The American Legislative Exchange Council (ALEC) is meeting this week in Philadelphia, and among the proposals ALEC delegates will be discussing is one being promoted by the National Retail Federation (NRF) that they claim will address the problem of retail theft. Unfortunately, the model legislation NRF is proposing is the wrong solution to the wrong problem and targets the wrong culprit.
In fact, the NRF proposal has a lot less to do with theft than it does with good old fashioned competition. NRF would like to use any excuse available to get the government to put pressure on their new online competitors. Instead of taking effective measures to deal with rampant employee theft in their own stores, NRF has chosen instead to blame the problem on e-commerce. Without offering any logical justification, NRF’s proposed legislation would impose an impossible "should have known" standard on online marketplaces that, despite their best efforts, unwittingly handle stolen merchandise.
In fact, a study by the University of Florida, commissioned by the NRF, found that in 2005 employees were responsible for almost half of all thefts from retail stores. That’s $17 billion worth of merchandise taken out the back door by employees in a single year. Meanwhile, retailers spend less than one-half cent of every dollar in sales on security and loss prevention.
Fortunately, ALEC and many individual states have already begun to address the real problem of retail theft. Delaware, Nevada, Texas, Utah and Washington State have enacted legislation that adds retail theft to the list of offenses qualifying for increased criminal penalties and tougher sentencing. That’s a better way to deal with organized retail theft that pointing the finger at innocent third parties.
Online marketplaces are anxious to work with retailers and law enforcement to fight retail theft. They already spend millions on fraud prevention because it is in their own best interest to do so. NRF would have you believe that online marketplaces are the root cause of organized retail theft when, in fact, retailers themselves, through inaction, inattention, and indifference, are a major part of the problem.