Congress To Make eBay A Rat

    November 29, 2008
    WebProNews Staff

Taken together, three bills in Congress would require online marketplaces and auction sites to secretly police affiliates suspected of selling stolen goods. In addition to requiring extensive record keeping on sellers using the site and turning over that information to authorities upon request, the legislation prohibits resale sites—like eBay or craigslist—from informing suspected sellers they are being investigated.

>> Article Updated 09/29/08

None of the bills, two in the House of Representatives and one in the Senate, is expected to come to a vote before the Congressional recess—they’ve got bigger fish to fry in Bailout Brand oil at the moment—but the House Judiciary Committee’s Subcommittee on Crime, Terrorism, and Homeland Security held a hearing on the subject recently.

The purpose of the legislation is to target organized retail crime, or bands of shoplifters and hustlers hocking ill-gotten goods online, where the National Retail Federation, which has come out aggressively in favor of the legislation, says thieves can sell goods at 70 percent value. Street corners typically only bring 30 percent of the retail value.

The problem was highlighted recently when a New York vendor was busted selling Victoria Secret brassieres on eBay for $25 a pop. They typically sold for between $40 and $80.  If you’re wondering why Homeland Security is being dragged in to this, it’s likely because of alleged past connections between organized retail crime syndicates traced to Hezbollah and Hamas.

Naturally, the Internet is to blame.

Though, NetChoice’s Steve DelBianco colorfully compared this logic to blaming the back seats of cars for teenage sex, the NRF’s vice president for loss prevention, Joseph LaRocca, has elevated the problem to the level of addiction to Class A narcotics. At the aforementioned hearing, LaRocca said:

"The Internet seems to be contributing to the creation of a brand new type of retail thief – people who have never stolen before but are lured in by the convenience and anonymity of the Internet. 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."

Soon you’re likely to see them on A&E’s “Intervention.” Though evidence of the above scenario is lacking, it sounds like Congress is taking this just as seriously as the NRF.

Individually, the bills are: H.R. 6713, the E-Fencing Enforcement Act of 2008, sponsored by subcommittee Chairman Bobby Scott, D-Va.; H.R. 6491, the Organized Retail Crime Act of 2008, sponsored by Representative Brad Ellsworth, D-Ind.; and S. 3434, the Combating Organized Retail Crime Act of 2008, sponsored by Senate Majority Whip Richard Durbin, D-Ill.

Congressman Scott’s E-Fencing Enforcement Act mandates that online stores and resellers disclose contact information for high-volume sellers—with sales of $12,000 or more per year or sales of $5,000 or more in any single offering—“to any inquirer with standing under this section.” An “inquirer with standing” is defined as anybody who sends a copy of a signed report made to or received from law enforcement in the past year involving goods matching the description of those offered online after a theft.

The legislation requires marketplaces to store contact information for three years, and upon the retailer’s request the online marketplace would be required to investigate whether the goods sold are stolen. If so—or even if there is good reason to think so—the online marketplace provider would be required to ban the seller and remove the seller’s listings.

Congressman Ellsworth’s bill ratchets it up another notch, making both online and offline organized retail crime a federal offense. Ellsworth requires providers to act quickly to investigate and to maintain a database of all suspected shady sellers, including their name, telephone number, email, physical address, user ID, company name, and a record of all transactions for three years. Again, the provider is required to hand over that information to anybody with suspicion of a particular seller.

Senator Durbin’s bill puts the nail in the due process coffin by requiring online marketplaces presented with evidence (by any inquirer with standing, remember) that a seller is fencing stolen goods to file a report with the US Attorney General, tell the plaintiff the report has been filed, and then start looking for evidence of other illegal activity. Durbin’s legislation bars the provider from informing the seller they are being investigated.

Quick summary, if these bills pass: Anybody (retailer, competitor, etc.) who claims to suspect a seller of illegal activity can file a police report, present it to the marketplace provider and the provider must shutdown the seller. The records the provider has been required to keep for three years of all seller information and activity must be handed over to authorities and reported to the Atty. General while the provider presumes guilt and conducts a secret investigation of the seller on the government’s behalf in case there might be, could be other illegal stuff happening, and is barred from saying anything about it to the seller.

Please, someone explain to me how that’s remotely constitutional.

It’s all not without its hypocrisy, of course. Democrats have railed for some time (before caving in other instances, like with FISA legislation) about the Administration’s continuous erosions of rights and liberties, and here we have three Dems constructing further erosions. The NRF, too, looks a bit ridiculous in this, not just for their comparison to addiction, but also since retailers have refused to accept eBay’s offer to help police for stolen goods because they didn’t want to give up any control of the process. Clearly, government control is better then, huh?