Retail CEOs say online marketplaces fueling ‘flash mob’ robberies, want Congress to step in

WASHINGTON — Some of the nation’s largest retailers are urging Congress to help combat a wave of smash-and-grab robberies by cutting off the resale pipeline for stolen goods, which they say is enabled by online marketplaces that don’t do enough to verify the identity of sellers.

In a letter signed by the chief executives of 20 retailers – including Best Buy, Target, Nordstrom, Home Depot and Dollar General – House and Senate leaders were urged to pass legislation that would make it harder for people to remain anonymous when they sell things online. Representatives of the Retail Industry Leaders Association, the trade group responsible for the letter, said every major online marketplace is regularly used to sell stolen items from fake online accounts.

“Criminals are capitalizing on the anonymity of the Internet and the failure of certain marketplaces to verify their sellers,” the CEOs wrote.

“This trend has made retail businesses a target for increasing theft,” the CEOs wrote, “hurt legitimate businesses who are forced to compete against unscrupulous sellers, and has greatly increased consumer exposure to unsafe and dangerous counterfeit products.”

The retail industry has been rocked by a spate of “flash mob” robberies that can involve dozens of masked thieves swarming into stores with crowbars, guns and other weapons. Retailers ranging from Louis Vuitton to Best Buy to Home Depot have been hit, with some incidents resulting in injuries: Two Nordstrom employees were assaulted and one was pepper-sprayed Nov. 20 after an estimated 80 people rushed the Walnut Creek, California, store.

The National Retail Federation estimates that such incidents cost companies roughly $700,000 for every $1 billion in sales. By that measure, based on the trade group’s holiday sales forecast, retailers stand to lose at least $590 million the last two months of the year.

The CEOs asked Congress to pass the INFORM Consumers Act, which is designed to increase transparency around sellers on third-party marketplaces.

The Coalition to Protect America’s Small Sellers, an industry-funded advocacy group that counts eBay and Etsy among its members, has endorsed the act, though the legislation had to undergo some changes first.

Charita Choudhury, an eBay spokesperson, said an earlier version would have created “serious privacy, safety and compliance issues” for people who sell things online, but that the current form of the legislation strikes the right balance.

“We have zero tolerance for criminal activity on our platform,” Choudhury said in a statement.

An Etsy spokeswoman said the company supports the measure, and noted that counterfeit and stolen items are prohibited on the website.

Spokespersons from Amazon and Craigslist did not respond to requests for comment Friday. (Amazon’s founder and chairman, Jeff Bezos, owns The Washington Post.)

While large-scale “flash mob” thefts have been on the rise this year, experts say they hit critical mass in late November, when stores were piled high with holiday inventory. On Black Friday, a crew descended on a Home Depot in Lakewood, California, making off with sledgehammers, crowbars and hammers. The same day, roughly 30 people swarmed a Best Buy near Minneapolis. A Bottega Veneta boutique in Los Angeles also was hit that day.

Others have followed, including Thursday when thieves smashed the front door of a California gun shop and stole an estimated 40 firearms, according to the Los Angeles Times.

There are numerous cases in which online marketplaces have been used to offload stolen goods. In August, an Alabama couple pleaded guilty to selling more than $300,000 worth of stolen baby formula on eBay, according to The formula was stolen from various retail stores in the state and shipped to customers throughout the country.

In October, a father and daughter were sentenced to more than five years in prison for deploying “an army of professional shoplifters” to steal from CVS, Target and other retailers, according to MarketWatch, and selling those wares online. Prosecutors said they operated the scheme for nearly a decade, orchestrating the theft of $6.1 million in merchandise.

For most large retailers, finding their stolen goods online is “a daily occurrence,” says Jason Brewer, senior vice president for communications with the Retail Industry Leaders Association. “It’s no longer something that surprises anybody,” he said.

Lisa LaBruno, a former prosecutor who now works with RILA, said stolen property is an issue on every online marketplace. For sellers, it “is a low-risk, high-reward business” because “with a few exceptions they’re not going to be proactively investigated by the platform or preemptively shut down,” she said.

Meta spokesperson Ashley Settle said stolen items are prohibited on Facebook Marketplace and that retailers are encouraged to report suspected postings to law enforcement. The company regularly complies with law enforcement requests when illegal activity is suspected, she said.

The retail CEOs said there is no easy fix to the organized robberies. Some retailers have been hiring more security guards and locking up expensive items to lessen their risk. But adopting basic controls against fake online accounts would be an important step, they said.

“Implementing basic transparency and verification protocols is essential and will finally expose criminals who are selling consumers stolen, fake, and dangerous products,” the CEOs wrote.