Our State AG webinar series continues. After spending time in the Centennial State, we went east to the Land of Lincoln. We met with Illinois Attorney General Kwame Raoul, Susan Ellis, Consumer Protection Division Chief, and Lyle Evans, Chief of Investigations, to learn about the office, their priorities, and more about Organized Retail Crime and the INFORM Consumers Act. Highlights of what we learned are recapped below.

Background and Priorities of the Office

Illinois’ primary consumer protection statute is the Consumer Fraud and Deceptive Business Practices Act (CFA). The state also has a Uniform Deceptive Trade and Practices Act but it is bootstrapped into the CFA. The CFA is primarily a civil law with some criminal penalties, and is enforced by the AG and county state attorneys. There is also a private right of action.

The CFA authorizes the AG’s office to conduct pre-suit investigations which could include a civil investigative demand (CID) or subpoena depending on whether they want to ask interrogatories (a CID allows the state to ask for more information while a subpoena requires the business to appear in court or hand over specified documents). Although the CFA does not state whether the party can object or set aside a CID, under Illinois’ Rules of Procedure, the party could file a motion to quash if needed. The office does not need to provide any pre-suit notice to the proposed defendant.

According to Ellis, the office can enforce compliance with a CID through a variety of ways – such as filing an enforcement action and asking for a “broad swath of relief” from the court. This may include restraining a business from certain conduct until they respond, suspending their authority to do business in the state, etc. There is no statute of limitations for the AG to bring a violation under the CFA in contrast to the three-year limit for private right of actions.

The CFA allows the office to receive up to $50,000 total as a civil penalty with some potential enhanced penalties if the allegations include vulnerable populations. However, the civil penalty can increase to $50,000 per violation if the office can demonstrate intent.

Ellis also noted that the office receives around 20,000 consumer complaints annually and has designated staff that handle informal resolutions for those complaints. These consumer complaints are attainable by a public records request though they are redacted to remove name and contact information.

Organized Retail Crime

Since the pandemic, AG Raoul explained that organized retail crime (ORC) has continued to increase resulting in losses up to billions of dollars annually. He noted that bad actors tend to target big box stores, pharmacies, hardware stores, auto dealerships, and other retailers, and resell stolen goods below market value on online marketplaces. General Raoul said that some of the profits from ORC are frequently connected to human, gun, and drug trafficking and other crimes. As such, AG Raoul emphasized, “we cannot dismiss these thefts as isolated, brazen, retail theft because oftentimes there is an organized retail ring behind these acts.”

Due to these problems, states such as Illinois have expanded their criminal and civil authority to combat ORC. In 2021, AG Raoul created the Organized Retail Crime Taskforce. The Illinois taskforce fosters cooperation among retailers, online marketplaces, law enforcement agencies, and state’s attorneys. AG Raoul analogized the collaboration as if the platforms were “invited in the restaurant to help us cook a meal and solve the problem of ORC within the state. . . however, if they were not willing to come to the table, then they would be on the menu.”

To assist with investigations, Evans emphasized the importance of retailers working with state enforcers to help track down stolen goods and disrupt their flow into the online marketplace.

INFORM Consumers Act & States

Illinois’s enacted its version of the INFORM Consumers Act (Illinois Act) in May 2022, effective in January 2023, about six months before its federal counterpart. Ellis said that the Illinois Act provided an “interesting intersection” of criminal and civil issues as consumers are unknowingly purchasing stolen goods. Ellis also noted that the Act requires important information be provided to consumers about who they are purchasing products from, as well as a tool to report suspected activity. Evans stressed that the Illinois Act is a “start” and will be very good at resolving issues with ORC. The reporting requirements will provide better insight into how law enforcement can stop ORC.

General Raoul said that they have already seen early success with funding the Illinois Act. Evans added that the law has provided enhanced criminal penalties and enforcement provisions which have been instrumental in targeting ORC specifically.

Other than small changes, both the federal and Illinois INFORM Consumers Act are relatively similar:

Both cover “high volume” third party sellers. For collection of information, this means 200 or more discrete sales plus $5,000 or more in aggregate gross revenues in 12-month period. For disclosure of information, this means the aforementioned requirements plus $20,000 or more in annual gross revenues.
Both create collection requirements. An online marketplace must collect certain information within 10 days of seller qualifying as high volume and verify the information.
Both require disclosures. An online marketplace must disclose identity information to consumers.
Both require reporting mechanisms. The marketplace must clearly and conspicuously disclose on the product listing a reporting mechanism that allows for electronic and telephonic reporting of suspicious marketplace activity to the marketplace.
Both require suspension. The marketplace must suspend future sales activity of high-volume seller if, after providing notice and an opportunity for compliance, the seller does not comply with these provisions. The suspension is in effect until the seller complies.
Enforcement by Attorney General.
- Federal Law: A state Attorney General may bring a civil action. The AG can obtain injunctive relief, civil penalties ($50,120/violation), or other remedies permitted under state law, and damages, restitution, etc.
- Illinois State Law: The Illinois Attorney General may bring a civil action. A court can order an injunction, the revocation of authority to do business in the state, and restitution. The Illinois AG can also issue a pre-suit subpoena.

Ellis said that “it will depend” on whether the state will enforce the federal or state INFORM Act. She said that it is certainly “not a local problem” and is a “cross-jurisdictional issue” and states will need to work together to tackle the problem. AG Raoul emphasized that partnering with federal, state, and local law enforcement is “critical.”

In addition, the omnibus bill that created the Illinois INFORM Consumers Act also created enhanced criminal penalties for persons engaging in ORC. If a person is accused of committing organized retail theft (stealing merchandise worth $300 or more when acting together with one or more people), under the Act, they can be charged with a Class 3 felony, which is typically punishable by up to five years in prison. If the alleged offender stole from multiple stores, the act is punishable by up to seven years in prison.

Takeaways: As ORC presents a substantial disruption on a federal and state level, we continue seeing more collaboration between federal and state law enforcement, and also among states. Ellis concluded that there is an obligation on platforms to not turn a blind eye to criminal activity on their platforms. The AG can enforce this obligation through the INFORM Act, the CFA, or UDAP authority. Illinois’s authority is broad and covers both deceptive and unfair conduct. It’s important to understand one’s obligations, especially under the INFORM Act, to ensure that you won’t get hit with both federal and state litigation.

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Be sure to join us this Thursday, October 19^th as we meet with New Hampshire Attorney General John Formella and his Consumer Protection office at 2:00 pm ET. To register for the webinar, click here. To catch up and read the coverage of all our previous state AG webinars, click here.

What We Learned From … Illinois