Stolen items, depending on rarity, should always have a chance to be recognized when equipped on a companion. I want the possibility a friggin' Flaming Fist squad spawning yelling "I AM THE LAW!" as it proceeds to arrest or attack you or a "crime hunter" squad who investigate larger thefts and where possibly innocents are falsely accused/arrested. Anything but a quick and easy way to be more rich and more powerful as Larian usually opts for.
Ugh, maybe it's just me but I hate too much moral intrusion like that. Especially a game mechanic where loot is flagged in your inventory as either clean or stolen, and you can only sell stolen loot at a fence, not a normal merchant. The intent may be "immersion" but it ends up just being busy work for the player, especially with travel time to separate classes of merchants. I can't remember which RPG I played that had that mechanic, but I didn't enjoy it.
