Prevention and Deterrance

Online Marketplace Response

Recently eBay, the largest online marketplace, has begun a series of efforts designed to prevent the sale of stolen merchandise on its site. The site maintains a “prohibited items” list designed to prevent the sale of items subject to federal regulations—including firearms, alcohol, and tobacco products—and other items unlicensed for sale, including stolen property. However, eBay’s recent efforts have been designed to make it more responsive to requests for information from both retailers and law enforcement, both of which usually need seller information from eBay to link stolen merchandise to specific people. Prior to its recent efforts, eBay provided seller information to retailers and law enforcement when it was legally required to do so through a subpoena, or other appropriate legal processes. In early 2008, eBay began to change its approach to the issue of ORC, recently developing a series of initiatives designed to more easily provide information to retailers and law enforcement alike.

For retailers, eBay developed the PROACT program, providing a way for retailers to quickly submit and receive information on eBay sellers they suspect of selling stolen merchandise. The program currently has 300 members. All retailers can submit a request for information on a seller to eBay, and as of January 2011, eBay had received 2,340 requests for information. eBay’s PROACT investigators can provide information requested, such as name, address, and seller history. eBay PROACT investigators may also help retailers with their investigations by providing them with an undercover account, which may be used to purchase merchandise they suspect is stolen to help build a case, linking confirmed fraudulent sellers—”bad actors,” in eBay terms—to other users or accounts, and taking action on user accounts, such as suspending them or pursuing criminal action against them in concert with retailers and law enforcement.

eBay also provides retailers with:

eStop: On every product page, eBay has placed a “Report Item” link, providing a mechanism to report a listing violation, including stolen property. eBay has indicated eStop has been used three times since it was implemented in early 2010. However, eStop requires retailers who want a listing removed to affirm that the specific listing is stolen. Often, they cannot make this affirmation without additional information about the seller from eBay, which is one of the reasons why eBay believes the tool has been used infrequently.

Exception reporting: For PROACT member retailers, eBay is to create customized “exception reporting” for those who request it. eBay will work with these retailers to build reports on products frequently stolen from their stores. As of May 2011, eBay has created these reports for nine retailers. The reports provide retailers with information showing the top suspicious sellers of high-risk items based on quantities, price points, and high-theft areas. One retailer we interviewed uses these reports to identify sellers that warrant additional investigation—internally and within eBay—to determine if the products that are being sold have been stolen from their stores.

eBay has also created tools to aid in providing law enforcement with access to information. eBay’s Law Enforcement Portal allows state, local, and federal law enforcement to request information from eBay on users suspected of selling stolen merchandise. The company allows all vetted LE agencies to use the Portal to investigate possible illegal activity on the site, including the sale of stolen goods, and eBay reviews all requests to ensure they comply with eBay’s privacy policy. According to eBay officials, it approves about 99 percent of requests, responding within 48 hours with the name, address, Internet Protocol (IP) and email addresses, any additional contact information, shipping information, listing, and sales data, and user history over the last 2 years. In 2010, eBay received 603 requests through the portal. eBay also built the Law Enforcement eRequest System to allow law enforcement to submit requests for information and court orders electronically. Since inception in November 2010, 1,601 requests or court orders have been submitted by law enforcement in North America. Additionally, all law enforcement can access eBay information through LeadsOnline, an online, property-crimes database. eBay provides access to listing and sales data through LeadsOnline automatically, providing law enforcement with another investigative tool. Through the database, law enforcement users of the system can get basic seller information from the past 3 months. In 2010, 2,090 law enforcement agencies conducted 12,990 eBay related searches on LeadsOnline. For more detailed information, law enforcement agencies are to contact eBay directly.

In addition to its retail and law enforcement efforts, eBay has also implemented and improved a series of procedures designed to verify seller information, proactively flag suspicious listings, and further protect buyers. These efforts are independent of retailer or law enforcement requests.

These efforts include:

• Enhanced seller vetting: Starting in October 2010, eBay verifies users’ names, addresses, and phone numbers, and restricts new seller activity until the seller builds a good business record on eBay.
• Filters: eBay utilizes thousands of rule-based filters that search for suspicious listings. Filter variables can be seller based (financial, user information, feedback), item based (category, pricing, keywords), or risk-based (internal losses, risk models).
• Exception reporting: eBay runs 17 monthly exception reports on over 100 categories of commonly stolen products such as gift cards, health and beauty aids, and infant formula. These reports are designed to identify sellers who may have a high volume of sales in several retail high-theft categories for further review or monitoring by eBay. From January 2010 through March 2011, eBay has proactively reviewed 490 sellers, 237 of which were deemed “bad actors,” compared with 2,870 requests received from retailers and law enforcement, 220 of which were deemed “bad actors.”
• Payment holds: Through PayPal, eBay has instituted a 21-day hold on funds to new accounts so that proceeds from the sale of merchandise are not available until the hold expires. eBay believes this is an effective deterrent to the listing of stolen merchandise online as thieves generally look for a quick way to convert merchandise into money.
• Seller messaging: To remind sellers of eBay’s rules related to certain products, such as infant formula, eBay provides specific messaging if a seller is trying to list the product. For example, sellers of infant formula are reminded that they must include the expiration date of the formula in the listing and that it is against eBay’s policies to sell expired infant formula. These efforts are intended to protect consumers from purchasing potentially expired products but may also provide an additional deterrent to those knowingly selling expired products.
  

Internal Controls

Retailers’ loss prevention strategies can take various different forms, including pre-employment integrity screening measures, employee awareness programs, asset control policies, and loss prevention systems. Data from the 2010 NRSS indicate that over half of retailers use the following loss prevention systems or personnel:

• Burglar alarms
• Digital video recording systems
• Live, visible closed-circuit TV (CCTV)
• Point of sale (POS) data mining software
• Armored car deposit pickups
• Check approval database screening systems
• Acoustic-magnetic, electronic security tags
• Live, hidden CCTV
• Uniformed guards
• Cables, locks, and chains
• Web-based case management and reporting
• Drop safes; and
• Remote CCTV video and audio.

Technology

• Security tags
  • Electronic article surveillance tags, embedded in or secured to clothing or other products, emit a signal when leaving a store without being deactivated by the sales clerk.
  • “Benefit denial” tags typically utilize ink to ruin a product when removed improperly.
  • Radio-frequency identification tags allow retailers to track individual items through the supply- chain, including identifying if they were properly purchased.
• Locking display cases secure merchandise and must be unlocked by a sales associate to access the products
• Specialized displays to dispense one product at a time make it more difficult for a thief to sweep an entire shelf of products.
• Plastic cases around a single product to secure the merchandise must be removed by sales associate during check out.
• Camera systems
• Public-view monitors show customers that they are being monitored in the store, recommended for high-theft aisles.
• Enhanced public-view monitors trigger a recording when someone reaches for a specific product or enters a specific aisle.
• Closed-circuit television cameras situated throughout a store to record customers and may or may not be monitored real-time by store personnel.
• Case management systems used to track cases of ORC, including suspects and frequently stolen products, within a retail chain.
  

Personnel

• Sales associates whose presence can deter a thief.
• Receipt checkers who verify that customers leave only with products purchased.
• Loss prevention personnel who may apprehend boosters in stores.
• ORC investigators who typically work with law enforcement and other retailers to link incidents of ORC to build larger cases for prosecution.
  

Profession Organizations

Albuquerque Retail Assets Protection Association (ARAPA)

• Initiated in 2008 — approximately 374 members.
• The site includes a member directory, incident reporting forms and customizable incident alerts, and incident mapping and searching tools.
• Approximately 30 theft incident alerts issued per week.
• Association includes monthly member meetings.
  

Los Angeles Area Organized Retail Crime Association (LAAORCA)

• Initiated in late 2009 – approximately 500 members.
• Site shares same technology platform and capabilities as ARAPA – approximately two theft incident alerts issued per day.
• Dedicated individual available to field inquiries and provide ORC expertise. Another individual monitors alerts to identify potential connections to other crimes.
• Association includes member meetings every 6 weeks.
  

Bay Area Organized Retail Crime Association (BAORCA)

• Initiated in May 2010 – approximately 378 members.
• The site shares the same technology platform and capabilities as ARAPA and LAAORCA.
• Approximately 8-10 theft incident alerts issued per week.
• Member meetings occur every 3-4 months and often include case presentations.
  

San Diego Organized Retail Crime Association (SDORCA)

• Initiated in October 2010 – approximately 180 members.
• Includes member database and standardized incident report form.
• Approximately five theft incident alerts issued per week.
• An individual at San Diego Police Department vets members and responds to requests
  

Cook County Regional Organized Crime Task Force (CCROC)

• Initiated in December 2010 – approximately 500 members.
• Site shares same technology platform and capabilities as other networks (ARAPA, LAAORCA, BAORCA), as well as advanced analytical tools, such as identified linkages between suspects.
• Ad-hoc meetings occur as needed to discuss ongoing investigations and an annual symposium is to be held in 2011.
• Individual within Cook County State Attorney’s Office vets members and responds to requests.
  

Florida Organized Retail Crime Enforcement Network (FORCE)

• Utilizes Google Groups as a central repository of member contacts and for email distribution of incident alerts.
• Approximately 800 members.
• The network includes monthly meetings of approximately 20-30 members and a larger annual meeting.
  

Metropolitan Area Law Enforcement/Loss Prevention Retail Crimes Networking Group (Pennsylvania, Maryland, D.C., Virginia)

• Established between 2004/2005 – approximately 200 members.
• Consists of an email distribution list to submit alerts, suspect information, and other theft incident information
• Detective within Montgomery County Police Department (Maryland) vets all new members and all alerts before distribution to members.
  

Washington State Organized Retail Crime Association (WSORCA)

• Ongoing vetting of participating retail and law enforcement members throughout Washington and Oregon.
• The site shares the same technology