Security As A Profit Center: Extorting Shoplifters?

Author: John Honovich, Published on Mar 10, 2015

If you can't beat 'em, join em.

Many lament that security is a cost center. Now, a tech startup and major retailers have partnered to make money off of shoplifters in a most extraordinary and questionably legal manner.

In this note, we examine the system, looking at its pros and cons.

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"**** ********* *** ***********, **** *** ***** * ***** ***** about *** ****** ****’** **** ****, ***** ***** **** **** if **** ******* **** *** ********, **** ****** ****** ***** counsel *** ***** ******** ******* *** ****. *** ********* ** Caffaro, **** **** ** ******* ** ****** *** **** **** offered *** ****** ****** ***’* **** ***** ** ******** **** elected ** **** **."

*** **** ****** **** *** * ** * **** ****** course:

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Comments (57)

What a ripoff! Not of the shoplifters, but of the stores!

Many chains have had similar internal programs for years, charging hundreds in exchange for not pursuing things further. They are apparently legal, as they are an attempt to recoup the expense that the shoplifter caused them.

But 20/80 is a poor split for the retailer. I'm not sure what the value add is to the process. Maybe it's for mom and pop retailers mainly?


"According to the company’s VP for account management, E.J. Caffaro, retail chains that have used the company’s services include Bloomingdale’s, Burlington Coat Factory, and the shoe store DSW; CEC also contracts with third-party security firms that provide loss prevention services in regional branches of Whole Foods and H&M. "

After reading the article I don't think they are going after the store per-say. The $40 kickback commission cut appears to be paid out to the security guard. It looks like they get permission from X retailer to user their system and then subsides a third party security guard $40 to do their job better. Just my 2 cents.

My personal opinion is you give up your rights for ethics when you steal someone elses stuff..

This alternative is education, the fact any money moves around is incidental. I know of retialers taking civil cases for recovery, this seems alot easier.

Does that not presume that it is verified / proved that something is stolen? What stops a store from saying you are a shoplifter and demanding $320?

The fact you don’t have to elect to take it, if your innocent surely you simply agree to see the matter and court and have your day? But I guess probably the fact there is CCTV of them stealing most don’t bother.

The issue arises if they are bullied to take the option.

"The fact you don’t have to elect to take it, if your innocent surely you simply agree to see the matter and court and have your day?"


Ethics aside, $320 to avoid the risk, hassle and potential damage of criminal prosecution seems like a good deal.

Yes and of course thats what they are banking on ;) Your right they must catch innocents in who simply pay up to shut up. You have to agree the vast majority caught deserve everything coming to them as they are valid.

Just think in the back of my mind, if the real criminals cared about right from wrong or education they wouldn't be in this situation.. I know if i were a retialler i wouldnt use this

I agree that the vast majority are likely real shoplifters.

The questions are (1) what portion are innocent? and (2) how tolerant are we for innocents to be caught up in this?

But the loss prevention people that actually catch the shoplifters are employed by the store, right?

It seems like the kickback is low enough that there is little incentive for the store to make lots of false accusations. You'd be hassling a legitimate customer to get a few dollars? At the expense of most likely losing that customer, and potentially their friends or family?

Someone who is truly innocent would likely opt for the "call the police" route, knowing that for a first time offense, with no evidence, their risk is pretty low.

I'm not saying this overall grift is without some amount of collateral damage, but it seems to be pretty self-limiting.

What stops a store from saying you are a shoplifter and demanding $320?

The fact that they would like to stay in business?

So you think the average shopper has enough power to put them out of business for doing so?

No, of course not.

Any store who is accusing people who aren't shoplifters of shoplifting, as a way to make money, will soon run out of customers.

How soon will they run out of customers?

I agree with you that there is a business risk. My question / pushback is how much of a risk it is?

Arecont's tortured their customers for years and not only are they still in business (albeit at a much much lower growth rate and with lots of unhappy former customers) they got $80 million in financing to cash out.

What stops a store from saying you are a shoplifter and demanding $320?

What stops a store from saying you broke something and demanding $320?

At least you might think in the second case that there was a misunderstanding, in the first case, you'd be pretty sure it's a scam.

You would say, "Show me the video!".

Ethics aside, $320 to avoid the risk, hassle and potential damage of criminal prosecution seems like a good deal.

Are you saying that if you went in to Target, didn't take anything, and then were accused of shoplifting without any having anything on you and no video showing it, you would pay $320 dollars because it was a good deal???

If you are on parole or have two strikes against you already you might find $320 to be a great deal.

My guess is they do not operate this "service" in ALL stores across the country. Call me a cynic, but I am guessing this company works with the retailer to target certain stores where thefts are high AND the clientele are less likely to trust the police or already have an extensive history with law enforcement.

If you are on parole or have two strikes against you already you might find $320 to be a great deal.

If you didn't take anything AND you are on parole with two strikes you might find yourself in a quandary, admittedly. Even then you would expect to see the video...

If you did take something then it's definitely a good deal, that's why it works.

If you didn't take anything though, and you were just a normal paying customer without a record, and then were accused without any evidence besides employee testimony, you would be outraged and never go back and tell everyone you know not to go there as well. Not sustainable as a business model.

You would say, "Show me the video!".

Agreed. If you are savvy (and likely a seasoned shoplifter) that's what you probably should say.

But if you are innocent and surprised / nervous, you might not even think about that.

Btw, related: Retail Surveillance Operator Secrets Revealed

There is a presumption in Amercian Civil (not Criminal) law that the failure to object to an accusation is evidence that the accusation is true. The logic behind this is probably obvious, but as you said, it could well not be true due to a number of reasons.

This bothers me personally, since I spent time training myself not to react to other's statements, no matter how inflamatory. And as you said, the guilty will likely automatically object since they wouldn't be surprised.

Just note that everyone should automatically object to any false statement (from any non-law enforcement officer), regardless of how ridiculous it might sound. Sad but true.

Since anything you say to a LEO will be used against you, and this rule doesn't apply in criminal prosecutions, it's generally better not to say anything to them. Or so I opine. But I'm cynical.

Seems like a class action suit waiting to happen......


You should go shopping for a new coat and shoes and see if you can become a case study.

It's all in the presentation of the issue. It is natural to respond negatively based on how this program was described. What's missing is the data supporting or not the results of the education program being offered.

Again, I ask "What is the value add from CEC?"

Here's a WSJ article from 2008, when it was already being done by big box stores.

There is little oversight of a system retailers call "civil recovery," created by special laws passed in all 50 states. With no proof of theft, the retailers demand money -- often $200 but sometimes far more -- and promise to avoid suing if it is paid quickly. Laws vary by state, but in general, retailers can demand these sums even if the item at issue was worth far less and was quickly recovered and put back on the shelf.

Once a person's name is turned over to a collection firm, he or she is dunned with letters and often phone calls, which refer to lawsuits and sheriff's visits and sometimes multiply the penalty by demanding "pre-litigation" legal fees.

CEC has put a veneer of education around it, which helps to shield it somewhat from criticisms of it being a straight shakedown. That could be a value add for some retailers.

Ok, but then I suppose it has backfired if it's now reopening the whole ethical debate again for public scrutiny...

Fair and creative! I say it's generous of them to offer an alternative to facing a judge and considering it's voluntary, it is not coercion in my eyes.

Even if a person is innocent once they are in a back room being “talked” to by a couple big gentleman threatening everything under the sun if they don’t pay up it would be pretty easy to voluntarily take this “alternative” as a way out. Especially if it is someone with a criminal past or someone uneducated about the legal system.

My comment was assuming they are following typical loss prevention protocol which means you need to have solid evidence against the individual. The policy is usually so strict that even if you see them conceal a product but lose sight of them for just a second, then you cannot even attempt to detain them, in case they ditched the product.

Without proof of theft I agree this is clearly coercion. Though if I was in this circumstance and knew I was innocent, then I would continue on my way if they attempted to detain me. If they ended up detaining me anyway I would let them arrest me. Sure it would mess your day up but you would have a nice lawsuit on your hands for false imprisonment and likely a host of other legal issues that will land you a nice settlement.

Ryan, good points!

My son is a "loss prevention officer" at a national department store. Until someone leaves the store with unpaid items nothing happens. Often they suspect someone has taken an item, but unless they are sure they are not allowed to stop them.

It is tough to be innocent with an unpaid item in your pocket outside the store.

The police need to be called to allow escalation and documentation. (track repeaters)

This education is a scam. If you steal $300 of items five times and get caught once you win. You can continue.

Maybe a night in jail would be "education".

Extortion has a more severe penalty than petty theft.

Just a little.

18 U.S. Code § 873

Whoever, under a threat of informing, or as a consideration for not informing, against any violation of any law of the United States, demands or receives any money or other valuable thing, shall be fined under this title or imprisoned not more than one year, or both.

Cop 1: "So let me get this straight. You're calling us now to arrest a guy you suspected of shoplifting some time ago, but because he won't pay you money you now want to press charges."

Store Manager: "Yes, exactly."

Cop 2: "Sounds legit. Let's book him."

Worked in Loss Prevention for many years in big box retail.

You guys are looking at this all wrong... There are two elements at play here, the civil penalty, and the criminal penalty, and in some places you can have both.

So lets say someone walks into your place of business and starts spray-painting everything. You will want him arrested, AND you will want a civil penalty imposed. If you are soft hearted you MIGHT not call the cops IF that person agrees to fix / clean / pay for everything.

This is the same logic, companies like Wal*Mart would rather have their employees on the floor working then in court over an item that they recovered. The civil penalty can be worked out with out a judge, or lawyers. You simply agree to never come back to the store again, pay for the item you stole, and an additional penalty (depending on state / county / local judge)

If you elect not to settle the civil matter, you still committed a crime, you still can go to jail.

"The civil penalty can be worked out with out a judge, or lawyers."

E, thanks for the feedback. I agree. I wouldn't object to a civil penalty if it involved a judge.

Judges don't exist to profit from crimes. CEC does.

I would totally disagree... Chances are CEC is already paying judges for them to send Drug Users / Shop Lifters / DUI Cases to another branch of their "Education" process..

Can you clarify?

How is CEC 'paying judges'? In what way would they even be able to 'pay' judges?

I've been in loss prevention 25 years, let me share my insight. First you never show the video to the subject, you do show the police and the DA. I have worked for 3 major companies all charge a civil demand, with rules around it i.e. over $20 in theft, must be between the ages of 18 and 65, depending on jurisdiction prosecution. Civil demands can be as high as $500, this is to help the retailers recoup the cost of security. If you are ever stopped and didn't take anything then demand they call the police and don't move from where you are standing. When the police show up you have a defamation case as long as you didn't give probable cause. Also in some states you don't need to leave the store, concealment is a crime and you can be stopped at any point. With this all said, I don't agree with there program of pay $320 or police will be called. I think it's coercion.

C, great feedback!

With civil demand, how is that arbitrated / mediated?

For example, a retailer stops 'Sam' who they suspect of shoplifting, they make a civil demand of $300. 'Sam' says he is innocent and won't pay. What happens then?

What normaly happens is they get lots of letters saying you owe us X. What could happen is they have a judgement against them, I personaly have not seen that done it costs to much. We farm the service out and are happy to collect whatever comes back.

I used to work in Loss Prevetion/Assets Protection for two major big-box retailers in New York. I'm not sure if the civil restitution is decided by Federal or State Law, but in New York, the restitution was 'up to' 5 times the amount of the value stolen.

Now, what was actually collected? Every apprehension was different. Sometimes, if the shoplifter was a booster or professional, we'd press lesser charges and wouldn't seek restituion if they gave us intelligence on who their fence was. If it was an employee, we'd rarely seek to collect more than what they admitted was stolen. I'm not sure what the everyday opportunity was gone after for because that took place way after I was involved.

I highly doubt this will be adopoted by any big-box retailers, WAY to much risk/liability and it's not going to be effective in stopping loss. 35% of loss comes from internal theft, maybe 10% from external, and the major chunk comes from operational issues. I don't have a source for that, but that was always the rule of thumb from working in the industry.

This may be useful to some answers -- Civil Damand Associates does this as a service for retailers.

Haven’t you already ran into this at the magistrate level? For years now I have seen these education companies making political contributions to judges / politicians to for every “Alcoholic” or “Drug User” or “Shop Lifter” they get sentenced to a “Re-education Facility”

Either the education companies, or the retailers got smart and said “Hey, we can take that money and cut the judge right out of the picture”

Probably a tax benefit to it as well, educating "Sick" people....

I don't believe that educating a shoplifter on an 8 hour course will make them run out and get a job. Also, if they are shoplifting, do they really have $320?

Not sure this whole thing is a good idea...but they are the ones with $5M in revenue.

I'm very familiar with the Civil Recovery programs. To clarify this is used in addition to criminal prosecution, not as an alternative. Once the criminal case has been settled (most suspects plead down for a fine & probation) the disposition of the case is sent back to the retailer who then can request restitution from the thief.

Most retailers farm this out. The biggest firm providing these services are Palmer Reifler & Associates. This involves sending letters and placing calls demanding the maximum for that given state. According to several of my customers the actual percentage that pay is around 20%. Half of the recovery is sent back to the retailer that referred the case

Becausee the restitution amount is so low it's not worth the law firms time to bring them to court for a judgment.

Half of the recovery is sent back to the retailer that referred the case.

Yes, from what I read, this 1/8 split instead of 1/2 or greater seems quite a rip-off to the retailer. Perhaps John is right that this seems less greedy to the public, but was there really a problem in perception?

No one seemed familiar with civil judgments against shoplifters in this thread unless they worked with them before. The way the article is written one would think that CEC was the first to think of a way to squeeze shoplifters for compensation.

So now that we all have learned, we should re-evaluate whether this is just a high priced education novelty or really a breakthru?


Its ridiculously unethical and at best, legally questionable. The one premise within this country is that criminal justice is equally meted out for all people. Now we've built a "class system" even for criminal activity - if you're wealthy enough you get a pass. $320 may not seem like much to any of us, but for plenty of people, its prohibitive. One can say just "don't do the crime", but what we're really saying is "don't do the crime unless you can afford to buy your way out; because then its OK".

The VP for account management indicates some pretty high end retailers. I appreciate the information - I can't wait to go to Bloomindale's and try to steal a Rolex; I can afford the $320 in case I get caught.

And I love the slippery slope - its going to be interesting when the first municipality or county decides that for the small fee of $20K, it'll "reducate" murderers and let them back on the streets. Maybe just $10K for rapists ...

"Yes, your honor, the store management separated me from my family/friends, accused me of shoplifting, and told me that if I gave them $320, they would make this all go away. No, your honor, I was not shop lifting. Yes, your honor, when the police arrived, they confirmed that there was no evidence of shoplifting. Yes, your honor, I was wrongfully detained, harrassed, intimidated, and wrongfully accused. Yes, your honor, I was terrified. Yes, your honor, I think a cash settlement is appropriate."

"The debate centers on whether or not it is fair, ethical and indeed legal for a private entity to make money off a criminal accusation."

But private entities have been making money off a criminal accusation for decades. They are called attorneys.

I feel like this is terrible for the stores... yes they get a commission... i mean, cut... on each agreement.. but if they get, say even $50. what if the item stolen is estimated at more than that? say they stole a diamond necklace on display retailed at $500 (who would display this, I know, but for sake of example). they then pay $320 and are not prosecuted. great... the shoplifter still came out $180 ahead, and the store took a $450 loss.

what if the item stolen is estimated at more than that? say they stole a diamond necklace on display retailed at $500 (who would display this, I know, but for sake of example). they then pay $320 and are not prosecuted. great... the shoplifter still came out $180 ahead, and the store took a $450 l

  1. The retailer does not have to offer any deal
  2. If the theif does pay $320, it's probably $300 more than he could pay if in jail.
  3. Theives apprehended in store with video evidence rarely get to keep the merchandise.
  4. The markup on retail Jewelry is insane. At $320 the theif still got robbed.

1. didn't think of that, thanks

2. again, didnt think of that. :D

3. i guess i was thinking of later prosecution, say after reviewing the tape, then again, the likelyhood of this situation is probably 0.

4. yeah, but he money (in his mind) in the long run... rather than pay 500 dollars for it he only paid 320.

Update: A member shared a recent article on how Wal-Mart is using such a program in 1,500 stores. The article does not mention who the provider is but it is the same approach.

Under $ 500take the class, and ruff them up going out the door.....

Over $ 500 direct them to your local chapter of any reputable Outlaw Motorcycle Club and let them take care of the problem with a pair of channel locks and a hot clothes Iron, they will never steal again, I guarantee it!

2 things: I deleted a comment in response to this that was inappropriate. Other thing: I am not sure if you mean this as a (bad) joke but advocating violence against people is alarming.

Update on this: Wal-Mart Suspends Shoplifting Punishment That Court Called ‘Extortion’:

Corrective Education Co. and Turning Point Justice, Utah-based companies that provide the programs, emerged in recent years as alternatives to the often-overtaxed criminal justice system. They spare law-enforcement resources and hold offenders accountable without leaving the scar of a criminal conviction, their supporters say.

But Wal-Mart Stores Inc., one of the biggest clients of Turning Point and Corrective Education, suspended the programs earlier this month as more local officials questioned the legality of asking people for money under threat of criminal sanctions, though it said it found the programs effective at reducing shoplifting and calls to police.

The move followed a ruling from a California court in August finding that Corrective Education’s program violates state extortion laws.

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