America's Newest Addiction: Selling Hot Online Goods

WASHINGTON - America has become a nation of thieves hustling stolen goods off the back of a truck to sell on eBay. You name it, we steal it and we put it up for auction: infant formula, iPods, razor blades, DVDs, gift cards, laptops, Rogain, designer clothing and video games, just to name a few of the stolen items that appear on Internet market places.

It's all the fault of the Internet and its evil spawn, eBay, the NRF (National Retail Federation) advised Congress with a straight face Sept. 22.

"The Internet seems to be contributing to a brand new type of retail thief - people who have never stolen goods before are lured in by the convenience and anonymity of the Internet," NRF Vice President for Loss Prevention Joseph LaRocca told lawmakers.

Like heroin, it's a terrible thing to watch. Reality shows are already lining up to tell the hapless addicts' tragic tales. Geraldo is offering big bucks for a first-person account. YouTube witnessing abounds. God, as always, forgives, but sometimes needs Congress to trample out the vintage where online competition flourishes.

"Thieves often tell me the same disturbing story: they begin legitimately selling product on eBay and then become hooked by its addictive qualities," LaRocca said with all the gravitas and deeply honed sincerity of a man who learned the loss prevention biz at the Walt Disney Company retail division.

According to LaRocca, online selling is a toxic suck on the tailpipe, not to mention a ding in sales for Barbie accessory items, Cialis and hair combs. First, the seller's legitimate goods run out. Then the telltale intermittent stealing begins so the addled can continue selling online. What family scarred by this addiction doesn't already know this how story ends? That Mr. Soprano seemed so nice in the beginning.

"The thefts then begin to spiral out of control and before they know it, they quit their jobs, are recruiting accomplices and are crossing state lines to steal, all so they can support and perpetuate their online selling habit," LaRocca said.

And, as you might expect - quicker than you can say Bada Bing! -- the mob steps in. It's called ORC (organized retail crime) and retailers such as Wal-Mart, Best Buy, Target, Safeway and Walgreens are using ORC as their latest thrust at online competitors to their own Web and brick-and-mortar operations.

The retailers want legislation that allows them to issue take-down notices to eBay, Overstock and other online market places without as much a police report indicating the goods for sale are of suspicious origin, which the current law requires. Instead, retailers would reshape the law to require only the retailer's own "evidence" of suspected theft. Failure to "expeditiously investigate" the complaint would result in criminal penalties.

To further tighten the noose on online market places, retailers are seeking to impose reporting requirements for individual sellers that must be kept up to three years for anyone annually selling more than $12,000 worth of online goods.

"Big retailers like the Internet, but they don't like Internet-based competition from small sellers who drive down prices and give consumers more choices," said a feisty Edward Torpoco, senior regulatory counsel to eBay and who, coincidentally, may have the set the 110th Congress mark for most mispronounced name of a witness. "One way to attack pesky secondary market competitors is to suggest that there is something shady about them."

Shady like, say, flea markets, garage sales or classified advertising, the fertile traditional ground for hot goods. But the retailers' bill doesn't target those.

"These bills are blatantly discriminatory against online business models," Catherine England, a spokesperson for eBay, told me before the hearing began. "Selling stolen goods anywhere, online or on the street corner, is already illegal so the point of the proposed legislation is more about limiting competition."

Blaming the online market place for Mega Low Marts that can't control their own inventories is "like blaming the back seat of cars for causing teenage sex," explained Steve DelBianco, executive director of NetChoice, a coalition of consumers, e-commerce merchants and tech trade associations.