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When asked what would happen if shoplifters weren’t rigorously pursued, CEO Doug McMillon said it would have a significant effect on customers.

The top executive of the biggest retailer in the nation said in a December interview with CNBC that “if that’s not corrected over time, prices will be higher, and/or stores will close.”

Shutting down a store as large as Walmart can deprive communities of both jobs and a place to buy everyday goods – and lawmakers are paying attention. The retail industry is the country’s largest private sector employer and contributes $3.9 trillion to the country’s annual gross domestic product, per the National Retail Federation.

Similar measures are currently before legislators around the nation and in the U.S. Senate, and have been approved in at least nine states since 2022 – six of which have done so this year alone – to impose stiffer punishments for organized retail crime charges.

Retailers and trade associations are driving the wave of legislation, pooling their resources to push the bills through the legislative process, and capitalizing on the political advantage that lawmakers on both sides of the aisle see in portraying themselves as tough on crime.

Critics argue that the restrictions may not really decrease organized retail crime and may unfairly damage vulnerable groups. The current and proposed legislation seek to dissuade blatant retail crime and pursue the so-called kingpins that head organized theft organizations.

“The organized interest groups, whether they’re business, organized labor, or the NGO sector, have an insane amount of influence on our politics,” said Adrian Hemond, CEO of political consulting firm Grassroots Midwest. “Much of the policy agenda of these organizations is not driven by careful consideration of policy outcomes and whether they’re good for [the public].”

The legislative efforts come as more retailers attribute rising crime to higher inventory losses, also known as shrink, but they have not disclosed data that demonstrates how much it is costing them, nor are they required to do so. Experts told CNBC some companies may be exaggerating the impact of theft on their profits to divert attention from internal flaws.

Activist lawmakers attack organized retail crime

The Inform Act, which requires online marketplaces to reveal the identities of certain high-volume sellers to deter the sale of stolen goods, was the focus of retailers and their trade associations throughout 2021 and 2022. Supporters claimed it would combat organized retail crime by making it more difficult to anonymously resell stolen goods.

Amazon and Google were the main targets of the law, which became effective in June.

both eBay

While the internet behemoths finally endorsed the measure after certain concessions were included, they still risk huge penalties if they’re found in breach of the law. They are some of conventional retail’s largest rivals.

The Combating Organized Retail Crime Act (CORCA), sponsored in January by Sens. Chuck Grassley, R-Iowa, and Catherine Cortez Masto, D-Nev., has been retail’s new focus since the Inform Act was signed into law.

The bill’s authors include senior retail executives from Walmart, Target, and the NRF, the biggest industry trade organisation in the world, which is sponsored by retailers.

plus Macy’s

, among others, in accordance with the association’s archives and website.

In addition to calling for a modification in the standard that prosecutors must fulfill before filing federal theft prosecutions, CORCA suggests tougher punishments for theft crimes.

CORCA would enable federal prosecutors to file prosecutions if the total value of the items reached $5,000 or more over the course of a year, as opposed to the current law that states that offenders may only be prosecuted with federal larceny offences if the stolen goods are worth $5,000 or more in a single incident.

According to Cortez Masto, the measure intends to provide investigators more resources to dismantle organized theft rings and give the existing rules “more teeth.”

The proposed Organized Retail Crime Coordination Center, which would be required to track organized theft trends and release annual public reports to Congress, would also give retailers a formal venue to exchange information with one another and law enforcement. Both Cortez Masto and a spokesperson for Grassley said that could clear up some of the obscurity surrounding organized retail crime and give the public a better understanding of the issue’s size and scope.

According to GovTrack, the bill has five supporters in the Senate and 60 bipartisan cosponsors in the House.

Other bills are currently before legislatures around the nation, and identical legislation has been enacted in at least nine states with the assistance of regional retail groups.

Similar to CORCA, certain new state laws and proposals provide prosecutors the ability to add up the entire worth of stolen items over a specific time period so they may prosecute repeat offenders with more serious crimes rather than minor infractions.

For instance, Florida added a provision that says a person who takes 20 or more items during five or more occasions within a 30-day period can be charged with a second-degree felony, and changed its law so that people can be charged with felonies after they steal an aggregate amount of goods over 30 days.

The maximum penalty for it is 15 years in prison.

Will the enacted legislation be effective?

Both CORCA and the state laws depend on a proven method of countering drug trafficking organizations: first go after the “little fish,” or boosters who regularly rob stores, and then go for the “big fish,” or the kingpins in charge of organized criminal rings.

Let’s relate it to drugs, right? Very similar. Who are the people on the street, to who are the people supplying the drugs, to who are the people getting the drugs into the country? David Johnston, vice president of asset protection and retail operations at the NRF, explained that you work through them in order to find out who [the larger players are].

According to Jake Horowitz, a senior director at the independent, nonprofit The Pew Charitable Trust, the measures may not really lessen organized retail crime even if they are a certain means to hold repeat offenders responsible.

“If the question for policymakers is, ‘how do I reduce organized retail crime?’ the answer is unlikely to be through the threat of stiff sanctions to boosters,” said Horowitz, who is in charge of Pew’s safety and justice portfolio.

That’s because the illicit drug trade hasn’t been significantly destroyed using the same approach.

Although the drug trade is a distinct business than retail thievery, it has been extensively studied and may provide lessons for organized retail crime, which has received less attention.

Congress passed sentencing regulations in the 1980s and 1990s that considerably increased the penalties for drug trafficking, but decades later, research indicates that they haven’t had a major impact on drug availability or usage.

The likelihood of being discovered or arrested for any given theft makes it unlikely that boosters will be discouraged, according to Horowitz. “And then when you apply it and send people to prison, it has almost no incapacitation effect because street-level dealers are instantly replaced. It’s a market. It recruits replacements,” he added.

Additionally, organized theft laws are already in place in a number of jurisdictions, yet trade organizations claim that crime is still rising.

Misdemeanor charges, which carry less severe fines and less long-lasting repercussions than felony charges, which may restrict an individual’s options for work and housing for years after serving their sentence, are often brought against boosters who are discovered stealing.

Retailers and politicians argue that the fear of the higher punishments associated with felony convictions would better prevent theft. They claim the misdemeanor charges have empowered theft organizations and enabled organized retail crime to expand.

Law enforcement officials have told CNBC that although boosters are stealing for their own benefit, they may be members of disadvantaged communities and many of them struggle with mental illness, poverty, or drug addiction.

Congressmen should take these characteristics into account when recommending legislative solutions to combat organized theft, according to JC Hendrickson, the Justice Action Network’s congressional relations director.

Hendrickson, a supporter of bipartisan criminal justice reform, asserted that “a police response is only going to get you so far, right? Even if you have the most responsive police department in the country.” “In a case like that, a public health response is also really important,” Hendrickson said.

The staff of Senator Grassley expressed confidence that CORCA would significantly reduce organized retail crime.

Although it’s too soon to say how successful the measures will be, the choice to suggest aggregating offenses rather than raising the felony theft threshold might aid prosecutors in separating organized thieves from petty shoplifters.

We should be more targeted because various sorts of crime are extremely distinct and we shouldn’t take blanket methods to very varied types of crimes. “It seems more like changing laws with a scalpel than with a cleaver,” added Horowitz.

The impact of retail on policy

Despite the ambiguity surrounding their claims, retailers have had a significant impact on public policy due to the importance of the sector to the economy.

Public authorities take swift action when stores that provide jobs and necessities are in danger since shop closures may have a negative impact on employment, tax income, and community well-being.

According to Hemond from Grassroots Midwest, “If the Walgreens and this grocery store close, that will lower property values in the neighborhood because you’ll have to drive further to go pick up your groceries or your sundries that you would normally get at the Walgreens.”

Because they do not get the advantages of colocating with well-known retail places, individuals are less likely to desire to relocate into these areas, they are less willing to pay top money for real estate, and other commercial firms are less inclined to move there.

According to Molly Gill, vice president of policy at the nonpartisan charity Families Against Mandatory Minimums, voters are concerned about these concerns as well, and elected officials feel they will benefit from taking action on them.

When lawmakers are presented with problems involving crime, they frequently increase penalties for the offenses rather than addressing the root causes of a problem, but Gill, a former prosecutor who now advocates for sentencing and prison reform, is concerned the same approach is being used to target organized retail crime.

It doesn’t really matter [if it doesn’t truly address the issue] because they get to say, “Look, we solved it, I did something, aren’t we great?,” and then go on and the problem continues, added Gill, “When all you have is a hammer, everything looks like a nail.”


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