Retailers are scoring a government-wide spending bill win, which will force online marketplaces like Amazon and Facebook to vet high-volume sellers on their platforms amid growing retail crime concerns.
Hidden in the $1.7 trillion funding package is a piece of legislation that physical retailers have been pushing Congress to pass for more than a year, part of an effort to reduce the amount of goods stolen from their stores and resold online.
The bill, called the INFORM ACT, also seeks to combat the sale of counterfeit goods and unsafe products by forcing online marketplaces to verify several types of information – including bank account, social security number and contact details – for sellers who make at least 200 unique sales and earn a minimum of $5,000 in any given year.
It is difficult to analyze how much money retailers are losing to organized retail crime or if the problem has significantly escalated. But the matter has received more attention in recent years, as high-profile retail thefts and mass shoplifting events have garnered national attention. Some retailers have also said in recent weeks that they have seen more items taken from stores.
Target executives said in November that the number of thefts had increased more than 50%, resulting in losses of more than $400 million. It is expected to exceed $600 million for the full fiscal year.
And in an interview with CNBC earlier this month, Walmart CEO Doug McMillon noted that theft 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 battling rising costs due to higher levels of organized crime and had to double down on security guards in 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 group, said its latest safety survey of about 60 retailers found that inventory loss — called shrink — had an average rate of 1. 4% last year, representing $94.5 billion in losses.
Shrink measures losses from sources other than external theft, including employee theft and product damage. Most of the shrinkage, 37%, comes from external theft, including products stolen during organized shoplifting 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 aimed at taming the problem passed the US Senate on Thursday and is expected to pass the House on Friday.
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 backed the legislation after some changes, including changes to limit the amount of sellers who disclose their contact information to customers to those earning $20,000 or more in annual revenue.
Under the bill, customers can obtain a seller’s name, phone number, email and physical address, with some exceptions to protect merchants who sell goods out of the home. The bill states that sellers are not required to disclose their personal address or telephone number, as long as they respond to customer inquiries via 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 contend with a patchwork of statewide requirements.
Meta, which runs Facebook Marketplace, did not respond to a request for comment regarding the bill.
AP Business Writer Anne D’Innocenzio contributed to this report.
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