Who is the Victim in Petty Theft?

The answer to the questions above may not be as obvious as one would think. Retailers not only suffer losses in the billions, but they also must spend millions in an effort to thwart this behavior. In the past, retailers could rely on the criminal justice system, but today’s limited resources have left retailers with only civil demand laws which are currently being scrutinized. Part of the reason for the scrutiny has to do with some firms specializing in civil recovery -- the ability for retailers to seek repayment of damages without or in addition to criminal charges -- who are pushing the boundaries of civil demand.



At one point, all 50 states have specific statutes governing shoplifting and employee theft, providing retailers with civil restitution paid directly from the wrongdoer. The statutes, generally, represent a formulaic accounting of the value of the stolen good(s) as well as recoupment of the costs associated with the retailer’s loss prevention program. However, some civil recovery firms have actively chosen to include attorneys' fees in addition to the statutory recovery, often doubling the recovery sought against the wrongdoer. This has resulted in an outcry by consumer groups and certain state legislatures who feel this scheme sidesteps the statutory framework and results in an unfair burden upon the consumer. This apparent unfairness of added attorneys' fees is threatening the viability of a statutory framework which retailers and loss prevention advocates have a vested interest in maintaining.



In March 2015, Maryland Bill HB1239 was proposed to the state Senate attempting to repeal Maryland's entire civil recovery statute. Lawmakers in favor of the repeal argued that Maryland's civil recovery statute was enacted to protect both retailers and consumers and that the statute should be repealed where it fails to protect one side of the equation.



Civil recovery firms which push the boundaries of permitted recoveries threaten the entire civil recovery arena as we know it. Being able to have a pre-tort settlement outside of the judicial system is the most efficient way for retailers to recover lost profits, keep prices down for all consumers, discourage recidivism, and ease the burden on the judicial system. Without these remedies, retailers and consumers alike will suffer from having to bear the burden of increasing the prices of goods just to compensate for the retailer’s losses.



Though the Maryland Senate ultimately did not repeal the statute, the repeal effort alone should cause pause among those in the loss prevention industry. If successful, the repeal effort would have resulted in retailers not being allowed to collect out-of-court damages or civil penalties in Maryland for not only shoplifting, but also internal theft.



Moreover, it would have provided a basis for other states to reconsider the necessity of their civil recovery statutes, which could have a snowball effect. Indeed, this chain reaction has already started -- Massachusetts amended their civil recovery statute in 2015 to reduce the amount of damages a retailer may collect, and Illinois followed suit with Bill HB2496, which is presently proposed to its state Assembly.



The addition of attorney’s fees is neither required nor necessary. In fact, most, but not all, civil recovery firms have acted as responsible stewards of the civil recovery statutory framework, ensuring compliance with not only the letter of the law but also its spirit. Those civil recovery firms that are steering too far away from this model will inevitably affect the retailers, the civil recovery and loss prevention industry, and ultimately the consumer.



The financial impact of having to rely on a judicial remedy should be enough motivation for all retailers to ensure that their civil recovery program is being fairly administered. Holding everyone accountable will guarantee higher standards and fairness in the industry, ending the need for reformation of statutes and systems that have, and still do, work properly in most cases.

Daniel Singer is managing partner of BP Law Group, LLP and Frank Luciano is president of Civil Demand Associates, the nation’s oldest, most established civil recovery firm, and an affiliate of BP Law Group, LLP. Frank can be reached at 949-247-7851 or [email protected].