. It goes into effect on Dec. 1 and applies to offenses committed from that point on.
▪ Prohibits exchanging stolen property for cash, a gift card, merchandise card or item of value. It is part of the current law that makes larceny from a merchant a Class H felony, which is punishable by five to 20 months in prison depending on prior convictions.
▪ Increases the penalty for conspiring to commit retail theft in excess of $20,000 over 90 days. It also allows authorities to aggregate offenses committed in multiple counties. Some thieves steal just under the $1,500 limit to avoid felony prosecution. They also typically hit a number of stores in different counties as they travel the interstates.
The Class G felony carries a punishment of 10 to 29 months in prison.
▪ Adds “e-buyers” to the statute that defines “currency converters” in state law regulating pawnbrokers. In this case, a currency converter would be someone who is in the business of buying gift cards or merchandise cards online. Investigators say they are seeing more instances of retail thieves returning merchandise for store or merchandise credit, and then reselling them.
How to be a safe shopper
The N.C. Retail Merchants Association offers advice for consumers. Watch out for:
▪ Spelling mistakes and grammatical errors on the site.
▪ Online stores using a web-based email like Gmail, Hotmail or Yahoo under their contact details as opposed to a company email account.
▪ Merchants asking you to email them your credit card information.
▪ Overuse of words like “genuine,” “real” or “authentic.”
▪ Use of the phrase “inspired by” to get away with selling a fake.
▪ Check the product manufacturer’s website. Many companies will post details on their websites to alert customers about possible counterfeit products and how to detect fakes.
▪ Before buying from an online pharmacy visit: https://verifybeforeyoubuy.org/.