Internet Sales: Undercover Purchases on eBay and Craigslist Reveal a Market for Sensitive and Stolen U.S. Military Items

Unauthorized individuals, companies, terrorist organizations, and other countries continue their attempts to obtain sensitive items related to the defense of the United States. The Internet is one place that defense-related items can be purchased, raising the possibility that some sensitive items are available to those who can afford them.

In addition to the risk that sensitive defense-related items could be used to directly harm U.S. service members or allies on the battlefield, these items could be disassembled and analyzed (i.e., reverse engineered) to develop countermeasures or equivalent technology.

Given the risks posed by the sale of sensitive defense-related items to the public, and the Internet’s international reach and high volume of commerce, the Subcommittee asked GAO to conduct undercover testing to determine whether the general public can easily purchase these items on the Internet, including on the Web sites eBay and Craigslist.

To perform this work, GAO investigators used undercover identities to pose as members of the general public, meaning that they conducted their work with names, credit cards, and contact information that could not be traced to GAO. Investigators interviewed sellers where possible and referred cases to the appropriate law enforcement entities for further investigation.

What GAO Found
GAO found numerous defense-related items for sale to the highest bidder on eBay and Craigslist. A review of policies and procedures for these Web sites determined that there are few safeguards to prevent the sale of sensitive and stolen defense-related items using the sites. During the period of investigation, GAO undercover investigators purchased a dozen sensitive items on eBay and Craigslist to demonstrate how easy it was to obtain them.

Many of these items were stolen from the U.S. military. According to the Department of Defense (DOD), it considers the sensitive items GAO purchased to be on the U.S. Munitions List, meaning that there are restrictions on their overseas sales. However, if investigators had been members of the general public, there is a risk that they could have illegally resold these items to an international broker or transferred them overseas.

GAO investigators also identified examples of U.S. government property that was stolen and sold for a profit rather than being utilized by DOD. For example, GAO found two civilian store owners who acted as conduits for defense-related property that was likely stolen from the military. The store owners told GAO they purchased gear from service members—including Kevlar vests, flak jackets, and gas masks—and sold it through eBay to the general public. GAO also purchased stolen military meals, ready-to-eat (MRE) and found a robust market for stolen military MREs on eBay and Craigslist.

Advertisements for the sensitive defense-related items GAO purchased were not removed by Web site administrators, allowing investigators to buy the items. Both Web sites maintain lists of items that are prohibited from sale, including stolen items, but only eBay contains warnings related to overseas sales and the improper sale of sensitive defense-related items.

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Testimony Before the Subcommittee on National Security and Foreign Affairs, Committee on Oversight and Government Reform, House of Representatives

Statement of Gregory D. Kutz, Managing Director Forensic Audits and Special Investigations

eBay and Craigslist Have Few Safeguards to Prevent the Sale of Stolen and Sensitive U.S. Military Items

Advertisements for the sensitive defense-related items we purchased were not removed by eBay and Craigslist Web site administrators, allowing us to complete the transactions.

Both Web sites maintain published lists of items that are prohibited from sale, including stolen items, but only eBay contains warnings related to sensitive defense-related or export-controlled items even though both Web sites have an international reach. eBay employs administrative staff and investigative teams intended to deter fraud and prohibited sales from occurring on the site. Meanwhile, Craigslist has a smaller staff and largely relies on its user community for identifying inappropriate advertisements or postings.

Officials with both Web sites told us they cooperate with law enforcement agencies to stop the sale of illegal, counterfeit, or stolen items, and identify and deter individuals from using these Internet services for a fraudulent or improper purpose. Generally, neither eBay nor Craigslist can incur criminal liability for being the conduit through which stolen or export-controlled items are sold, even if the items are sold overseas.

Because the Web sites never take possession of the goods, do not set the price of transactions, and do not actually deliver the items, no relevant federal criminal statute applies to their activities. Table 5 summarizes the policies, proactive enforcement efforts, and penalties that each of these Internet companies maintain to deter the sale of prohibited items. ...

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eBay Inc. (eBay) provides online marketplaces for the sale of goods and services, as well as other online commerce, or ecommerce, platforms, online payments services and online communications offerings to a diverse community of individuals and businesses.

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