The scenario is pretty simple and becoming all too common. An individual walks into a store and tries to steal something. They are caught by store security (often using the fancy term of loss prevention). Security either calls the police and has a charge laid or issues some sort of notice banning the individual from the store. If the individual is a minor, parents or guardians are contacted and, at least for responsible parents/guardians, the matter is sternly dealt with at home. Those charges are given a court date and, in the vast majority of cases especially if it is a first offence, the Crown Attorney offers diversion.
This should be the end of the matter. Unfortunately it’s not.
While I, of course, don’t condone shoplifting, I also subscribe to the philosophy that two wrongs don’t make a right. Many retailers don’t have a similar philosophy and will engage in a practice that has become known as civil recovery. This involves sending the person caught a demand letter asking for an amount of money, typically around $500, that is meant to help the store recover from the costs associated with their “loss recovery” program. The claim is the money is meant to subsidize the whole program; it is not a realistic account of the exact costs involved in catching a particular person in a particular circumstance.
Some retailers will retain large law firms whose sole job is to send out these letters. Frankly it surprises me that well-respected firms engage in this practice.
There is no obligation to respond to a demand letter. The mere fact that they are written on lawyer letterhead is meant to give them more credibility. In reality, they are nothing more than a request for money. There is case law out there where stores have been successful in suing individuals in similar cases. The demand letter, however, is not a lawsuit. It is just a letter.
What must be responded to is an official court document called a statement of claim. Being served with such a document means the retailer is suing the individual, likely in small claims court. While I can’t guarantee retailers won’t go this route, it is extremely rare given the costs involved in engaging in litigation. If one is served with a statement of claim, they may then file a response and eventually have a hearing in small claims court. The retailer will need to prove, on a balance of probabilities, both that they have suffered a loss as a result of the individual being sued as well as the proper quantum of losses.
Another route that I have heard of retailers taking is to insist on the payment of civil recovery in exchange for not calling the police. Essentially they are threatening criminal action if a civil debt is not paid. Some less than ethical collection agencies will often use this tactic by threatening to have an individual charged with fraud if they do not pay monies owing (I’ll blog on this another time, but not paying one’s bills does not amount to fraud unless the person not paying has actually engaged in fraudulent activity, such as misrepresenting their identity; collection agencies also don’t lay charges – police do). This is an unethical practice which is essentially a form of blackmail. My guess is it is smaller retailers that engage in this since the largers stores would be well aware of the legalities of such a practice.
As mentioned above, those charged are often eligible for diversion. Check out my blog post about the ethics of diversion clients for some thoughts on whether one charged with shoplifting should be hiring legal counsel.
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