California Democratic Gov. Gavin Newsom has signed 10 new bills aimed at combating retail crime in the state.
The package, announced Friday, includes new laws aimed at combating shoplifting, theft from vehicles, organized theft and online marketplaces where stolen goods are sometimes resold. The new laws come after retailers called on state and federal governments to do more to combat retail theft, calling it a growing challenge that has impacted profits, customers and employees.
One of the bills in the package, Senate Bill 1416, would impose tougher penalties on middlemen in retail organized crime rings and was introduced in response to a CNBC investigation published in March, according to the office of Sen. Josh Neumann, a Democrat who introduced the bill.
“As the author of the bill, I used examples from your report in every policy committee hearing I presented the bill to, and I think it made my colleagues realize something that seemed somewhat abstract. I also think it illustrated how powerful incentives are,” Neumann told CNBC.
Newman’s law imposes additional prison sentences and fines for selling, exchanging or returning stolen property—a source of income for retail resale gangs. Before the law was passed, those accused of involvement in retail organized crime faced up to three years in prison. Critics said the penalties and punishments were not enough to deter criminals.
Newman said the law was designed to go after middlemen like Michelle Mack — the organized crime boss exposed in a CNBC investigation who police say made millions reselling stolen goods on Amazon for a fraction of the normal retail price.
“It's important to consider how easy it is to recruit people to steal your money, and then how easy and profitable it is to clean this stuff up and sell it,” Newman said.
Mack was arrested in December and sentenced to five years and four months in state prison. Mack’s husband, Kenneth, also received the same sentence and is already in prison. The couple was ordered to pay about $3 million in restitution to the cosmetics salesman. Ulta And another $13,000 to Sephora, a court official previously told CNBC.
Retailers have cited theft and organized retail crime gangs such as Max’s “California Girls” as reasons for declining profits, difficulty recruiting and retaining employees, and a deteriorating customer experience in stores. Others have countered these claims by saying that retailers overstate the impact of theft and underestimate the operational issues behind declining profits.
According to data from the Public Policy Institute of California, commercial burglary and robbery rates have been steadily rising over the past few years. Shoplifting is also on the rise, though it remains well below pre-pandemic levels.
Since January, the California Highway Patrol’s Organized Retail Crime Task Force has arrested 884 people and recovered more than 250,000 stolen items with a combined value of more than $7.2 million, according to a press release announcing the new legislation.
Retailers have urged Congress to crack down on organized retail crime nationwide, with the retail lobbying group known as the National Retail Federation seeking to make it easier to prosecute theft as a federal criminal offense.
With the 2024 presidential election approaching, Democrats are also seeking to appear tough on crime to address Republican criticism of the country’s rising crime rates. However, critics of efforts to combat retail crime fear that such measures will disproportionately harm marginalized groups.
Another bill, Senate Bill 1144, was also passed in the new package, aiming to prevent the sale of stolen goods on online marketplaces like Amazon. The bill, introduced by Sen. Nancy Skinner, a Democrat, builds on a previous California law by updating compliance standards for large third-party sellers and making it easier to file civil lawsuits against online marketplaces that sell stolen goods, among other measures.
— CNBC's Gabrielle Fonrouge, Scott Zamost and Courtney Regan contributed to this report.
