Retailers Still Want New Laws Blaming eBay For Shoplifting; Law Enforcement Isn't So Sure

from the anti-competition dept

A group of brick-and-mortar retailers have been pushing for years to pass laws that put liability on online sites, like eBay, if stolen goods are sold through the sites. This really has nothing to do with preventing theft from their stores, as they claim. Instead, it's really an effort to attack online competitors and second-hand sellers to try to boost the primary market. Studies have shown that the number one source of theft in stores is actually employees. If the retailers were serious about cracking down on theft, they would do more to watch their own employees... but instead, they've been trying to create a moral panic by claiming that the use of eBay leads to crime because people get so addicted that, after they run out of their own stuff to sell, they start ripping off stores just to keep that eBay high going. Just look at their own words:

"Thieves often tell the same disturbing story: they begin legitimately selling product on eBay and then become hooked by its addictive qualities, the anonymity it provides and the ease with which they gain exposure to millions of customers. When they run out of legitimate merchandise, they begin to steal intermittently, many times for the first time in their life, so they can continue selling online. The thefts then begin to spiral out of control and before they know it they quit their jobs, are recruiting accomplices and are crossing states lines to steal, all so they can support and perpetuate their online selling habit."

Uh huh. Only problem? Actual stats show that such retail theft is on the decline. But, of course, that won't stop the lobbyists from these stores from pushing -- and that means we've now got the fourth such law introduced just this year to deal with. With the introduction of the new bill, the House Judiciary Committee held hearings with law enforcement officials who did claim that retail theft was a problem, but according to Thomas O'Toole, they also said no new laws were needed. What are the chances of that happening? Apparently, the law enforcement folks said that the online websites like eBay are actually quite cooperative, and the only problem is they need more money and resources -- not more laws. Somehow, that seems unlikely.

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Retail Stores Still Trying To Blame eBay For Shoplifting

from the seriously? dept

Just as the record labels like to blame file sharing for their own business model problems, big retailers have been trying to blame eBay for all sorts of their problems for years. Last summer, the National Retail Federation (NRF), who represents the lobbying interests of big retail stores, started peddling a patently ridiculous line that using eBay led to crime. Seriously. They claimed that people got so addicted to selling stuff on eBay, once they ran out of their own things to sell, they would start stealing. Why even paraphrase it? Let's use their words:

"Thieves often tell the same disturbing story: they begin legitimately selling product on eBay and then become hooked by its addictive qualities, the anonymity it provides and the ease with which they gain exposure to millions of customers. When they run out of legitimate merchandise, they begin to steal intermittently, many times for the first time in their life, so they can continue selling online. The thefts then begin to spiral out of control and before they know it they quit their jobs, are recruiting accomplices and are crossing states lines to steal, all so they can support and perpetuate their online selling habit."

The problem, of course, is that this is complete hogwash. They presented no evidence whatsoever on this, and the actual stats on retail theft showed two things: first, retail theft has been on the decline for years and, two, that most retail theft is due to insiders, not shoplifters. So, if the retailers really wanted to stop theft, they should invest in better security against insiders. Yet, when asked why they didn't do this, a representative claimed that it didn't make any sense to make their employees into police officers. Yet it does make sense to pass draconian laws against eBay?

The truth is that the retailers aren't scared about eBay leading to shoplifting. They're scared about eBay, period. And they want to pass any laws to hurt eBay.

Of course, when presented with the fact that their claims were ludicrous, the NRF refused to back down, insisting its statements were accurate -- not in telling the actual truth, but in "reflecting the sentiments of many retailers that we work with." Seriously.

And, of course, politicians don't bother with fact, either, so the NRF was able to push legislation specifically designed to harm eBay and other online retailers, by adding all sorts of restrictions and liability over what can be sold through those sites. Of course, the NRF still has no evidence to back up its claims... so it looks like it's decided to try to manufacture some.

It recently came out with a report that pretends to show evidence that eBay leads to shoplifting. What's the data? Well, the NRF asked its own members what they thought the percentage of "new in box" merchandise for sale on eBay was stolen, and those members said they thought it was 50%. That's not evidence. That's just "reflecting" the highly biased "sentiments" of the NRF's members. As the NetChoice link above shows, there are lots of other problems with the NRF's position:

• Despite retailers' claims that theft is getting worse, nearly 6 in 10 retailers say they now spend less on loss prevention compared to last year. Yet while cutting spending on loss prevention, these same retailers doubled their spending on lobbying over the last three years, according to the Center for Responsive Politics. And they are lobbying for new laws to restrict competition from online sellers.
• A leading loss prevention consultant told retailers that over 2/3 of all store shrink is preventable, mostly by improving business practices, according to Larry Miller, Director of National Retail Research Group.
• Retail theft is not being caused by the Internet. According to the NRF's survey, retailers don’t identify stolen goods online any more than in traditional places like street corners, swap meets, and pawn shops.
• The NRF says that criminals use online marketplaces because they are anonymous, but these sites know exactly who the seller is, and disclose all that data to law enforcement officials whenever they ask. The truth is, an online auction is the last place a criminal would try to hide the sale of stolen goods.
• The NRF claims that online sellers "threaten the health and safety of innocent consumers", yet Rite Aid, CVS, Target, and Walgreens have paid millions in fines for selling expired products--often by putting stickers over the expiration dates.
• Overall, there is no evidence that organized retail crime has actually gone up -- the study only asks retailers whether they think it has increased. And that perception has only increased over the last two years -- concurrent with the worst economic downturn since the Great Depression. Isn't it much more likely that any increase in store theft may be a result of employees and consumers desperate to make ends meet?

That first bullet point, of course, is the most telling of all. While all of the evidence points to the fact that its insiders who cause the majority of any problem, rather than spending on dealing with that, they've massively increased their lobbying spend to try to craft anti-eBay laws.

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Big Retailers Pushing Legislation To Harm Online Retailers

from the why-compete-when-you-can-legislate? dept

Why should you compete with new technological innovations when you can just get elected officials to pass laws that greatly limit what those innovations can do? That seems to be the position of the National Retail Federation, the trade group that represents a bunch of the big offline retailers. We wrote about their attempt to do this last year, where they went so far as to claim (and then stand behind) that eBay was driving people to shoplift. Supposedly, selling stuff on eBay was just so addictive that once people ran out of their own stuff to sell on eBay, they would all rush to the nearest big box store to shoplift. That, of course, is totally bogus and not at all backed up by the facts. But who needs facts when you have politicians willing to do your bidding? The NRF's statement was so hilarious, we can't resist republishing it:

"Thieves often tell the same disturbing story: they begin legitimately selling product on eBay and then become hooked by its addictive qualities, the anonymity it provides and the ease with which they gain exposure to millions of customers. When they run out of legitimate merchandise, they begin to steal intermittently, many times for the first time in their life, so they can continue selling online. The thefts then begin to spiral out of control and before they know it they quit their jobs, are recruiting accomplices and are crossing states lines to steal, all so they can support and perpetuate their online selling habit."

While the three laws proposed last year went nowhere, it didn't take long for all three to be introduced again. The intended purpose of these three laws is to force these online platforms to interrogate every seller over every product they put online for sale. It goes against everything that's the basis of section 230 rules for online platforms, in that it says "you're not the tool someone uses, now you're liable for everything that happens with the tool." This is not, at all, about stopping crazy eBay addicts from shoplifting from big box stores. This is about making it tougher for people to buy and sell stuff online so that more people are forced to trek out to their local offline retailer to buy stuff.

The amusing thing is that, last year, when these same bills were introduced, the retailers were asked why they couldn't just do a better job policing their stores for shoplifting -- and the retailers replied that their employees were there to sell stuff, not to be police officers. Yet, the very purpose of these laws is to make that impossible for online retail services. It forces them all to be police officers, or face tremendous liability. It's no secret that it's tough to compete with new online services, but that's no excuse for passing bogus laws to harm those online players.

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National Retailers Refuse To Apologize For Claiming eBay Leads To Crime

from the lies-are-more-fun-than-facts dept

Earlier this week, we noted that the National Retail Federation, a lobbying group made up of a bunch of large traditional retailers, had claimed to Congress that eBay drove people to shoplift by being so addictive that people couldn't help themselves. According to the NRF, otherwise innocent people, after running out of legitimate things to sell, turned to a life of crime to support that eBay selling high. The whole thing is so preposterous, that the group NetChoice called for an apology from the NRF. The NRF's response? It stands by its comments:

"The testimony we submitted reflected the sentiments of many retailers that we work with."

Now there's a neat little rhetorical trick there. When called on the fact that they were lying in claiming a rash of eBay-induced criminals, the response is to claim that the statements "reflected the sentiments" of the retailers. So, even though those sentiments are based on pure lies, it's okay, because the statement reflected those sentiments.

In the meantime, it appears that NRF supporters have decided to respond with personal attacks, such as that one, directed at my post. It's also got some neat rhetorical tricks, such as claiming that what the retailers really meant when they said (and I quote), "When they run out of legitimate merchandise, they begin to steal intermittently, many times for the first time in their life, so they can continue selling online" was organized crime. Yet, that's clearly not what the NRF statement was claiming. It was talking about individuals who were selling stuff legitimately, until they couldn't find anything else to sell and began a life of crime.

See? So now that they've narrowly defined the issue as "organized crime" (ignoring what the NRF actually said and brushing over the actual stats on shoplifting being on the decline), the NRF supporter claims that these new laws are just "reasonable duties" for online auction sites to combat that issue -- never once explaining why online auction sites need to step in and do the work that the retailers themselves are unwilling to do. The retailers themselves admitted that they don't want their employees to act as police officers -- but they apparently have no problem demanding that their online competitors act as their police officers.

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Retailers Blame eBay For Driving Good People To Shoplift

from the gotta-feed-the-habit dept

Wow. Earlier this year we wrote about a bill, basically pushed for by big offline retailers, that would regulate online retailers. The big retailers made some bogus claims about an online "crimewave" that necessitated such legislation. Since that first bill was introduced in the house two other related bills have also been introduced, one in the House and one in the Senate. Earlier this week, hearings were held on the three bills, and the big retailers made the astounding claim that online auction sites need to be regulated because their "addictive qualities" lure perfectly innocent people into becoming shoplifters to feed their habit of selling online:

"Thieves often tell the same disturbing story: they begin legitimately selling product on eBay and then become hooked by its addictive qualities, the anonymity it provides and the ease with which they gain exposure to millions of customers. When they run out of legitimate merchandise, they begin to steal intermittently, many times for the first time in their life, so they can continue selling online. The thefts then begin to spiral out of control and before they know it they quit their jobs, are recruiting accomplices and are crossing states lines to steal, all so they can support and perpetuate their online selling habit."

Nevermind that the actual stats show that retail theft has been on the decline, while the majority of retail theft is actually due to insiders. Yes, the problem isn't with online retailers magically luring perfectly innocent individuals into lives of crime, but the big retailers own employees swiping stuff. Yet, when stores were questioned why they don't do more to prevent in-store theft themselves, a representative from Safeway claimed: "our associates are there to sell groceries, not to be police officers." However, even though the problem is with their own employees, who they don't want to turn into police officers, the retailers are asking Congress to, instead, turn all online retailers into police officers for them.

The combination of bills under consideration would give offline retailers the power to demand that online retailers interrogate sellers to find out if the goods they're offering for sale were stolen. They would also include a DMCA-like notice and takedown provision, allowing retailers to force auctions offline with a single letter and little proof. Yet, the notice-and-takedown is even worse than the DMCA's already dreadful system in that there's no provision to deal with any abuse -- meaning retailers could abuse the system sending false takedown notices and burdening online retailers over and over again, and there would be no punishment. On top of that, the bills would put liability on the retailers, directly contradicting the very point of section 230 of the CDA, which was designed to make sure liability went to the actually guilty party.

Basically, these three bills in combination are nothing more than a bogus effort by big traditional retailers to put a ridiculous liability and burden on online retailers to fix a problem that isn't as big as they make it out to be, and which they, themselves, have the most control over -- though they purposely choose not to do much to exercise that control. And, finally, these big retailers make up a totally bogus and unsubstantiated claim that online selling "addiction" is drawing a large group of folks into an unanticipated life of crime. Hopefully Congress sees through this blatant attempt by big traditional retailers to put a bunch of hurdles in front of online sellers.

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