The Strongest Press Piece
Published By a Major News Outlet
Detailing the ORC Epidemic
And in support of Senate Bill
S.936 - The INFORM Consumers Act
Every member of Congress should read the article
Send a copy to your
elected official today!
(Call to Action & Details Below Article)
Ben Dugan Works for CVS. His Job Is Battling a $45 Billion Crime Spree.
![](http://d-ddaily.com/images/9-1-21dugan-wsj2.PNG)
Ben Dugan, seen above in a
CVS store, the company’s top investigator, is charged with combatting
a boom in organized theft from retail stores. ZACK WITTMAN FOR THE WALL STREET
JOURNAL
Retailers are spending millions to combat
organized rings that steal from their stores in bulk and peddle goods online,
often on Amazon
Ben Dugan sat in an unmarked sedan in San Francisco’s Tenderloin neighborhood
one day last September waiting for the CVS to be robbed.
He tracked a man entering the store and watched as the thief stuffed more than
$1,000 of allergy medicine into a trash bag, walked out and did the same at two
other nearby stores, before loading them into a waiting van, Mr. Dugan recalled.
The target was no ordinary shoplifter. He was part of a network of organized
professionals, known as boosters, whom CVS had been monitoring for weeks. The
company believed the group responsible for stealing almost $50 million in
products over five years from dozens of stores in northern California. The job
for Mr. Dugan, CVS Health Corp.’s top investigator, was to stop them.
Retailers are spending millions a year to battle organized crime rings that
steal from their stores in bulk and then peddle the goods online, often on
Amazon Inc.’s retail platform, according to retail investigators,
law-enforcement officers and court documents. It is a menace that has been
supercharged by the pandemic and the rapid growth of online commerce that has
accompanied it.
“We’re trying to control it the best we can, but it’s growing every day,” said
Mr. Dugan.
The Coalition of Law
Enforcement and Retail, a trade association, which Mr. Dugan heads,
estimates that organized retail theft accounts for around $45 billion in annual
losses for retailers these days, up from $30 billion a decade ago. At CVS,
reported thefts have ballooned 30% since the pandemic began.
Mr. Dugan’s team, working with law enforcement, expects to close 73 e-commerce
cases this year involving $104 million of goods stolen from multiple retailers
and sold on Amazon. That compares with 27 cases in 2020, involving half the
total. CVS has doubled its crime team to 17 over the past two years and
purchased its own surveillance van with 360-degree cameras and a high-powered
telescope.
![](http://d-ddaily.com/images/9-1-21wsj2.PNG)
A clear
plastic container is used to protect CBD products at a CVS store, one of several
items
at high risk of being stolen. | PHOTO: ZACK WITTMAN FOR THE WALL STREET JOURNAL
Home Depot Inc. says the number of its investigations into these kinds
of criminal networks has grown 86% since 2016 and exceeded 400 cases last year.
The majority involved e-commerce. The company has doubled the size of its
investigative unit over the past four years, a spokeswoman said, and the unit
works alongside thousands of “asset protection specialists” stationed in stores
to spot suspected thieves.
“The digital world has become a pretty easy way to move this product,” Home
Depot Chairman and CEO Craig Menear told investors in December 2019, becoming
one of the first executives to highlight organized retail crime. “It is
literally millions and millions of dollars of multiple retailers’ goods.”
Target Corp. , Ulta Beauty Inc. and TJX Cos., which includes TJ Maxx and
Marshalls, have also bulked up their resources.
Complicating the battle is Amazon itself, which investigators and
law-enforcement officials say is one of the biggest outlets for criminal
networks, given its huge pool of potential customers and, in investigators’
view, insufficient vetting of sellers or their listings.
Retail and law-enforcement investigators say they struggle to obtain information
about potentially illicit sellers from the online giant, which generally
declines to provide information about sellers without a subpoena or other legal
action. Other online selling platforms such as eBay Inc. are more willing to
cooperate without legal intervention, investigators say.
Amazon “may be the largest unregulated pawnshop on the face of the planet,”
said Sgt. Ian Ranshaw of the Thornton, Colo., police department. “It is super
hard to deal with them.”
Amazon spokesman Alex Haurek said the company doesn’t tolerate the selling of
stolen goods and works with law enforcement and retailers to stop bad actors,
including by withholding funds, closing accounts and making law-enforcement
referrals. He said the company spent $700 million last year to combat fraud on
its platform.
![](http://d-ddaily.com/images/9-1-21wsj3.PNG)
Above, various
surveillance devices that keep tabs on stores.
PHOTO: ZACK WITTMAN FOR THE WALL STREET JOURNAL (4)
Mr. Haurek said Amazon doesn’t share customers’ and sellers’ personal
information without a subpoena due to privacy concerns.
Organized retail crime has moved away from flea markets and corner stores and
onto the Internet, where criminals can move their product quickly and
anonymously. Boosters, often drug addicts targeted by crime rings, typically
sell their goods for about 5% to 10% of retail value to a street-level fence,
who then sells them to a larger-scale distributor.
Retail investigators blame changes in sentencing laws in some states for an
uptick in thefts. In California, a 2014 law downgraded the theft of less than
$950 worth of goods to a misdemeanor from a felony. Target recently reduced its
operating hours in five San Francisco stores, citing rising thefts.
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The corporate investigators charged with tackling the problem are often former
police. They tail thieves, compile investigative reports, stalk storefronts for
stolen goods and comb through trash outside suspects’ houses. They pore over
videos from stores that have been robbed and scour profiles on online
marketplaces.
Mr. Dugan rarely wears hats, after boosters said they assumed anyone wearing a
hat was a cop. (The exception, Mr. Dugan said, is Boston, where everyone wears
hats.)
Store staff are instructed not to apprehend thieves for safety reasons. Retail
investigators will sometimes let a theft unfold to help identify a fence.
Earlier this year, an e-commerce analyst on Mr. Dugan’s team who looks for
sellers hawking high-risk products such as allergy medicine or razorblades
identified an Amazon account with over $1 million in suspicious listings. It was
linked to a video store in Leominster, Mass. Local law enforcement, working
together with CVS and other retailers, arrested the owner of the video store in
May. Amazon kept the store up for at least six more weeks after the arrest.
Amazon’s Mr. Haurek said the account was closed “at the earliest appropriate
time after reconciling inventory and completing necessary documentation.”
In late 2017, CVS investigators interviewed three different shoplifters who all
said they worked for “Mr. Bob,” a man named Robert Whitley, who owned a business
in Atlanta. Mr. Dugan shared pictures of the thieves with his counterparts at
Target, Publix and Walgreens. They were getting hit by the same people,
according to investigators and case documents.
The four teams, working with the FBI and the U.S. Postal Service, took two years
to unravel the network of shoplifters who had stolen over-the-counter medicines
from hundreds of stores in nearly a dozen different states.
Mr. Whitley operated an Amazon store, Closeout Express, for about seven years
and sold $3.5 million in stolen goods on the platform, according to court
documents. In April, Mr. Whitley pleaded guilty to transporting stolen property
across state lines; his daughter pleaded guilty to conspiracy to do so. They
await sentencing. Amazon said it cooperated with the investigation.
Donald Beskin, the Whitleys’ lawyer, disputed the characterization of the case,
but declined to elaborate.
Law enforcement has become more focused on organized retail crime in recent
years. Some states have formed regional task forces devoted to the issue.
To help those efforts, Walmart sometimes gives detectives a corporate credit
card to use for undercover sting operations. In the Atlanta investigation, CVS’s
Mr. Dugan said he provided FBI agents with cases of electric toothbrush heads
and Fusion razorblades to help an agent make an undercover sale to Mr. Whitley.
Last year, Home Depot paid for more than $400 in equipment, including a GPS
tracker, to help Colorado police follow a member of a crime ring who was
transporting stolen power tools to a house 1,000 miles away in Katy, Texas.
![](http://d-ddaily.com/images/9-1-21wsj5.PNG)
The view
inside Steven Skarritt's house, which was stacked with allegedly stolen goods
from Home Depot.
Through his attorney, Mr. Skarritt denied wrongdoing.
The Katy house had been turned into a warehouse, complete with an elevator
moving goods between floors, where Steven Skarritt, a former painting
contractor, allegedly ran an Amazon storefront that sold almost $5 million in
stolen goods between 2018 and 2020, according to a search warrant investigators
served Amazon with in January.
The elevator was “something I’ve never seen in my career,” said Jamie Bourne, a
Home Depot organized retail crime investigator involved in the case, who was
there when law enforcement raided Mr. Skarritt’s house last October. They
recovered 55 pallets of stolen Home Depot merchandise, including power drills,
levels and vacuums.
Mr. Skarritt was charged in mid-July with first-degree felonies for money
laundering and engaging in organized criminal activity. Amazon closed his
account later in July. Amazon spokesman Mr. Haurek said it had agreed with Texas
law enforcement to temporarily keep the account open to support the
investigation.
In a recent court filing, Mr. Skarritt’s attorney, Q. Tate Williams, said there
was no direct evidence Mr. Skarritt was aware of the thefts or that any of the
stolen merchandise from Colorado was part of his inventory. “He denies and
intends to vigorously defend these charges,” Mr. Williams said.
![](http://d-ddaily.com/images/9-1-21wsj6.PNG)
Mr. Skarritt's house
included an elevator for moving goods between floors.
In recent years, retailers have pressed Congress to pass legislation requiring
e-commerce sites to verify details for third-party sellers and make certain
information public, making it harder for people to sell stolen goods.
Amazon, along with other online marketplaces including eBay, has lobbied against
the bill, saying such measures would invade sellers’ privacy. Mr. Haurek said
the legislation would favor large retailers at the expense of small businesses
that sell online.
“We believe the most effective way to stop fraud and abuse is for Congress and
the states to increase penalties and provide law enforcement with greater
resources,” he said.
Last year, Amazon began conducting interviews to verify seller identities, and
now does so for the “vast majority” of prospective sellers, Mr. Haurek said. The
company also requires prospective sellers to provide government-issued
identification, addresses, credit cards, bank accounts and taxpayer information.
It also makes public some seller information. The verification process last year
stopped more than six million attempts by apparent bad actors to create new
seller accounts, he said.
In last autumn’s San Francisco case, CVS investigators for weeks tracked a ring
of nearly two dozen boosters targeting their stores who were stealing up to
$39,000 a day in merchandise.
They followed the stolen goods to two units in a warehouse facility in Concord,
Calif. When investigators, working with local law enforcement, ran the address
through an online database, one business stood out: D-Luxe.
The company was owned by a man named Danny Drago—known to boosters as “Daniel
the Medicine Man” for the types of products he bought—and his wife, Michelle
Fowler. A website for the company said it did business with Amazon’s “Top Rated
Sellers.”
On Sept. 10, CVS’s Mr. Dugan asked Amazon for more details on its relationship
with D-Luxe. Amazon refused, saying it would respond only to a subpoena from law
enforcement.
When the San Mateo sheriff’s department served a search warrant to banks
associated with Mr. Drago and Ms. Fowler on Sept. 28, investigators realized the
Drago enterprise was bigger than they had thought, according to people close to
the investigation. The district attorney’s office, through a court order, froze
the accounts.
Investigators believed Mr. Drago and Ms. Fowler were involved in a nearly $30
million operation, the people close to the investigation said. Between 2017 and
2019, they operated at least two Amazon storefronts, the people said. They also
sold to at least three other sellers on Amazon, one of the people said. CVS
estimates the operation was selling $5 million a year in stolen goods on Amazon
or to other Amazon sellers in recent years.
![](http://d-ddaily.com/images/9-1-21wsj7.PNG)
A haul of
stolen goods seized by authorities in San Mateo, Calif., just one small part of
the estimated
$45 billion in annual losses for retailers from theft.
Amazon suspended at least one of the accounts in 2019 and both are now closed.
“The account was blocked after we suspected the seller could be listing
improperly obtained product, and the seller couldn't produce valid invoices,”
Amazon’s Mr. Haurek said.
Mr. Haurek declined to comment on CVS’s estimate of the Drago operation’s sales.
He said the company worked closely with law enforcement to help break up an
additional ring Mr. Drago had supplied, including closing four seller accounts.
When Amazon suspects a seller may be hawking goods it purchased from a retail
crime ring, it requests invoices, purchase orders or other proofs of sourcing,
he added.
The bank accounts indicated that Mr. Drago and Ms. Fowler also operated a
smaller eBay account, the people said. An eBay spokeswoman said stolen goods
aren’t tolerated on the site and that the company is committed to cooperating
with law enforcement and retailers.
Law-enforcement officers served Amazon and eBay with search warrants seeking
records for its accounts.
Amazon provided correspondence with Mr. Drago regarding complaints about his
suspended account, but didn’t hand over financial details of transactions or
internal notes about suspicious activities, despite repeated requests by law
enforcement, a person close to the investigation said.
Amazon provided “extensive information,” Mr. Haurek said, but didn’t provide
sales data because the warrant and follow-up requests didn’t explicitly request
it.
![](http://d-ddaily.com/images/9-1-21wsj8.PNG)
Mr. Dugan holds up a foil-lined bag used to evade a CVS alarm system in a
Daytona Beach, Fla., store.
PHOTO: ZACK WITTMAN FOR THE WALL STREET JOURNAL
EBay was more responsive to a search warrant, handing over detailed financial
transactions for Mr. Drago’s account on its platform, said the person close to
the investigation. Before the warrant, the company had also allowed a CVS
investigator to access more than 15,000 financial transactions for the account
associated with Mr. Drago’s storefront without any legal intervention. It
subsequently shut down the account.
Days before police arrested Mr. Drago and Ms. Fowler on Sept. 30, the pair
attempted to sell $1 million of stolen merchandise to an Amazon seller,
according to a person close to the investigation. CVS investigators set up
outside the Concord warehouse saw hundreds of boxes leaving the warehouse and
alerted law enforcement and United Parcel Service Inc., which stopped the
shipment. The seller no longer appears to have a storefront on Amazon.
When police raided the warehouse and other properties associated with Mr. Drago
and Ms. Fowler on Sept. 30, they found more than $8 million in over-the-counter
medication and other products from various retailers, along with $85,000 in
cash, according to the California attorney general’s office.
Mr. Drago, Ms. Fowler and three others were charged with criminal profiteering,
money laundering, conspiracy to commit a felony, possession of stolen property
and organized retail theft. Both Mr. Drago and Ms. Fowler pleaded not guilty and
await trial. Their lawyers either didn’t respond to requests for comment or
declined to comment.
For Mr. Dugan, it was on to the next case. This week, he hired two more
investigators.
wsj.com
The INFORM Consumers Act
Buy Safe America Coalition
WSJ Article: Ben Dugan Works for CVS. His Job Is
Battling a $45 Billion Crime Spree.
Call to Action for Every LP & AP Executive
& Even the Industry's Solution Providers
Letters from you and your team & from your CEO &
Legal Council
Objective: Get You Congressional Representative & Senator to
Read The WSJ Article & Support
The INFORM Consumers Act
This WSJ article is probably one of the most thorough and well researched
articles on ORC that we've ever seen. Every elected official should read this
and especially now, given the current bill sitting dormant in the Senate
Commerce Committee. Which has not seen any movement since its reading in March.
We've
had a couple of opportunities to get some movement when Congress has focused and
was probing Amazon. And when RILA engaged them with letters and formed the
Buy Safe America
Coalition. Which gathered some great retail support.
But in order to motivate Congress, especially now with the focus on
Cybersecurity and online criminal activity, we need every executive in the
industry to get this article on your elected official's desk. And even more
importantly, you need to get your CEO and legal council to send them a letter
as well with the article attached and the Bill linked - demanding action!
Make sure you include and provide a link to the
Buy Safe America
Coalition group as well. Make sure the official has all the resources
and sees the support for the Integrity, Notification, Fairness in Online
Retail Marketplaces (INFORM) Act, otherwise referred to as:
S.936 INFORM Consumers Act.
Sponsor:
Sen. Durbin, Richard J. [D-IL] (Introduced 03/23/2021)
Committees: Senate - Commerce, Science, and Transportation
How to
Contact Your Elected Officials
●
Locate your U.S. senators' contact information.
●
Find your U.S. representative's website and contact information.
Folks, for years everyone has talked about the need for a Federal ORC law and
now we have Bill sitting in Congress that tackles the issue. But like so many
times before, Congress is dealing with issues that far out weight this issue,
speaking realistically, and if we want to get it at least to the floor for a
vote it's going to take a Herculean effort on the industry's part to get it
there. And it needs an article of this caliber and a massive lobbying
effort. Which is all of you, your teams, your solution providers, and
especially your senior management teams - your CEO's and Legal Council.
Write a template letter everyone can sign. Make the effort easy for everyone.
And include the
Buy Safe
America Coalition information.
Every Retail CEO & Chief
Legal Council Should Demand Action
It's their fiduciary responsibility