GOVERNMENT AFFAIRS

LEGISLATION INTRODUCED TO CURB RISING ORGANIZED RETAIL THEFT

Many of us have seen the widespread smash-andgrab retail crimes happening across our nation and throughout our communities. Wisconsin state lawmakers are taking action by stepping up legislative efforts to try and remedy these unlawful practices that directly and indirectly impact on our state’s economy. State business organizations and lawmakers have asked for the insurance industry to help get involved in the broader legislative effort.

Republicans State Senator Roger Roth (R-Appleton) and State Representative Alex Dallman (R-Green Lake) introduced legislation this month that would require online marketplaces like Facebook and Amazon to verify that their high-volume third party sellers are legitimate businesses. Assembly Bill 743 (AB-743) and Senate Bill 710 (SB-710) aim to increase transparency and accountability for online marketplaces amid the rapidly growing problem of illicit goods being sold online. Currently, there is minimal oversight of who and what products are being sold through these virtual marketplaces. Why should the insurance industry care and agents get involved, you ask? Because at a basic level as these unscrupulous practices continue to occur unchecked, there is the potential for increased claims from those business customers that you might insure. The goal is to support efforts like AB-743 and SB-710 that could help mitigate and reduce this type of exposure for your business clients that may fall victim to smashand-grab criminal activity. including those from big box, brick-and-mortar retail stores, while strong opposition comes from online marketplaces that include Amazon, Facebook, eBay and others. Similar legislative proposals are being considered by Congress and in other state legislatures across the country.

The bill otherwise known as the “Integrity, Notification, and Fairness in Online Retail Marketplaces Act” or the “INFORM Act” establishes more stringent identification and verification requirements for anyone who is considered a “highvolume” seller on online platforms to ensure they are legitimate sellers. The bill includes an exemption for occasional sellers from the requirements of the bill to avoid placing a burden on smaller businesses and individuals who occasionally sell their merchandise online. A high-volume third party seller is defined under the bill as “a third party seller who in any continuous 12-month period during the immediately preceding 24 months has engaged in at least 200 discrete sales or transactions of new or unused consumer products that have resulted in a total of at least $20,000 in gross revenues.”

Advocates for the bill highlight that the sale of counterfeit and stolen merchandise is a growing problem for traditional storefront retailers. Organized retail crime syndicates are more frequently using online marketplaces to sell their stolen merchandise. The Coalition of Law Enforcement and Retail estimates that retailers nationwide lose more than $45 billion annually due to organized retail theft and some of this cost has an impact on the

commercial insurance industry. The sale of counterfeit merchandise can also lead to sub-standard and sometimes harmful products to consumers, particularly in the area of healthcare products and toys. Opponents of the proposed legislation argue that big box storefront retailers are trying to add onerous, unwieldy regulations on online platform competitors and seeking to drive a wedge into their current business model. These online retailers suggest better enforcement by storefront retailers and tougher penalties of retail theft laws as the better approach to curbing the problem of retail theft and fraud. These too are important risk mitigation strategies, but simply increasing penalties for retail theft is unlikely to happen in Wisconsin due to the current political environment. Retail is a $4.4 trillion business in the U.S. and organized retail theft is a growing issue facing Wisconsin’s retailers and manufacturers. They are important insurance consumers and a vital part of our state’s economy. The emergence and growing popularity of online retail shopping has no doubt created new challenges for the entire retail sector that need to be more carefully scrutinized. The INFORM Act seeks to institute some regulatory safeguards at the state level in order to curb stolen and counterfeit Because of the limited amount of time remaining in the current 2021-22 legislative session, the bill’s prospects are uncertain. However, it is likely that the legislature will hold public hearings on the bill before the session adjourns in March of 2022. In the meantime, IIAW’s government affairs team in Madison will continue to remain engaged on this issue and monitor the bill’s progress.

Read a copy of the bill draft at https://bit.ly/ JAN2022GovAffairs and please send us your feedback by emailing info@iiaw.com.

> Misha Lee

IIAW Lobbyist

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