The National Retail Federation reported that three of the top 10 cities for organized retail crime are in California: Los Angeles, San Francisco and Sacramento. It’s no wonder. Just this past May, California authorities recovered over $700,000 in stolen merchandise during an arrest of a suspect in connection with a smash-and-grab retail theft ring.
These crimes are having devastating effects, particularly on small businesses. Latino small-business owners, who are the fastest-growing group of entrepreneurs in the U.S., are especially impacted. A recent study of small business owners found that 89% of small businesses across the country were affected by shoplifting in 2021. Of this percentage, 54% experienced an increase in comparison to past years. To make matters worse, these same stores also often find themselves being repeat victims of theft after shattered windows and broken locks leave them vulnerable to more attacks.
That means the nearly 5 million Latino-owned businesses in the United States contributing more than $800 billion to the American economy annually are unfortunately no stranger to the impact of organized retail crime. In the Los Angeles metro area, Latino GDP alone was $285 billion.
State officials have gone to great lengths to address this issue. Governor Newsom introduced $255 million in grants for local law enforcement and implemented a permanent Smash and Grab Enforcement Unit. The city of San Francisco created the Storefront Vandalism Relief Grant, which helps small businesses repair the damages from burglaries. While these efforts can be beneficial, they are simply a band-aid. We need legislation that proactively deters crime from happening in the first place.
Legislation California is already considering SB 301, a state bill that would attempt to address this issue by implementing a more thorough verification process for high-volume, third-party online sellers. While admirable in its goal, state-specific bills like this will inadvertently cause more headaches for California’s online sellers. As states pass their own versions with slightly different compliance guidelines, online sellers will be forced to navigate a patchwork of state-by-state selling regulations. Subsequently, it will become increasingly difficult for online sellers to run their businesses, as they will have to expend time and resources to ensure they are following the fine print in each state.
Therefore, California – and particularly Latino small businesses – need a federal solution. H.R. 5502, the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers (INFORM Consumers) Act is that solution.
The INFORM Consumers Act provides a direct, consistent, and common-sense approach to disincentivizing organized retail crime. This bill requires online marketplaces to verify and disclose the contact information of certain high-volume, third-party sellers. This information would include their name, tax ID, bank account information, and contact information. By encouraging transparency when selling online, the INFORM Consumers Act would combat the proliferation of stolen and counterfeit goods that often end up being resold online.
Moreover, a federal approach means that online sellers will follow one uniform set of selling standards nationwide. Amid an economy crumbling under inflation, streamlining compliance regulations across the country can help ensure we aren’t piling onto our small business community’s already full plate.
Retailers have already lost $125.7 billion from retail theft. In this economy, they can’t afford to hemorrhage any more expenses. The INFORM Consumers Act is a bipartisan bill with overwhelming support. Organizations spanning tech, retail, and law enforcement have all been vocal about their support. This fall, Congress should focus on delivering real relief where it can for small businesses and pass H.R. 5502.