A fence is an individual who knowingly buys stolen property for later resale, sometimes in a legitimate market. The fence thus acts as a middleman between thieves and the eventual buyers of stolen goods who may not be aware that the goods are stolen. As a verb, the word describes the behaviour of the thief in the transaction: The burglar fenced the stolen radio. This sense of the term came from thieves' slang, first attested c. 1700, from the notion of such transactions taking place under defence of secrecy.
The fence is able to make a profit with stolen merchandise because he/she is able to pay thieves a very low price for stolen goods. They then disguises the stolen nature of the goods, if possible, so that they can sell them closer to the white market price. This process often relies on a legal business conducting legal sales. Fencing is illegal in the United States and in the United Kingdom, but legally proving a violation of anti-fencing laws is difficult.
The fence is able to make a profit with stolen merchandise because he is able to pay thieves a very low price for stolen goods. Thieves agree to this because their alternatives may present a greater risk of the thief being caught. As well, selling stolen goods takes a great deal of time and effort (transaction costs), as the thief would have to try to contact a number of potential buyers and show them the merchandise. Some habitual thieves are so well known to police that if the thief were to attempt to sell any used goods, this would quickly draw the attention of the police.
The fence then disguises the stolen nature of the goods, if possible, so that he or she can sell them closer to the market price. Depending on the stolen item, the fence may attempt to remove, deface, or replace serial numbers on the stolen item before reselling it. In some cases, fences will transport the stolen items to a different city to sell them, because this lessens the likelihood that the items will be recognized. For some types of stolen goods, fences disassemble the good and sell the individual parts, because the sale of parts is less risky. For example, a stolen car or bicycle may be disassembled so that the parts can be sold individually. Another tactic used by some fences is to retain stolen items for some time before selling them, which lessens the likelihood that the burglary victims or police will be actively looking for the items in auctions and pawnshops.
Fencing is often conducted through legal businesses. Some fences maintain a legitimate-seeming "front" through which they can sell stolen merchandise. Depending on the type of stolen merchandise a fence deals in, "front" businesses might be discount stores, used goods stores, a coin and gem store, auction houses, or auto salvage yards. The degree of illicit activity in each "front" business may differ from fence to fence. While one fence's salvage yard may consist mainly of stolen auto parts, another fence's used good store might consist mainly of legitimately purchased used goods, with the stolen merchandise acting as a minor, but profitable, sideline.
The prices fences pay thieves typically depend both on norms and on legitimate market rates for the items in question. Vulnerable sellers, such as drug addicts or casual thieves, may receive less than 20% of an item's value. Higher prices, sometimes as high as 50% of an item's value in a legal market, can be commanded by a professional thief, especially one who concentrates on valuable items. At the same time, fences will often take advantage of thieves by deceiving them about the value of an individual item and the relevant market conditions. For example, a fence may falsely tell a small-time thief that the market for the type of good which the thief is selling is flooded with this type of merchandise, to justify paying out a lower price.
Research on fences shows that they view themselves as entrepreneurs, relying on networking with and patronage by prominent criminals to become successful in their word-of-mouth-based "wheeling and dealing". They occupy the middle ground between the criminal world (thieves, burglars and shoplifters) and the legitimate world (e.g., everyday people who purchase used goods). Some active fences go farther in their business, maintaining longstanding contacts and even teaching thieves how to practice their craft, whether by identifying specific products or by teaching them tools of the trade.
There are a number of different types of fences. One way of categorizing fences is by the type of good in which they trade, such as jewels, power tools, or electronics. Another way of categorizing fences is by their level of involvement in buying and selling stolen goods; for some, fencing is an occasional "sideline" activity, while it is an economic mainstay for others. At the lowest level, a hustler or drug dealer may occasionally accept stolen goods. At the highest level would be a fence whose main criminal income comes from buying and selling stolen items. At the broadest level, two tiers of fences can be distinguished. The lower level of fences are those who directly buy stolen goods from thieves and burglars. At a higher level are the "master fences", who do not deal with street-level thieves, but only with other fences.
The degree to which the purchasers of the stolen goods know or suspect that the items are stolen varies. If a purchaser buys a high-quality item for a low price, in cash, from a stranger at a bar or from the back of a van, there is a higher likelihood that the items may be stolen. On the other hand, if a purchaser buys the same high-quality item for the standard retail price from a used goods store, and obtains a proper receipt, the purchaser may reasonably believe that the item is not stolen (even if, in fact, it is a stolen item).
Fencing is illegal almost everywhere, usually under a similar rationale as in the United States, where receipt of stolen property is a crime in every state, as well as a federal crime if the property crossed a state line. Occasionally federal agents will temporarily set up a false fence sting operation. Fencing is a common source of income for organized crime. In England and Wales, as in many U.S. states, the crime requires three elements: stolen property, the receiver's act of receiving or hiding it, and his knowledge of its stolen status.
Pawnbrokers have often been associated with fencing, though in many jurisdictions, government identification must be shown in order to pawn an item and police regularly check pawnshops for stolen goods and repossess any stolen items. While pawnbrokers do not like this characterization of their business, police efforts have indicated that some pawnbrokers are involved in fencing. Money laundering could be described as the fencing of currency.
E-fencing is the sale of stolen or shoplifted items on the Internet, an activity that thieves often mix with sales to pawnbrokers. The auction website eBay, being easy to reach for the average thief, is a popular location for e-fencing; customers reported more than eight thousand crimes from the website in 2008, many of which involved the sale of stolen property.
Crime rings steal in-demand items from retailers and then sell them online, relying on the Internet's ability to reach buyers around the world and its anonymity; some theft rings even take pre-orders, confident they can steal what's in demand. In the United States, major retailers such as Wal-Mart and Target have advocated for federal legislation to combat Internet fencing. Proposals for such legislation have often proposed requiring major sales websites (e.g. eBay and Amazon.com) to retain some items' serial numbers and to release information to retailers about major sellers whom the retailers believe to be relying on stolen property. Such proposals have been opposed by the online retailers who would be required to maintain these records and take these actions.
An eBay spokesman has stated, "Perhaps the dumbest place to try to fence stolen materials is on eBay," and news agencies have reported incidents of the police purchasing stolen property directly from thieves, leading to their capture. By early 2007, e-fencing had become a $37 billion business.
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