Dramatic store security footage of smash and grab retail theft and interviews with shaken staff have recently made for compelling broadcast TV and salacious headlines around the country. But are we seeing the full picture?
The media’s interest in this storyline is being driven by Big Retail companies’ use of wildly inflated statistics related to retail theft, many of which have been debunked by major media outlets. Big Retail advocates continue to incorrectly use blanket stats when discussing crime. In one instance, an advocate even told federal lawmakers that “organized retail crime accounts for $45 billion in annual losses for retailers.” In actuality, the $45 billion in losses, as reported by the National Retail Federation, refers to total retail loss – including employee theft and many other forms of fraud. Organized retail crime comprises a small fraction (about $2.1 billion) of that number.
Despite recent media attention, retail crime surges are not a new phenomenon. Historically, organized retail crime tends to rise in times of domestic turbulence. According to US Court statistics, retail theft skyrocketed by 16% around 9/11 and by 30% during the 2008 financial crisis. It would be unsurprising if retail theft rose during the pandemic and its attendant economic hardship.
Captivating news coverage shouldn’t dictate public policy, but it appears to be spurring action in our state legislature at the expense of a lesser-known victim: small businesses who make their living or supplement their income by selling products online. Big Retail argues that goods stolen from their stores are then fenced on e-commerce sites, and as such, these corporations are lobbying for new, privacy invading regulations to be imposed on small businesses that sell products online.
Online marketplaces, which support American small businesses to the tune of $145 billion in economic value annually, shouldn’t be roped into fighting an in-store, big-box retail problem. But that’s exactly what legislation under consideration in Maryland’s House will do. Scheduled for a hearing Wednesday, HB 295 would classify small, home-run businesses as “high-volume sellers” based on an arbitrary threshold of just a few hundred sales or $5,000 a year. Based on this classification, these sellers would be required to disclose to the world sensitive information like their home address, email address, and personal phone number, effectively leaving sellers exposed and vulnerable to angry customers, identity thieves, and other bad actors.
The overwhelming majority of small business owners selling on these marketplaces are your neighbors, friends, and family. They are moms, not mobsters, and they shouldn’t be collateral damage in Big Retail’s ploy to regulate competitors as brick-and-mortar companies struggle to adjust to the e-commerce economy.
This is not just an issue in Maryland. Seller privacy is on the docket in states like Florida, Georgia, Missouri, and Ohio. If these bills are enacted, they will create a tangled web of varying state-by-state regulations sellers will have to spend scarce time and resources navigate.
Legislation like this would disincentivize American entrepreneurs looking to leverage a roughly $768 billion e-commerce economy. We shouldn’t have to choose between preserving our privacy and keeping our virtual doors open to the nearly 2.14 billion people worldwide who shop with us.
In-store retail theft needs to be addressed at the scene of the crime, not by punishing local Maryland small businesses. Our state has worked hard to earn a reputation as a good place to do business in recent years. Hopefully, lawmakers won’t tarnish that reputation with this anticompetitive bill. Instead, I hope they listen to Maryland small businesses who have very real concerns about the unintended consequences of measures like these.