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Organized theft is costing retailers $30 billion a year. Here's what NC is doing about it.

North Carolina is taking action in response to a growing trend of organized retail theft in the state.

Lawmakers hope to curb this increase with the passage of House Bill 384, which will ease prosecution and strengthen punishments for the crime come December 2017.

Organized retail theft harms both businesses and consumers; it involves stealing goods in large quantities and selling them at prices that undercut retailers.

According to a study by the National Retail Federation, organized retail crime costs the retail industry $30 billion a year. This prevalence is due in part to the lack of regulation in online marketplaces like eBay.

"It's an unfortunate fact that with any channel of commerce, criminals try to beat the system," said eBay spokesperson Ryan Moore in an email statement. 

House Bill 384 includes an entirely new subsection specifically pointed toward e-buyers, enforcing transparency and proof of legal purchase.

Ann Edmondson, spokesperson for the North Carolina Retail Merchants Association, said opioid addictions are a possible motivation for committing or becoming involved in organized retail crimes.

“The whole opioid epidemic, things like that drive these sort of occurrences because people need to fund those habits,” she said.

The Raleigh Police Department has made similar connections to the opioid crisis, though no definitive conclusion has been publicized.

Consequences of organized crime depend on the size of the businesses in question, said Saravanan Kesavan, a professor at UNC’s Kenan Flagler Business School. 

“The impact could be disproportionately large for smaller retailers,” he said.

Edmondson said comparing the impact of organized retail theft on small and large businesses might be difficult due to the nature of theft in different types of stores. At a larger store, more expensive items may be stolen — but they represent a smaller percentage of total items at the store.

All fall victim to organized retail theft, Edmondson said.

“I think it’s hurting everyone equally — in different ways,” she said.

The retail industry has responded with different strategies and varying levels of success, Edmondson said. Some stores opt to hire loss prevention officers to monitor shoppers or lock items behind glass. 

Kesavan said he is skeptical of these strategies.

He said one study of a retailer with a loss prevention officer showed losses shrunk due to the presence of the officer. At the same time, sales also dropped due to customers' uneasiness.

Kesavan said the study found similar results when impulse buys were put behind lock and key to prevent theft.

"Unfortunately, what they found is that the sales dropped and the profit declined as well,” he said.

Kesavan said retailers can’t stop this trend without help from regulation.

“It’s a tough one to fight," he said. "While retailers have tried many different ways to fight this problem, I think some help from regulation will indeed be welcome."

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