Governor Newsom signed the most significant bipartisan bill to crack down on property crime at a Home Depot store in San Jose, California, United States, on August 16, 2024.
Tayfun Coskun | Anadolu | Getty Images
California Governor Gavin Newsom has signed 10 new bills into law that aim to combat retail crime in the state.
The package, announced Friday, includes new laws that crack down on shoplifting, vehicle theft, organized theft and online marketplaces where these stolen goods are sometimes resold. The new laws come after retailers have called on local and federal governments to do more to combat shoplifting, citing it as a growing challenge that has hurt profits, customers and staff.
One of the bills in the package, SB 1416, establishes tougher penalties for middlemen in organized retail crime rings and was introduced in response to a CNBC investigation published in March, according to the office of state Sen. Josh Newman, who introduced the bill.
That bill provides for additional prison terms and fines for the sale, exchange or return of stolen goods — the bread and butter of retail resale organized crime rings. Before the law was passed, those accused of participating in retail organized crime rings could face up to three years in prison. Critics said that sentence and penalty were not enough to deter.
Newman said the law was designed to go after middlemen like Michelle Mack, the “queen” of retail organized crime who was exposed in the CNBC investigation. Police say she made millions by reselling stolen goods on Amazon at a fraction of their usual retail price. Mack was arrested in December and received a deferred sentence of five years and four months in state prison.
Mack's husband, Kenneth, received the same sentence and is already incarcerated. The couple was ordered to pay about $3 million in restitution to the beauty store chain. Ulta and another $13,000 to Sephora, a court official previously told CNBC.
Retailers have cited theft and organized crime rings like Mack's “California Girls” as the cause of lower profits, difficulty recruiting and retaining staff, and a degraded in-store experience. Others have disputed these claims, saying retailers are exaggerating the impact of theft and downplaying operational problems behind lower profits.
According to data from the Public Policy Institute of California, rates of commercial theft and robbery in California have been steadily increasing in recent years. Shoplifting, while still well below pre-pandemic levels, is also on the rise.
Since January, the California Highway Patrol's Organized Retail Crime Task Force has made 884 arrests and recovered more than 250,000 stolen items collectively valued at more than $7.2 million, according to the news release announcing the new legislation.
Retailers have been urging Congress to crack down on organized retail crime nationwide, and the National Retail Federation is pushing to make it easier to prosecute theft as a federal crime.
With the 2024 presidential election looming, Democrats are also looking to take a tough stance on crime to counter Republican criticism of rising crime rates in the country. However, critics of the initiative to combat retail crime fear the measures could disproportionately harm marginalized groups.
Another bill, SB 1144, also passed in the new package of laws, aims to prevent trafficking in stolen goods on online marketplaces like Amazon. The bill, introduced by state Sen. Nancy Skinner, builds on an earlier California law by updating enforcement criteria for high-volume third-party sellers and making it easier to file civil charges against online marketplaces that sell stolen goods, among other measures.
— CNBC's Gabrielle Fonrouge, Scott Zamost and Courtney Reagan contributed to this report.
