Retailers are scoring a victory in the US government’s spending bill, which will force online marketplaces such as Amazon and Facebook to verify high-volume sellers on their platforms amid heightened concerns about retail crime.
Included in the $1.7 trillion funding package is legislation that brick-and-mortar retailers have been pushing Congress to pass for more than a year, part of an effort to reduce the amount of stolen goods from their stores and sold online. .
The bill, called the INFORM ACT, also aims to combat the sale of counterfeit and dangerous products by requiring online marketplaces to verify different types of information, such as bank account, tax identification number and contact, for sellers who make at least 200 unique sales and earn a minimum of $5,000 in a given year.
It is difficult to analyze how much money retailers are losing to organized retail crime, or whether the problem has increased substantially. But the problem has received more attention in recent years as high-profile retail thefts and mass theft events captured national attention. Some retailers have also said in recent weeks that they are seeing more items being pulled from stores.
Target executives said in November that the number of thefts has increased by more than 50%, resulting in more than $400 million in losses. That’s expected to be more than $600 million for the full fiscal year.
And in an interview with CNBC earlier this month, Walmart CEO Doug McMillon noted that shoplifting at Walmart was higher than it has been historically and could lead to higher prices and store closings if it persists.
Meanwhile, Joe Parisi, president and chief operating officer of New York City grocery chains D’Agostino’s and Gristedes, said the chains are struggling with the rising costs of higher levels of organized crime and that they have had to double the number of security guards in the stores from a year ago. Walgreens, Best Buy and Home Depot have also reported similar problems.
The National Retail Federation, the nation’s largest retail trade group, said its latest security survey of roughly 60 retailers found that inventory loss, called shrinkage, increased at an average rate of 1 .4% last year, which represented a loss of $94.5 billion.
The reduction measures losses from sources other than external theft, including employee theft and product damage. Most of the contraction, 37 percent, came from external theft, including products taken during organized theft events, the trade group said. He also noted that retailers, on average, saw a 26.5% increase in organized theft incidents last year.
The funding package containing the bill that aims to tame the problem was approved by the US House on Friday. It now goes to President Joe Biden to be signed into law.
Amazon, Ebay and Etsy had initially opposed the verification bill, saying it would harm seller privacy and favor brick-and-mortar retailers over their online competitors. Online marketplaces later supported the legislation after some changes, including modifications to limit the amount of sellers who disclose their customer contact information to those making $20,000 or more in annual revenue.
According to the bill, customers can get a seller’s name, phone number, email and physical address, with certain exceptions to protect merchants who sell products outside the home. The bill says sellers don’t have to reveal their personal address or phone number, as long as they answer customer questions by email or other forms of online messaging provided by the marketplace.
The federal bill would also override similar state laws, a win for e-commerce sites that no longer have to deal with a patchwork of state-level requirements.
AP Business Writer Anne D’Innocenzio contributed to this report.
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