Skip to main content

tv   Experts Testify on Online Marketplace Fraud  CSPAN  November 4, 2021 6:36am-8:04am EDT

6:36 am
>> thank you senator grassley the first witness is aaron muteric. he invented thinking putty. his company is known for developing unique production methods to employ individuals with special needs. he's a volunteer firefighter. received his b.s. from university of rochester. gary camel is the is assistant
6:37 am
direct for education outreach and senior academic specialist at michigan university center for anti-counterfeiting and product protection. she also serves as an adjunct professor after law at michigan state college of law. intellectual property and trademark law. previously worked for de paul college of law. received her b.a. from university of chicago, her m.a. from american university in cairo. and j.d. from de paul. james snowden. association represents global internet on matters of public policy. mr. snowden was chief operating officer at ntca, internet and
6:38 am
television --. also served in federal communications commission as chief of consumer and government affairs bureau from william mary. senator whitehouse. >> thank you very much. dvs health is a great growing and successful rhode island company shown leadership in many issues including refusing to sell tobacco products as part of its commitment to public health. online marketplaces have been an important part of every day life in the covid shut down but they present convenient avenues for organized theft and crime. mr. dougan is at the vanguard of
6:39 am
investigating and combatting these crimes. for decades fought. he's a natural leader in retail loss prevention particularly e-commerce and even featured in the news media as one of the foremost experts in dismantling organized retail crime. he's a veteran of the united states army military police, serves as president of the national coalition of law enforcement and retail. and i'm delighted to have him here. i will say that as u.s. attorney and rhode island attorney general it was my privilege to work with many skilled rhode island investigators both in law enforcement and from the private sector. and mr. dougan continues our tradition of investigative excellence in rhode island. >> thank you senator whitehouse. with the witnesses please stand to be sworn in. please raise your right hand.
6:40 am
do you affirm the testimony you are about give before the committee will be the truth, the whole truth and nothing but the truth so help you god? all answer in the affirmative. mr. muteric. >> aaron muteric. founder and president of crazy aarons a toy manufacturer in norristown, pennsylvania. thank you for the opportunity to testify today. chairman durbin, ranking member grassley. i applaud your commitment to protecting consumers. curbing the flow of counterfeit and unsafe goods is e-commerce is critically important to me as a toy manufacturer and a small business owner. i founded crazy aarons in 1998 with a mission to create toys that inspired a sense of wonder and creativity. i quickly realized i was going to have to build my own factory, so that is what i did. and today our headquarters is part of the revitalization of norristown.
6:41 am
we employ over 100 people and for over 18 years we have provided meaningful daily work to hundreds of additional individuals with disabilities in the philadelphia area. while my business has seen successes since the days of experimenting in my parents basement, it has come with unanticipated challenges. i discovered a tidal wave of infringing products being sold online through third party sellers. we've spent significant time and resources policing these one by one. i've submitted a list to the committee. today i appreciate the opportunity to share three serious concerns. first, the enormous resources required from a small business to endlessly police these marketplaces for bad actors. second, that due to many of these bad actors being outside the jurisdiction of the united states, our recourse to protect our intellectual property and
6:42 am
reclaim damages is severely limited. and in many cases non existent. third and most importantly, these bad actors often sell unsafe goods which do not meet the stringent federal safety standards required of legitimate producers. these violations range from labeling requirement, illegal levels of regulated chemicals and mechanical hazards which cause acute physical harm. consumers visit online marketplaces assuming the products they see meet safety standards. so i created the world's first magnetic putty. it is a putty toy that crawls over to a magnet as if it was a live. and it was a tremendous commercial success and differentiated us from competitors. we invested significant r&d into making it a reality and into making it a safe product. as counterfeiters and knockoffs flooded the marketplace, magnetty putty sales began to
6:43 am
decline. i scrambled but became increasingly concerned that almost every one of the competing products did not comply with safety standards. today i have brought with me products i purchased last week from two of the largest online marketplaces in the u.s. i also have brought independent third party laboratory results showing their non compliance with mandatory federal standards. our company has done this testing at our own expense and communicated this non compliance to online marketplaces again and again following up with them repeatedly. we have done this for years. nonetheless these products remain available for sale. they are purchased in the hundreds of thousands by unsuspecting consumers. they contain high strength hazardous magnets which are not legal in children's products. you will note the online packaging and listings including language like safe for children 3 plus. or safety tested. they include photos of children
6:44 am
as young as toddlers playing with them. accidental ingestion of these hazardous magnets can cause serious injury and unfortunately numerous fatalities have been documented. their magnetic strength is so high they destroy themselves when drawn to each other. you can see in the video and photo i have provided that when these magnets collide, that the not only shatter into sharp shards but due to the nature of their material, they will spark and have the capacity to start a fire. if my words, demonstration or laboratory results ant enough you need only look at consumer reviews of the products which are publicly available in the marketplaces themselves. an example. quote, the magnet broke apart while i was showing this off to a friend. he was pulling them apart. sliced open his finger. i do not recommend this to anyone. i thank you for the opportunity to share the story of one product monk a sea of millions
6:45 am
available online. i appreciate your efforts to secure consumers from counterfeit and unsafe goods. >> and we appreciate your testimony and the fact that your business philosophy is embracing people with disabilities. >> thank you. >> professor, dr. camel, you are next. >> chair durbin, ranking member grassley and members of the committee, thank you for inviting me today. my remarks draw on my research online trademark counterfeiting and work with industry professionals. i focus on research, education and outreach around counterfeiting and brand protection. we work with both intellectual property rights coners and governments as well as online marketplace, social media platforms and other industry experts across the field giving us the unique ability to examine the problem wholistically. today i'll give an over view and
6:46 am
the current stay of the law. one i --. and two i recommend continued and expanded data sharing and research on the trade in counterfeit goods and counterfeit responses. i'd like to start by painting a picture what is occurring online marketplaces in the current state of the law. the sale of counterfeit goods online impacts national companies, companies of all size, small and medium sized enterprises and consumers is has exploded in the past decade and even more since covid-19. the financial impact of the sale is staggering. roughly over 460 billion dollars wort of global sales in 2019. counterfeiters find success by using another company or brand own ears trademark on a product or package without authorization to. they also take advantage of the opportunity online marketplaces to provide to reach often unsuspecting consumer who is cannot examine the goods before purchase. consumers struggle to be able to report suspected counterfeit or
6:47 am
cannot find a third party seller. only marketplaces have varying levels of proactive efforts. must be a meeting in time and space of the consumer, counterfeiter posting and commerce platform. the most effective way to disrupt this is removing a factor from the situation proactively before they ever reach that meeting in time and space on the platform. in the brick and mortar space, the current state of law requires providers to take steps to disrupt the sale of counterfeits and consumers. however we don't find the same parallels in the law. the current state of law rests on the 2010 second circuit case of tiffany versus ebay. which recommends only need to act if they have specific knowledge of a posting from a --. -- monitoring other platforms for counterfeit even though they
6:48 am
have the most control over the platforms they have created. thus where brand owners attempt to take down counterfeits but cannot get at the root of issue. a lack of transparency about third party sellers, details on vetting, taken, repeat sellers or any education awareness or reporting mechanisms for consumers. while informed -- growing urgency on this topic and take different approaches they both seek to require e-commerce platforms to proactively take measures. and provide multiple avenues for tackling this complex issue. in my opinion both pieces of legislation are essential to balance the space due to the shift from brick and mortar to the current online e-commerce space. and importantly to provide consumers with more education, protection and avenues which to report suspected counterfeit goods. i also recommend continued and expanded data sharing and research on the trade in
6:49 am
counterfeit goods and anti-counterfeiting responses. thank you again for the opportunity to participate in this hearing on this very important issue. and i look forward to answering your questions. >> thank you. >> chairman durbin. ranking member grassley, members of the committee. thank you for the opportunity to appear today to discuss the ways that online platforms are partners in the fight against illegal and counterfeit goods, retail theft and protecting consumers from bad actors online. represent -- our mission is foster innovation, promote economic growth and empower people through the free and open internet. online marketplaces and platforms are the virtual main streets that enable us to purchase things we want and need. not all marketplaces are the same. different item, sellers, audiences. and households across america, we use online marketplaces to
6:50 am
get our grows for the week and goods and crafts all with the click or swipe on a screen. as we continue to live through the covid-19 pandemic online marketplaces and platforms have helped americans by delivering the essential goods and products consumers need to maintain their daily lives and keep our economy going. while the vast majority of online sellers and goods sold online are legitimate, the internet industry recognizes that online systems have created new challenges for brand owners, retailers and consumers. however counterfeiting, retail theft and organized crime are not new problems. nor were they created by online platforms and marketplaces. it would take all of us, law enforcement, state box retail. brands and right holders and
6:51 am
online marketplaces to work together to combat the illegal activity by organized crime. online marketplaces have made this a priority and work every day to stop organized crime and counterfeiters. we recognize the responsibility and the important role we play in the ecosystem in stopping this activity. and we continue to innovate and cooperate to ensure our marketplaces are safe and trusted by the consumers and sellers who use our stores. we are on the right path to addressing these issues. it is important to stress, internet companies do not permit illegal or counterfeit goods on their platforms. they have invested hundreds of millions of dollars in tools and deployed thousands of people members to implement clear policy. when they find something that violates their terms of service, they take it down. or in other cases never low it up. online platforms and marketplaces bet sellers up front through the direct skpin correct means. they use advanced tools like image detection and machine learning as well as reports from
6:52 am
brand owners. -- monitoring for any issues. the partnership with brand owners and rights holders are critical because they are in the best position to identify counterfeit goods. last year amazon enrolled more than 500,000 brands in its free reporting tool. those brands reported 99% reduction in suspected infringement. and less than 0.01% of products sold on amazon received a counterfeit complaint from a customer. ebay works with 40,000 individual rights holders to identify property infringement and -- teams have led to 58% increase in intellectual property related take down. beyond these proactive efforts we support the chairman and committees goals of further
6:53 am
minimizing the availability of counterfeit and other illegal goods online. international association encourages to consider two aspects that impact sellers, consumers and online marketplaces and platforms. first a national framework that clearly preempts a patch work of states or local laws that ensuren americans continue to receive a consistent internet experience nationwide, while states have an important law enforcement role in protecting consumers and stopping retail threat. federal law should be the sole source of companies that operate across state lines. second -- careful not to impose unnecessary burdens on small businesses. many online operations are small --. protecting privacy. recommend changes made in the --
6:54 am
informed consumers act and encouraged by the version recently introduced in the house. -- expectation about the type of information online platforms or marketplaces should collect about high volume sellers and consumers while recognizing burdens and risks to small businesses. the internet industry are partners in the fight to protect consumers and rights holders from the threats opposed by fake goods and bad actors. we hope today's haerlg are further discussion about clear, reasonable requirements within the national from, that can enable online marketplaces to continue providing convenient and safe opportunities to connect sellers and consumers. thank you, i i look forward to your questions. >> thank you very much mr. dougan. >> good morning, chairman durbin, ranking member grassley and members of the committee. my name is ben dougan and i'm director of organized retail crime and -- cvs health.
6:55 am
reducing retail theft nationwide. opportunity to testify on the massive growth of retail crime and impact on consumers, and communities we service. i want to share first hand what i experienced over 30 years working on the problem. organized retail crime represents a massive and growing threat to the tune of 45 billion dollars a year. the internet is riddled with illegitimate sellers. these criminal organizations employ teams or crews of professional thieves that steal products by any means necessary and sell them through online marketplaces. unfortunately these means often include daytime retail theft, threat u intimidation, violence, horrifying stories that play out in our stores every day and which a lot of us see playing out in the media every day.
6:56 am
there is one thing i want to leave you with today senators is that we're not talking about shoplifting. we're not talking about individuals that go into a store to steal something for personal use. these crimes are connected to organized crime and carefully planned and controlled by large scale criminal enterprises, with serious economic and human implications. these professional crews can victimize the same store over and over in the same day or they can go to dozens of stores in the same day and travel over multiple states. this is all part of this national retail theft epidemic that we're in. and it is being all controlled by organized crime. it is fueled by increase in demand and facilitated by an unregulated online marketplaces. but perhaps the most disturbing is the direct physical harm these crime organizations cause retail employees every day. very recently, a cvs manager was
6:57 am
assaulted and remains in serious condition. these incidents are not uncommon. reported violent events at cvs have doubled in the last year. to give it some scale, senators. there is an organized retail crime reported to -- from cvs store every three minutes. and two-thirds of those involve threat of violence, actual violence or a weapon. but there are far less obvious dangers to this crime, including infant formula. a favorite target of these criminal organizations. and the investigations that i've worked, these criminals disregard all of the safety protocols for products. they ignore or manipulate expiration dates and are not storing at proper temperatures. compromising the product integrity and endangering the health of an infant. just last week i received disturbing photographs of a surveillance my team had
6:58 am
conducted with criminals retrieving stolen baby formula from the basement of an abandoned home, cleaning it up and repackaging it to appear as new for an online seller to sell to an unsuspecting consumer. these products go from the hands of criminals to the hands of families. our investigations involve illicit wholesale operations that include hundreds of professional thieves who steal up to a million dollars of product a month. just at cvs. -- specific instructions on what items and quantities the target and purposely direct them to stores in urban and suburban neighborhoods in virtually every state. these stolen products are repackaged, distributed and distributed to the largest online marketplace sellers. and then eventually on to unsuspecting customers. we're talking about dozens of
6:59 am
professional thieves traveling to multiple states. 20 or 30 retail stores per day. and stealing tens of thousands of dollars per store. -- over 75 million dollars in cases so far this year but the current law doesn't provide us or law enforcement with the tools we need to hold these people accountable. these criminal organizations are growing more sophisticated, more entrenched and the harm they do to consumers and businesses is only becoming more severe. we work closely with law enforcement to address this and educate consumers but we are running out of tools like senator grassley said his opening statement to keep up. we need urgent action from congress. the informed consumers act championed by the leadership of this committee and several of its members will make a meaningful difference for us. this bill will help protect consumers and aid law
7:00 am
enforcement and it will prevent crime. making it harder for criminals to easily dispose of zolen goods to online marketplaces is the most significant step we can take to curtail retail theft and reduce the harm organized retail crime represents to our employees and customers. chairman durbin, ranking member grassley, i appreciate your leadership on the issue and commit to combatting organized retail crime. thank you for the opportunity and i welcome your questions. >> thank you mr. dougan. mr. muteric you had a cnn interview couple years ago and you said that one of your employees was spending 15-20 hours a week submitting forms asking amazon and other e-commerce sites to remove products with your company's trademarks. is that still going on? >> what's happened is the producers of these goods have realized that infringing our
7:01 am
marks is more difficult for them. so they have changed to not infringe our marks but it doesn't change the fact that they do not comply with safety standards and flood the marketplace at severely discounted prices. the problem remains. we just no longer have standing to go to the marketplace through the brand owner protection mechanisms and say please take this down. and say please take this down to your. >> so, they aren't using your trademarks or identification? >> it's dropped off a significantly because we were so aggressive, but they do you keywords and other things that we can't enforce with our trademark to drive consumers towards purchasing-- pushing these types of items rather than the legitimate product. >> when i think i heard you say was the controlling law case on this subject requires the marketplace have knowledge of deception or counterfeit status. is that true? >> that is correct they need to be notified often by the brand owner, which is notice takedown
7:02 am
procedure before they are required by the law to take it down. many marketplaces still take down counterfeits beyond this, but in order for them to be held liable secondarily liable for trademark counterfeiting that's basically standard for it so they only have to respond to specific knowledge of the counterfeit. >> mr. snowden, i guess the thing that always mystified me is that the internett marketplaces which have grown in size and i think it's pretty safe to say if they maintain their reputation and integrity they should be on our side in this battle. it took eight years to bring them around to that point. why? >> i would say we are on this your side. we are on the side of consumers and we see consumers enjoy the online experience for the convenience and i get good products. i think as what ms. kammel just said is that it's right in the
7:03 am
sense that yes when we have knowledge of something we take it down, but we don't just wait for that.t. in at 2020 amazon took down over 10 billion bad listings and so this process is going on. online stores-- we don't want this information on our marketplace. it's not our goal. it hurts our reputation on online stores to have this on our stores so we wanted off ast fast as we can and it takes is working with retailers, rights owners and law enforcement. >> well, i would say my observation is amazon's late to the party, but we welcome them as a guest. they recently said quote we look forward to working with lawmakers to further strengthen the bill. proposals they made over the years do not strengthen the bill. they strengthen amazon's he had in avoiding the bill. i for one will not stand watch this water down further. we are going to move on this and test your statement that they
7:04 am
are on our side. mr. dugan, i asked a competitor of yours that happens to be located in my state of illinois and you can guess when talking about, so why do you have these plastic flaps with the keys necessary for underarm deodorant for goodnesss sakes? what's going on here? >>fo that's actually a direct result of organized retail crime and unfortunately it varies sometime in product by demographic or city or suburbano neighborhoods, so we had to lock up those products to prevent organized retail crime groups from stealing them. >> just for second we only have a minute left. so, they sweep in with some container and drag everything on the shelf. where did they end up selling these products they've stolen? >> on my marketplaces on the number one place for the groups to dispose of their products. to the chairman's point they don't steal one or two, they steal all of the deodorant in
7:05 am
the story to maximize product and unfortunately most of the product winds up in the online marketplace. >> flea markets? >> flea markets are kind of a thing of the past, mr. chairman, quite frankly. it still exist, but online marketplace-- flea market sellers also have an online presence. they do both. flea markets don't play the role they used it to because quite frankly the internet provides larger customer base that they can sell the products to. >> i will close by saying in 2019 u.s. custom and border protection reported 83% came from one country and you can guess what it is, the equivalent of $1.4 billion, so we have retail threat-- theft at home being translated into the fencing of stolen goods in these internet marketplaces and then we have the foreign supply either of counterfeit goods such as he is referred to that is
7:06 am
another venue and there may be more, but those are the two that have been identified so far. senator grassley. >> to each of you, if you support legislation, what tools would you like to see in those legislation-- what tools you need? >> thank you. more formal process to identify products we know is unsafe or doesn't meet steve-- safety standards and communicate that to the marketplace versus only having intellectual property protection as a channel to communicate to the marketplace. that would be a tool that would be very useful. >> ms. kammel? >> from my perspective transparency is important so we have abe lot of statistics about takedowns and sellers, but not necessarily how many of the sellers have sold counterfeit prior to the takedown procedure or what is happening on the back
7:07 am
and beyond the initial statistic so at least from my perspective the ability to use some of the data for research to study the problem further. >> i would say information sharing is very important along all parties, something critical for this issue to understand who is doing what and also reporting requirements, strictly small sellers. right now i think in your bill is about two days and i think it's important-- i think that still has 10 days and i would encourage you to consider that as well. >> i would say transparency, ranking member appeared transparency equals accountability. we have to first figure out who they are so we need transparency first before any other remedy. >> okay. to mr. lewter, snowden and dugan, what collaborations orr volunteer initiatives or cross within stakeholder groups have you participated in cracks have they been successful efforts and are some marketplaces more
7:08 am
cooperative than others? >> as a member of the toy association we work with our members, many of whom are manufacturers, some retailerser and online marketplaces are also members that have come to the table to have a conversation. i have seen progress over the probably eight year period i've been involved with the conversation specifically around intellectual property protection, but have not seen progress at the table regarding these unsafe products or products that don't meet safety standards. >> mr. snowden? think what we see with attorney general across the country is we have utah, illinois, arizona, california, the ag's are setting a nice crime task force bringing in all the parties, retailers, brings in us, rights holders and that's important because they are looking it as a holistic point of view which is the way we need to tackle the issue. this is organized crime. at they are organized so we have to make sure we get organized on our side as well and that takes
7:09 am
all of us. >> mr. dugan? fear unfortunately, there has not been a lot of progress in that regard. there are some online marketplaces that do cooperate. ebay is a greatat example on the investigative side. i will tell you that none of the online marketplace currently in the transparency to the level we are looking forward to prevent crime fear thatre attorney gene. task force is being stood up that we work closely with that talk about increased penalties, tougher penalties with resources anyone to add-- they all say the same thing, we need to make this work and we need transparency from the online marketplaces in which right now, we don't have. >> what do each of you believe has been the most successful strategy to counter illegal activity? >> i think persistence, you know our internal efforts nonstop to communicate this even when we
7:10 am
feel like we are hitting a brick wall. i'm hopeful one day we will break through. >> ms. kammel? >> proactive approaches to dealing with the program as to reactive approaches to takedown procedures are necessary, butes when we see either marketplaces or brands trying to take a proactive approach before it ever gets posted, we find those the most effective. >> i would agree with the proactive nature, but i would add that its importance that what's been successful is having the partnership with the brands and rights holders. they know what is counterfeit and what iss illegal, so working that angle and having us work together, i think, has been the most successful. >> what i have learned in my years investigating this crime is that we will not be able tobe arrest our way out of this problem. we need proactive solutions to s really stem the tide of the growth of organized retail
7:11 am
crime, sell proactive measures, but preventative measures have been the most effective and i think it will be the most effective going forward and i believe this bill does happen. >> mr. dugan, i'm going to jump in because i don't believe you identify the percentage the retail theft impact on a business, drugstore. can you give a percentage of sales? >> unfortunately, mr. chairman, i'm unable to talk about specific retail loss numbers to cvs. i will say this, mr. chairman, it's pretty consistent across all types of retail. we are all seeing the crime affect us at a similar level and it's higher than any other level that has been in history and i know there are some ceos that have made public statements about how jack dorsey is affecting their overall profitability, so i think those are available to you, but we could possibly get back to you.
7:12 am
>> senator klobuchar. >> very good. thank you very much for your leadership on this issue and all of you for your work. i want to focus on the bipartisan legislation that senator grassley and durbin and others introduced with me and that would prevent dominant digital platforms from engaging in behavior that unfairly harms competition like relevant here, knocking off products sold on a platform. recent reports in places like the "wall street journal" have documented how amazon has picked knockoff products based on the data they get from innocent companies selling on the platform and of course it's a big platform in town. then, engages in a self prefacing of their own brand above other brands. mr. snowden,n, do you support legislation to make it illegal
7:13 am
to use special access to online seller data to create copycat versions of popular products? >> p senator, this is an issue that i have members on both sides, so i am actually-- ill traditionally have not taken a stance on the competition issues and i will not-- i don't plan to take one today. >> okay. i knew that, but i thought i-- we have a lot of people here, but to be clear i get this, but at t some point this congress hs to take a side. do you want to add anything, mr. dugan? >> now, senator klobuchar, but this is the first i have heard of that. >> you are nodding your head. >> you are teaching me something, senator. i find it amazing, but thank you. >> okay. well, it's true. >> thank you. a few months ago i was sent a link to a new product on amazon
7:14 am
and amazon basic version of our products and is obviously concerning and i looked a little deeper and i saw that not only was it a knockoff of our product but it violated a number of our trademarks as though someone didn't do their homework and we were able to quickly get it taken down through the amazon brand registry which speaks to some of the progress they have b made, but i also thinks it speaks to an underlying product that-- problem that you brought appear. >> very good and i appreciate that and i think we see so muchk more of it and you just have to be on this panel we have had people who have experienced this as we know from the report and i think there's a lot of it in my view is that we have to update our laws which is part of the work that senator durbin and senator grassley have been doing. i'm also concerned about safety when consumers buy products online. just last week in the commerce committee i question snap about heart-wrenching stories of young people in minnesota who died after taking drugs that were
7:15 am
purchased on snap. in one case they didn't know it was laced with fentanyl. mr. dugan, what are some of the harms since consumers can experience when they unknowingly purchase unsaved goods online? >> thank you for the question, senator. there are a lot of harms and i will say that there is virtually no product integrity online, so i would caution buying sensitive products online unless you know that they are safe. we spoke about infant formula and there's another case i work, unfortunately, involving organized crews that still billions of dollars in diabetic testll strips and store them at different temperatures and then counterfeit them and sell them to unsuspecting patients with diabetes across the country so there is a lot of harm across the effectiveness of over-the-counter drugs, they expire, they get less effective, it is really a domino effect on the safety hazards that are out
7:16 am
there with product integrity. >> and of course, the fentanyl example is an example of drugs that should not be sold at all on a platform. you know, snap has pledged it to take these down and do what they can to get into witnesses words at the last hearing, drug dealers out there platform. i continue to digger-- believe that when you have new marketplaces and people making tons of money that they have to start being responsible. ms. kammel, inng your experience when consumers are making purchases online, do they have enough to decide for themselves whether a product might be unsafe? >> no, they don't. often they are looking at an image. sometimes it's a copy of another brand's copyrighted image and what information the seller decides to put on the site, so one cannot tell what they are actually buying until they receive the product even if it
7:17 am
appears genuine at first glance. >> and whether it is counterfeit ppe, amazon or advertisements for fake covid-19 vaccines on facebook, do you think online platforms are doing enough to stop this conduct? what else should they be doing? >> there were a lot of initiatives around say ppe and counterfeit covid related products for sure and i do applaud the marketplaces weree looking at that,bu but across te board we see counterfeits in almost every industry we work with, almost every product line that is a successful so i believe more should be done proactively. >> very good. i really appreciate click again, thank you very much, mr. chairman, for all your work on this and being a cosponsor of our bill which i think is so timely giving what we are talking about here today. think it. >> thanks, senator klobuchar. you are recognized. >> thanks for offering your insights today. we have all seen the e-commerce
7:18 am
has revolutionized marketplace, revolutionized the way we live and operate in the business and it's given a lot of people opportunities that they would not otherwise have. there are some challenges that have of course accompanied this logical revolution and the corresponding social and economic revolution that occurred with it fair as we seek to make the world a better place in the online experience to be better, we have to be careful because any time we enact laws those laws can have consequences and we want to make sure any laws we enact and codify don't make things worse or don't create one problem while purporting to solve another in the legislation we are talking about is something we should scrutinize carefully to make sure we have it right and i do have some concerns. i like to start with you.
7:19 am
it's a laudable. goal, when i think a lot of us would share. of cracking down on counterfeits and stolen merchandise sales on the internet. no one wants that. everyone wants to crackdown on that-- at least everyone in this room, but i wonder how difficult some of the requirements might be for someme companies and especially smaller online marketplaces and by smaller online marketplaces i mean, you know, to a degree anything other than the largest among them, anything smaller could suffer. for example, the bill requiresre verification of high-volume third-party sellers and requires that within three business days and it also requires continuous annual certification of all sellers.
7:20 am
threshold definition of a high-volume seller is set fairly low. it's triggered once you pass the required sales of between five y and $7000 annually. it's pretty low. it would take in a lot of people. do you have any idea-- i'm imagining that the combined sellers of your member companies can certainly be numbered in the many thousands if not millions. am i on track there roughly? >> in the millions. >> we are talking about millions and millions of sellers. now, amazon might, just might be able to do this verification with technology. it might be able to do it just fine it. i'm not sure, but i doubt all of your members would and i definitely worry about smaller platforms that might not be able
7:21 am
to do this. t assuming that i am right that some really large online marketplaces, amazon for example might be able to do this, but smaller companies wouldn't, could the bill actually help-- end up helping a company likean amazon while making it more difficult for smaller businesses to operate and do so in compliance with the law? >> senator, i think your characterization of sellers who use our online marketplaces is accurate. it can be someone-- a mom who is working on hand goods or something she makes in her basement and then she would fall in the verification process of. having to do everything-- three rodays and i think it happens in the hospital, which is about 10 days and give us more time and flexibility. we don't want barriers that will limit sellers to being able to get online and sell their goods to pick the beautiful thing about online marketplaces is that it opens up the door for
7:22 am
more sellers, but also opens the door for myers-- buyers to see your product, so i would say that 10 day threshold i think is important and also raising a limit to 20000 right now i think you said it's five or $7000. if you think about someone selling something, if it is $5000 over 200 sales, that's up $13 a week selling the product. that's a not a lot of money. >> which gets to another concern i have got your i worry about language in the format and in the shop safe act that would mandate the public disclosure of the platform names and contact information. this worries me for three independent reasons. number one, there is a lot of individuals, moms and dads out there who work from home or at least partially from home who operate out of their homes. if they have to provide their name and their address, that
7:23 am
could present some privacy and safety and security issues for them. some might be deterred from engaging in that line of work at all. number two, it could end up stifling competition by giving larger companies the ability to poach sellers, the sellers who have been affiliated with their smaller competitors andit number three, the sheer regulatory burden associated with this, could itself create a natural barrier on entry, a natural restriction on entry making it harder generally for smaller competitors to compete? and my right to be concerned about those three things? >> i think you are. one i would applaud the chairman and members of the committee who have worked with us and others particularly on the house side as well as the senate side to increase, to allow consumers and sellers to be able to import their business information versus their personal
7:24 am
information because that is definitely a barrier. if i am a single mom creating products out of my basement, i don't want everyone to know my home address so we need to keep going down that path. >> thank you very much. thank you, mr. chairman. >> senator kunz. >> thank you, chairman derman, ranking member grassley, for holding this hearing peered the ranking member and i have been cochairs of the trade mark caucus for a long time and have held a number of caucus meetings and hearings over the last decade about the risks that counterfeit goods provide opposed to american-- or opposed to american consumers in this testimony today is riveting and challenging and reminds us that has marketplace for the purchase of goods online have grown and grown and particularly started during the pandemic that the numbers stolen in counterfeit goods that are now stolen and fenced or produced and sold to american consumers has taken off dramatically. we have heard about unsafe goods whether they are cell phone batteries or bike helmets or
7:25 am
spoiled baby formula or counterfeit drugs that have harmed americans. they also ruin the trust bill between brand owners and consumers. as crazy aaron-- not so crazy aaron, for the wise incapable aaron demonstrated to us today. i think we need stronger steps to address the online sale of these goods before they reach consumers hands. there are some studies suggesting as much as a quarter of all americans who purchase goods online and unknowingly purchased a counterfeit good. that's why i am proud along with my colleague to have introduced a shop safe act. i was pleased to see a strong bipartisan vote over the house judiciary committee to send to the floor. it will encourage electronic commerce providers to adopt anticounterfeiting best practices in exchange for a safe harbor from contributory liability for trademark infringement. in that bill increase transparency, keep counterfeit goods with the health and safety
7:26 am
impact out of consumer handsco d i think promote the health and safety of our country and continue to accelerate the growth of these innovative sales platforms. althere's also an urgent need to provide transparency to consumers and that's why i'm proud to support the informed consumers act. mr. dugan made clear there is great need for greater transparency, so i think shop safe and inform come from and each other to significantly increase transparency and accountability and i urge my colleagues to support both of these important bills. let me turn to some quick questions if i could. mr. mubarak, my daughter is a certified customer, really loves putting into slime and so forth and had commented on how inventive your products are, but i am struck by your descriptions about how hard it has been to enforce your trademark and how much time you've had to dedicate to it. could you briefly give us more detail, how many other competitors-- how many other small business owners like you
7:27 am
have had to dedicate enormous amount of resources to the whack a mole game of notice and takedown notice and takedown notice with online platforms? >> so we go to trade shows at least pre-pandemic and owners sit around an talk and this whole industry in particular sort of started my life was something else, invented something and landed here and imitation at the five-- is the finest form of flattery and i think many of us are very, very flattered and i think if we have a successful product you will see outright knockoffs, counterfeiters coming into the marketplace. >> and you described how petty that hasas lower safety standars poses a real threat to children and infants in particular. what would it mean to you and other small business owners if platforms took more proactive steps to combat counters-- counterfeit goods to on the one side the resources we need to spend sort of padding is the law to get someone to listen.
7:28 am
it will also, i think, helped our brand integrity appeared it would help consumer confidence and we would probably receive more of a legitimate sales of the product then the sales which are going to elicit products. >> thank you. mr. dugan, how would the information that inform one collect insist in combating the online sale of stolen goods? >> thank you for the question, senator. i think it will do more to prevent these accounts from being open and the first place. it will definitely protect the consumers from these sellers. it will aid law enforcement. it looks to identify the bad actors much quicker and prevent the further expansion of the crime.e. right now what is vital right now is that we are in the middle of an epidemic that we take o immediate action to slow this down to. >> thank you, mr. dugan. mr. snowden, some platforms have said they would like to see affirmative requirements for brand owners. why is mccurdy duty brand owners to police their own trademark as
7:29 am
mr. mubarak had enough to encourage them to assist platforms and policing counterfeit goods and what requirements would platforms like to see of the brand owners in the bill? >> i think one of the things you are doing in the bill is changing the liability putting the burden on us and not on them. they have no responsibility in this. it's important that they stay at the table as well. we cannot do this alone. it takes all of us. we have been proactive for many years working onn this particulr issue, i mean, when i look at the retail side, ebay has a program for over 10 years working directly with retailers to help identify suspicious products so it's something we want to do, but we need retailers. we need rights holders to make sure they are at the table and they have a responsibility to help us police their product as well. >> mr. chairman if i may have one final question. ms. kammel, help us understand how this balance works, if you would describe the whack a mole problem experienced by brand owners and i have heard some
7:30 am
argue shop safe is a hand tech but immunizes them from liability they already have in exchange for nothing meaningful. is that accurate or true that online platforms are not frequently broadly liable for trademark infringement. >> to the first part of your question about the lockable approach, this is when as has been described today a counterfeit posting is up, a brand owner tries to react to it and they spend hours searching for these counterfeit postings across multiple e-commerce platforms and entire sub industry has actually sprung up to basically monitor these forms to the best of their ability, verify with the brand owners and submit for notice and takedown, so hence the term whack a mole. once you take down one another 10 or 20 come up in its place and to the second part of your question, could you please repeat them at contributory liability and whether it's a handout to big tech that immunizes them from liability they already have in exchange for nothing meaningful.
7:31 am
that's been one criticism. >> i don't believe that. i think it addresses what i've written about law disruptive technology, so the technology it has been wonderful for all of us.. everyone and i'm sure almost everyone in the room uses e-commerce but there still has to be a balance. we are sort of reaching a tipping point where we have seen all these product liability cases brought because people who are being injured can't find the seller of the goods. to put that back to the secondary liability, it creates the space for e-commerce platforms that have to proactively do something to prevent the postings from coming up. a brand owner still need to be involved to identify what their trademarks are, but we find a more balanced median between them. >> thank you. thank you for your intelligence mr. chairman and i look forward to working with all of you. >> thank you. on the floor we started the first of three row whole because i'm going to go make the first and senator blumenthal will preside at direct nice senator
7:32 am
blackburn. >> thank you, mr. chairman. ms. kammel, i want to come to you, if i may. section 230, i know that some online sellers have used section 230 as a shield to prevent them from liability and i come from tennessee. of course, we have aftermarket auto parts that copyrights have been infringed. we have things like gibson guitars that have been infringed and not to mention books that have been published, music, but you know when you talk about the auto parts, the engines for boats and motorsports, things of that nature, sometimes we have seen in these cases where online sellers really try to hide behind section 230. so, do you see that specific part of the law as something
7:33 am
that is a potential obstacle to consumers who are trying to get recourse for having bought something that is a fraudulent product? >> i'm very aware of section 230. it's not an area i've spent a significant amount of product-- time researching, but i do know that the sellers of counterfeit goods will try to hide behind almost anything they possibly can. >> why don't you take a look at that and then way back in with us. mr. literate, let me come to you country of origin labeling, i have heard from so many people that sell online that they have seem to think it's a good thing and also from people who buy online because specifically they don't want to be buying products from china because many times they feel like they are infringed or a knockoff and certainly in a tennessee with some of our toys, inventors, we have had problems. i am certain you have met with some of these guys, so talk to
7:34 am
me about why that teva disclosure and how it can be done so that people get the protection and the knowledge, but their privacy is protected. why that's a good thing. >> sure. i mean, when i was starting a business i was making putty selling it out of my home and when the time came that i felt like i needed some protection of my privacy of my home i got a po box, but at least there is a way to trace it back and eventually i got ann office. there's ways to communicate to the customer, a place to go especially if there is legal recourse while maintaining personal privacy. in terms of country of origin labeling obviously it's required by law. it's important for consumers. when i look at these products, sometimes they have it, sometimes they don't, sometimes it would be in the online listing, sometimes it won't and often it's in conflict with whatever the online listing
7:35 am
says. its absolute chaos. >> and mr. snowden, went to go back, senate-- senator klobuchar was asking you about predictions and i think you might want to explain. it sounded in yourn. response tt you do not support intellectual property protection for u.s. innovators and that's the protection to them under law, but when youm said you had members that are for disclosure, members that are against adisclosure, intellectual propertylo protections are very important to this committee. >> i one 100% agree with you. to us as well. what i was referring was senator klobuchar mentioned the self prefacing part of her bill and that's the part i said i would not make a comment on today. >> okay. i c think-- so, let's go to the country of origin labeling. where are your members on that we make the country of origin is a challenge for us because
7:36 am
sometimes we may not even know-- we don't touch the product in some cases. in other cases some of our-- let me back at. it's important to recognize that online marketplaces aren't just one company. and i think some of that moment ago about big tech, there are small tech online stores as well and so when we try to track country of origin a lot of that is tried up with trade agreements and also enforced by border patrol-- >> do you think everyone in the online marketplace has a responsibility to know what they are selling and what they are bringing to the marketplace? >> they are selling, yes. >> do you agree with that? >> what they are selling yes, t but country of origin-- >> esther doing comedy want to weigh in on that? >> this is a 50 state problem, senator. we have plenty of homegrown thieves and organizers and crime organizations to deal with. transnational organized crime is
7:37 am
part of this. but, not a major factor as far as we can see right now. >> okay. my time has expired. mr. mel, i'm going to come back to you for a written answer on your comments on my disruptive technology. i think that would be helpful as we look at how we are going to move forward on this issue and protect u.s. innovators and protect a healthy, productive online place that consumers can feel and be certain that they know they are not getting fraudulent counterfeited products. thank you. >> thanks, senator blackburn. i will preside while senator durbin is a voting and recognize myself. to other witnesses, thank you for being here today. as the chair of the commerce subcommittee on consumer protection, i have been focused
7:38 am
on the role of consumer product safety commission and hours consumer product safety laws particularly in online marketplaces to take seriously the responsibility to recall dangerous items. we have a procedure now to protect people, recall dangerous products, but all too often the online marketplaces feel they have no responsibility to inform consumers or to in any way participate in recalls. when example in april, 2019, i wrote to facebook marketplace and fate it-- craig's list about the fact that they were not effectively preventing the sale of recalled products including rock in play sleepers that had been linked to 32 infant deaths. they have been laggard, slow,
7:39 am
inconsistent in taking on responsibilities that other sellers and retailers observe, and i am now considering reforms that should be made that was drinking-- strengthen the cpsc, when is that we need to make sure online marketplaces are covered by the product safety andd recall laws. so, let me ask the witnesses, all of you, what will you think that cpsc can have along with the fpc in enforcing these laws and ice should just the size we have a lot of good laws, often they are unenforced. we spent a lot of time picking new laws that are then unenforced. frustrating?
7:40 am
yes. dangerous? yes. we need to focus on enforcement and give the fpc and cpsc the tools they need to ensure that the laws are more than just data letters, so let me go down the panel. >> thank you. i have had conversations with cpsc and shared my information about the products we have in the infringers that we i think that the cpsc does an effective job at looking at the courts-- ports and bulk shipments coming into the u.s. but they are challenged as is the postal service as the parcels that come through third-party sellers into the united states. it's a torrent of small envelopes and it's hard for them to develop a strategy to interdict them or prevent them from reaching consumers hands. it sort of outside the scope of my knowledge what we might do about it, but to me that's wherf i see the major problem. >> ms. kammel?
7:41 am
>> the areas we have researched focus primarily on trademark counterfeiting and any overlap with consumer product safety issues here so, i think it's important for platforms or anyone who is in the business of providing the space for consumers to purchase products that whatever laws are in place they uphold whether they are brick-and-mortar or whether they are an online space. >> senator, i think this is something i would like to come and talk to you about more, but i will share that when we are notified of recalls or made aware of recalls we do told the product down in most cases when we can and also we try to inform the consumer. in some cases when you try to inform the consumer in the product may have been bought two or three years ago and e-mail address we may not have or they may not be able to be contacted, but that is something we are working on and we take it very seriously.
7:42 am
>> i apologize, senator, that's beyond my role at cvs help and i'm not familiar with some of the laws you mentioned earlier, but i assume we would be in support of any action that helps protect consumers. >> thank you. l let me ask one more question. you know, one of the obstacles to effective accountability currently is section 230. in effect it creates broad immunity for the platforms. let me ask you, ms. kammel, whether you are familiar with the impediments of section 230 to effective accountability to consumers on a part of the platforms and advocate of performing section 230, we managed in certain areas to do it. we are proposing additional measures.
7:43 am
senator graham and i have a proposal which we have introduced in past congress, bipartisan, passed unanimously from the judiciary committee and just one example of what we can do to impose greater accountability if we were a form section 230. >> thank you for the question. i'm very aware of section 230. it's not part of my current research, but i'm happy to provide you with follow-up afterwards. >> that would be great and anyone else who wants to add any views on section 230 i welcome. thank you.. senator holly. se>> thank you, mr. chairman. thanks to the witnesses for being here. i'm going to start with you if i could. i noticed something in your testimony that i thought was interesting to review said much of the problem with counterfeit goods online is due to organized crime in brick-and-mortar stores and the organized criminals shoplift from the stores and turn around and sell the goods online. to have that right? >> now, i don't think i commented on counterfeit goods.
7:44 am
>> stolen goods. >> yeah, stolen goods, i introduce the word counterfeit-- goods online that are stolen and then they have been stealing from brick-and-mortar stores and turn around and sell them on my to do i have that? >> yes, sir. >> the "new york times" earliern this year had a story, which he recorded, i think of us in our security officers are assaulted on a pretty regular basis in a san francisco and that san francisco is one of the epicenters of organized retail crime. have i i got that right? >> yes or. >> can you say more about that because i think this is something that-- it's not been widely reported and not widely understood and part of the problem we see in counterfeit or in this case stolen goods online we have a delusion of these goods linked also now turns out to a, crime wave we are seeing across the country so maybe say something more about that. >> yes, thank you for the question, senator peter this is not a big city crime. this occurs in all 50 states. theft of organized retail crime
7:45 am
occurred just as much in low crime of suburban neighborhoods as they do in america's largest cities in another that's probably news two a lot of folks, but it's not covered on the media as it is in some of our major cities, so what i meant to say is we are talking about san francisco specifically. there's a lot of stolen product they are that's filtered to other states specifically texas, north carolina and new jersey. they get a lot of the stolen product from san francisco to your so, said-- i was trying to make the point that even though the product is stolen in one area, the problem is statewide and that's why we need federal legislation. >> in other wordsro it can be stolen from one place, san francisco, new york, st. louis, whatever and that then it finds its way online and so it shows up in an online marketplace in some context and it's competing with legitimate goods, with goods that are entirely legal, online and you have a competition making its way to these online marketplaces due to organized crime at the
7:46 am
brick-and-mortar level. is that fair to say? >> that is fair tock say excepti say it's unfair competition for today are getting the products much, much cheaper and that's what our team does, we track investigations state to state all across the country and ultimately it leads us to the same place, which is an online marketplace which is why we are looking for your help. >> what you think is a best way for this body to address that phenomenon? >> i think the swift passage of the inform act is a vital first step to. >> very good. thank you for that. i want to turn to the amazon self prefacing question here for a moment. mr. me eric, i think you testified to senator klobuchar earlier that your product in particular that amazon for a a while had an amazon basics knock off of your product. have i got that right? >> that's correct. >> it's now been taken down. >> he was taken only because i akwill say it accidentally infringed on some of our registered trademarks. >> i see.
7:47 am
i want to highlight this problem because i thinktr it's a centra, last of the "wall street journal" reported amazon collects detailed data about merchandise so amazon can create a copycat product and it did that with your product it sounds like. and the "wall street journal" reports standard operating procedure. amazon denied that they said they had procedures in place standing-- banning the practice. has that been your experience, mr. meeter? >> i don't have any insight into how amazon makes their decisions, but i was aware the path they create more a striking resemblance to another unique item that we had on amazon. >> well, you are the only one. employees in the same reportt said that the procedures that amazon referenced weren't enforced and in fact amazon encouraged employees to break those procedures and last month at reuters reported amazon's own internal documents revealed still doing the same thing. the market is reported that amazon is a systematically rigging its search engine to return results for us copycat
7:48 am
products over producers like you, mr. meter it and i went to drive home the point that we can talk all day about the problems of counterfeit goods and those are significant, but that's not going to make a huge dent unless we do something about the self prefacing on these platforms and i've introduced legislation to prohibit this self prefacing and i'm joined legislation by senator klobuchar and senator brett-- senator grassley that heads in the same direction i want to underline that i think it's absolutely vital that we tackle this issue. last thing in my few remaining seconds, senator blackburn was asking about some of the country of origin issues. again, i wanted to just highlight this. your product-- tell us about the problem of counterfeiters using high-strength magnets in some of the knockoffs of your product and i think the it's not good that it was not made in the united states of america. >> that's right, samples i have here which i ordered last week were not made in the united states, some have producer markings, this is made in china, this says nothing.
7:49 am
and they do contain these high-strength magnets, whichon cause significant hazards to children when they play with the product. >> absolutely and i went to underline that we are talking a lot right now about supply chain and manufacturing issues which is important given our supply chain crisis, but i think what we also see in this context is that when giant companies like amazon help-- these are counterfeit, made abroad and parents don't have any way of knowing this, difficult to find out that they are not only endangering children, they are also taking jobs away from people like you and your company that are made in this country and putting american kids atn risk. as well as our own economy, so we needry to find a way to push back against the simultaneous problem of counterfeiting, a misrepresentation of goods and also frankly off shoring, so thank you for bringing that to our attention and thank you, mr. chairman. >> thanks, senator holly. senator, your recognized. >> thank you, mr. chairman.
7:50 am
mr. dugan, you mentioned that you think that the format inform act should be passed as soon as possible. my understanding is the house version of this act the date the consumer receives information at the product to after the point of sale, do you support that change? >> i support both the house legislation and hearing the senate. i'm not an expert or legislator and i will kinda leave that to the legislators if i could. >> doesn't do more sense to get the information before the consumer purchase. >> i prefer-- i support that, yes. >> mr. dugan supports the package of the inform act, do the other palace also support the passage of this act? >> senator, we have not weighed in with official support. right now, we want to work with the committee to fine-tune some things in the bill particularly the verification timeline and
7:51 am
that is very important. >> but, itol sounds as though yu support the concept of disclosure information? > cracks-- correct and infor. >> yes, i do. >> yes, i do. >> thank you. so, mr. wyrick, he had brought to the attention on these online sellers about maybe amazon that they have online unsafe products and they don't take it down. you have been asked a number of questions relating to section 230. i'm wondering whether-- where the online platform receives money for advertising the product, whether they should be exposed toho liability. what do you think? any of you.
7:52 am
>> i'm not sure i fully understand your question, senator. >> section 230 pretty much protects the online marketplace, let's just use amazon that whatever is the content that they have no responsibility for monitoring or doing anything, so i am cosponsor of-- what is it the safe deck act? which requires that in certain instances these platforms will not have the benefit of liability protection. what other instances would be if they actually receive money for that item to be advertised on the platform. >> well, section 230 allows us to actually take down the content and that's why it's so vital that we had that liability protection, so anything that would harm or dilute that protection would be a concern of ours.
7:53 am
>> excepted the platform does not take down the product as was the case with mr. mubarak, then should there be liability attached because right now there is nothing that really requires these platforms to take those kinds of precautions. if they want to they can, if they don't they have liability protection. >> actually there's a lot that says if we are notified of something we have to take it down and that's required so we do that. mr. meter, i don't know all of his examples and i'm not familiar-- it's the first time i'm hearing about it so i get, on exactly what he is saying that there is existing law that says if we are told about something we must take it down. >> that is a surprising because this committee has had other hearings where certain video for example very harmful, very-- the platform is asked to take down a video, for example, a father whose daughter was a shot and killedke online and he kept askg
7:54 am
the platform to take down the video and they never took it down, so i don't understand your comment that when told you have to take something down. >> mr. merrick said that there were products that were infringing on his trademarks and in those cases that information once we are notified of thatf there is precedent that says we have to take it down. >> if i may? >> yes. >> on a monthly basis we send a list of products they did not infringe our marks but were in violation of federal standards and on a monthly basis we would follow up with the same list of not only the same products, but even in many cases the same exact list that had not been taken down. >> so, i am among the members of this committee who are looking at the section 230 provisions to
7:55 am
make some changes and i realize every time we do that it may be unintended consequences, some ability mentioned seeks to really define those instances when immunity is not available. so, i'm going to continue to pursue that and asked the panelists to take a look at the act. thank you, mr. chairman. >> thank you. senator chris. >> thank you, mr. chairman. mr. dugan, over the last several years we have seen repeated efforts in democrat controlled cities and states to effectively decriminalize theft. california, for example, said any theft under $950 is no longer a felony and we won't arrest you if you are under tha dollar figure care a recent nbc news article stated that both cvs and walgreens a shoplifting
7:56 am
in san francisco outpaces thefts at their stores across the country. s pretty common sense. remove or greatly reduce the penalty for stealing things, theft gets worse. what exactly are the figures for nonemployee theft in a cvs stores around the country in particular how do the rates of theft differ in jurisdictions with so-called progressive prosecutors who declined to prosecute shoplifting versus jurisdictions where law enforcement is enforcing laws against theft? >> thank you for the question, senator. i'm not going to be able to disclose cvs financial information about losses, but if you allow me toona comment, this is not a big city problem. decriminalization is contributing to the problem. you are right, certain-- >> is there more's theft in san, francisco than elsewhere? >> no, sir. >> there's not? >> relative to the amount of
7:57 am
stores and market share have it is higher-- >> nbc news was wrong when they said that? >> i can only speak to what i am see every day and i follow these criminals day to day from state to state and city to city. >> so cvs would support other jurisdictions legalizing shoplifting up to $950 claimant cvs does not support shoplifting. >> why not? >> we are not going to endorse rentalot activity. >> you'r are saying it has no effect. >> i never said itd had no effet is. >> you said there's not worse shoplifting in san francisco. doesn't have an effect or not? >> of course it does. >> was the fact? >> shoplifting is completely different than organized retail crime. you are talking about shoplifting, that's a different dynamic than organized retail crime. >> what is the effect, you guys have the data. >> i'm not sure i understand your question, senator. do we take losses to
7:58 am
shoplifting? yes. >> are they greater in jurisdictions that effectively legalize? >> no, they are not. >> so, why would you oppose every jurisdiction it legalizing shoplifting? your answers are making any sense, sir. >> i respectfully disagree. they make perfect sense. when i am saying is this crime goes through all 50 states. it's not a big city problem, absolutely not. >> so why would you oppose every jurisdiction legalizing shoplifting? sir, why would you oppose every jurisdiction legalizing shoplifting? >> why are we not going to oppose? >> why? >> no, we are not going to do that. we are not going to endorse illegal activity. shoplifting is given than organized retail crime and i'm here to testify today is that organized crime-- >> that's really quite remarkable. let me ask a different question, which is you go to great detail
7:59 am
about organized criminal organizations, but i want to point to you to something in ms. kammel's testimony where she sighs the work of jt kennedy who has written a lot on the subject of theft and one scholarly article that mr. kennedy wrote functional redundancy in response to employee theft and small businesses has an interesting paragraph on the second page which is relevant to this discussion. it says quote it's been estimated that employee theft in the united states i is 10 times more costly than all forms of traditional streett crime and that it costs victimizeth businesses in the u.s. economy as much as $400 billion a year. furthermore, employee theft is estimated to cost victimize businesses significantly more than a non- employee theft in the same business. in your experience, what is the relative magnitude of employee theft versus nonemployee theft forsu retailers?
8:00 am
>> my scalp at cvs, senator, is to investigate the external part of the theft. i don't have the internal figures necessarily at cvs. i was a overall as the president of the coalition of law enforcement in retail the internal effect is down and i could provide you a report with those figures, senator, if you'd like me too come about my-- >> do you have any judgment as to which is bigger, employee theft or nonemployee theft? .. watching retail crime. i see it happening every day. >> sir, with all due respect, i'd like an answer to my question. do you have an opinion which is bigger, employee theft or non-employee theft? i'm hearing it's ten times larger. >> i wouldn't agree >> most recently over the last instance the spread of this epidemic i would say not employed. >> thank you. >> you'rech welcome.
8:01 am
>> i want to thank the witnesses are coming inan today, and testifying. it was an interestingyi panel andrew a large part of our membership here on the senate judiciary committee. we have committed jurisdiction issues which suggests that the senate commerce committee has jurisdiction over this issue. with jurisdiction over senator coons aspects of it. that's ours to worry about, but the problem is real and we now have all the major players on board apparently to doing somethingw about it. i'm going to do my best, won't go through thises committee to encourage the commerce committee to join with us in this effort. so i thank you for lending her voice is to it. it's been 13 years for me since i first saw those home depot drills and realizeze what was going on out there. that's a long time to wait for an answer. maybe not by senate standards but my normal s human standards. so thank you for joining us
8:02 am
today, and with that the senate judiciary committee stands adjourned. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] >> c-span is your unfiltered view of government. we are funded by these television companies and more including cox. >> cox is committed to providing eligible families access to affordable internet through the connection program bridging the digital divide one connected and engage student at a time.
8:03 am
cox, bringing us closer. >> cox supports c-span as a public service along with these other television providers giving you a front-row seat to democracy. >> coming up to date on c-span, the house is back at canadian eastern for general speeches followed by legislative business at noon. members will finish work on a bill to prevent age discrimination in the workplace. it can possibly take up the president's nearly $2 trillion social spending package and the senate passed bipartisan infrastructure bill. on c-span2 the senate returns at 10 a.m. to consider executive nominations including rob santos to head the u.s. census bureau. and at 10 a.m. on c-span3, dr. fauci and cdc director dr. walensky testify before the senate h.e.l.p. committee about the


info Stream Only

Uploaded by TV Archive on