eBay execs call e-fencing bills unfair

IDG News Service - EBay Inc. executives yesterday said that they oppose three bills filed in the U.S. Congress that attempt to crack down on sales of stolen goods online.

The three bills, introduced in February, could force "online marketplaces" such as eBay to provide private seller information to retailers who believe that stolen goods are being sold on such sites. They could also allow retailers to sue online marketplaces for failing to adequately investigate complaints about sales of stolen goods.

At the same time, though, officials at eBay said they encourage police, prosecutors and U.S. enforcement agencies to contact them for help on investigations, saying that working with law enforcement is a top priority for the online retail and auction company.

In a briefing with reporters, Edward Torpoco, senior litigation and regulatory counsel at eBay, said that the company would support legislation that increases criminal penalties for selling stolen goods. However, he added, the three bills in question "try to address retail theft by trying to impose additional obligations, additional liabilities, on the marketplace. We feel very strongly that any common-sense approach to combat retail theft needs to recognize first and foremost that the primary responsibility for preventing theft actually resides with the retailers, given that employee theft is the single leading cause of theft."

The National Retail Federation (NRF), a retail trade group, supports the three bills, called the Combating Organized Retail Crime Act, the Organized Retail Crime Act, and the E-Fencing Enforcement Act. Shoplifting related to organized crime costs retailers $30 billion a year, the group said.

EBay officials said that the company works with 47 major retailers in its Proact program to combat the sale of stolen items on its site. But they also encourage retailers to focus more on the "front end" of the problem, the point of theft. It's unfair to "focus the legislative regime completely purely on the back end," Torpoco said.

Joseph LaRocca, the NRF's vice president for loss prevention, said in a statement that "organized retail crime is a rapidly growing problem, especially as challenging economic times increase the market for stolen merchandise. Retailers already struggling to survive are seeing their inventory disappear in increasing amounts, and the goods end up at flea markets or on the Internet at prices that put temptation into the path of cash-strapped consumers trying to stretch every dollar. Losses from these crimes ultimately drive up the price of legitimate merchandise at a time when consumers can least afford it, and do serious damage to our nation's already weakened economy."

Earlier, Torpoco and other eBay executives encouraged law enforcement officials to report suspected criminal activity to them. EBay's policies allow it to release contact information about suspected sellers to law enforcement officials without court-ordered subpoenas, they said. EBay officials spoke to more than 100 law enforcement officials during a training session in Washington; it was the first time eBay had conducted law enforcement training on the East Coast.

In addition to reports from law enforcement officials, eBay relies on its users and an automated keyword filter to keep illegal products off the site, company executives said. Besides stolen items, eBay prohibits sales of items such as guns, prescription drugs and police uniforms. EBay investigators gave their contact information to the law enforcement officials in the audience.

EBay doesn't work unless buyers trust that the products they purchase are legitimate and authentic, said Tod Cohen, vice president and deputy general counsel for government relations at eBay.

"We need your agencies to bring the [criminal] cases, and we stand ready to help you in any way necessary," Cohen said. "The only way services work is if our customers trust the payment will go through and the item will arrive on their doorsteps."