Since the earliest days of organized retail, there has been a recognition of the unique exposure that retailers have to crime and loss. We all know that larceny crimes—shoplifting, credit card fraud, refund abuse, and internal theft—cost the retail industry tens of billions of dollars each year and can devastate a retail business.
But shoplifting and other forms of retail theft also impact the industry in ways beyond the monetary loss of stolen merchandise. From the retailer’s perspective there are the costs associated with processing the incident, court appearances, evidence management, and other related expenses such as the costs associated with surveillance and security equipment, merchandise protection tools, and technology resources. Looking deeper there are negative impacts due to lost sales, out-of-stocks, and merchandise replenishment. All of these can have substantial impact on the retailer’s bottom line—and the prices paid by the retail customer.
Historically, society has provided retailers with tools to help control those losses. For example, each state has statutory provisions typically referred to as “merchant protection statutes” that provide retail organizations with extraordinary powers to detain possible shoplifters in a manner that’s not available to the typical citizen and also afford significant protection to the retailer against liability.
The entire process of prosecuting a shoplifter can be very expensive from a community standpoint as well, ultimately costing thousands of dollars per incident. From the time of arrest, through the court system, and up to the point that a decision on guilt or innocence is determined, extensive financial and human resources are dedicated to ensure a fair and just process. If found guilty, the burden of public responsibility shifts to the management of the criminal sentence, up to and including incarceration for more serious criminal offenses.
So retail theft is costing all of us money—a lot of money. For anyone paying attention, that should really come as no surprise. The only true constant has been that the theft problem is not going away. The nature of retail theft may have evolved with the progressive nature of the retail culture and the needs, norms, and values of an evolving society. But the problem itself persists and will likely endure as long retailers open their doors for business.
The Debate over Response
How we respond to the problem of shoplifting has also shown considerable signs of change. Over the past fifteen to twenty years, there have been significant trends related to retail theft, shoplifting, police response, and the views of the criminal justice system that are causing significant disruption and confusion as to the manner in which shoplifting and related crimes are dealt with. These developments have often been contradictory to each other, influencing how they’re handled from jurisdiction to jurisdiction, how they’re viewed in the eyes of lawmakers, and even how they’re managed from retailer to retailer.
As budgets are squeezed and resources stretched, conflicts over the best way to handle this criminal behavior has only continued to escalate. In the past few years, there has been an increasing chorus of criticism of big box retail for what is being perceived as an “overuse” of police resources. With criticisms emerging in large cities and small towns, the story is typically told by citing statistics on how many police responses are made to a particular retail outlet for issues ranging from shoplifting to various other crimes and complaints.
In some instances, businesses have been threatened with fines or the intent to declare the retailer as a public nuisance due to the frequency of police calls made to deal with shoplifting and other criminal incidents. In other situations, police have asserted that they will not respond to theft incidents under a predetermined dollar amount. There are even those jurisdictions that have announced they simply won’t respond to shoplifting incidents at all, believing that police resources are better spent by focusing on “more serious crimes” other than those that cost retail companies tens of billions of dollars each and every year.
For example, in March of 2018 Chief Erika Shields of the Atlanta Police Department announced that officers will no longer be responding to shoplifting calls at department stores. “You can only do so much,” said Chief Shields. “We are going to change how we handle shoplifting calls, and primarily, for the most part, we will not be responding to them. Every time we make a shoplifting arrest, that officer is out of service for sixty to ninety minutes. It’s not acceptable.”
While most departments work well with their retail partners, critics assert that retail companies in question either don’t take crime seriously or don’t want to spend the money necessary to prevent it. Rather, they are relying on public services and the taxpayers’ dime to handle what could be prevented or mitigated. Further, there is a lack of understanding—or a lack of empathy—for the role that retail theft plays as a “gateway” crime to more serious offenses such as drug crimes and violent crimes, which only further impacts reaction and response.
Decriminalization and Reduction of Sanctions for Larceny
When it comes to controlling crime, one of society’s aims is to deter bad behavior through the use of criminal sanctions. In fact, deterrence theory could be considered the bedrock of almost any criminal code. According to the National Institute of Justice-the research, development, and evaluation agency of the US Department of Justice—a primary means to deter crime is to increase the perception that criminals will be caught and punished.
While the legislative branch and criminal justice system have long recognized the extreme exposure that retailers have to theft, there is strong sentiment within the industry that a weakening of criminal sanctions has occurred and will, at least in theory, drive higher rates of offending and loss. These changes have largely been driven by budget concerns in the public sector and the sense that law enforcement agencies and the courts are beyond capacity, thus necessitating either increased funding or a reduction in the number of offenders being referred, prosecuted, and incarcerated.
State Felony Threshold Changes. Since 2001, at least thirty-five states have raised their felony theft thresholds—the value of stolen money or goods above which prosecutors may charge theft offenses as felonies rather than misdemeanors. This comes at a time when the retail community is seeing a rise in organized retail crime (ORC) where the potential financial gain is significant compared with the reduced risk of meaningful criminal sanctions.
“There are clearly people that should be in jail who are now free due to the new legislation,” said Loren Naiman, formerly with the Office of the Los Angeles County District Attorney. “Theft is now a consequence-free crime, resulting in an increase in property crimes in Los Angeles by almost 10 percent since these changes have taken effect.”
Local Police Response Thresholds. On an informal basis, many law enforcement agencies have created a de facto reduction in criminal sanctions for shoplifters by establishing dollar thresholds for when they will respond to a shoplifting case. While this does not necessarily prohibit the retailer from pursuing criminal prosecution, it makes it much more cumbersome and also removes the immediate sanction and deterrence from the equation.
Prop 47. Proposition 47, the ballot initiative passed by California voters in 2014, has become somewhat of a “rallying cry” in the retail loss prevention industry regarding the perceived softening on shoplifting, organized retail crime, and retail fraud. It reduces certain drug possession felonies to misdemeanors. It also requires misdemeanor sentencing for petty theft, receiving stolen property, and forging/writing bad checks when the amount involved is $950 or less, including any and all repeat offenses.
“It’s basically decriminalized shoplifting and theft, making it a low-risk/high-reward proposition,” said Aaron Moreno, senior director of government relations for the California Grocers Association. “Thieves are more brazen, putting retail workers in danger.”
“Ban the Box” Initiatives. Nationwide, over 150 cities and counties have adopted what is widely known as “ban the box” where employers are restricted in their consideration of criminal convictions in the hiring decision process. Ten states have also mandated the removal of conviction history questions from job applications.
“The purpose of the ‘ban the box’ initiative is to allow people with a conviction history to go through the interview process and be considered based on their qualifications rather than their conviction history,” said Sandra Johnson with California-based Legal Services for Prisoners with Children and part of the campaign behind the “ban the box” initiative. “I felt held hostage by my past and wanted a fair chance to be considered without being judged based on my conviction, getting a job so that I could move forward.”
While not directly related to the issue of retail theft, many retailers feel this trend also impacts the perception of decriminalization of a wide range of offenses and removes one more tool for retailers to control loss. Further, it represents an additional weakening of deterrence for offending.
Increased Violence and ORC Activity
Over the last several years, every gathering of loss prevention practitioners has ended up with a significant focus on violence in the retail workplace. These concerns include traditional workplace violence issues, increases in armed robberies, and active-shooter incidents. But the major point of discussion involves increased levels of violence, threats of violence, intimidation, and use of weapons by shoplifters.
“Different groups are now getting more involved in theft, including a number of gangs and other felons that have habitually been involved in more violent crimes,” added Bill Williams, formerly with the Los Angeles Police Department. “In California, following the passage of Proposition 47 they’ve turned to shoplifting because the penalties are so much less.”
Whether involving ORC incidents or individual shoplifters, these issues seem to span the entire spectrum from big box to specialty retailers. This trend continues despite attempts by retailers and loss prevention to reduce and mitigate violence by changes in policies and procedures.
The Drug Crisis and Its Impact on Retail
There’s no denying that the US is facing an opioid abuse epidemic, and the impacts of that are being felt by retailers in many ways, but opioids are only one class of drug in play. For instance, the widespread use of methamphetamine (meth) has resulted in many states adopting stringent requirements for retailers regarding the handling of products that are components or precursors to meth, such as Sudafed and Advil Cold and Sinus even though they are officially over-the-counter medications.
Some are now criticizing retailers because there is a sense that addicts are turning to retail theft to fund their habits. Many retailers would agree as they have long felt the impact of shoplifting due to drug dependency. But a Pennsylvania judge recently said that a major retailer was “part of the problem” because of its return policy and that retailers are not doing enough to combat the issue.
There are now even reports of a link between gift card issues and the opioid epidemic, with addicts stating that drug dealers will often accept gift cards as payment in lieu of cash. While gift cards can be sold at physical locations, such as pawn shops and other outlets, online sales sites currently provide an easy way for thieves to convert the cards to cash at an 85 to 90 percent return.
State Senator Richard Briggs of Tennessee reported a direct connection between gift cards and drug overdoses based on reports received in his home state. Retail theft is prevalent in Tennessee, with Knoxville reportedly ranking first in the nation per capita for card abuse and theft. In Knox County, he revealed that police linked sixteen of nineteen overdoses to the sale of gift cards during a one-month period in 2017. In the city of Knoxville, police also tracked eighty-three to ninety-eight overdoses to gift cards during a three-month period.
“It would be no different than if there was a rock lying there, and if you lifted it up, and this horrible smell came out, and this monster came out,” said Senator Briggs. “We had no idea that the organized retail theft was related so intimately with the opiate and drug trade in general in Appalachia.”
These criticisms add to the sense of frustration in the retail industry. It seems that some want retailers to solve a societal issue that is not of their own making without any regard to the competitive nature of their core businesses and the need to skew their policies to favor of their legitimate, honest customers who make up the vast majority of their businesses, while taking away many of the criminal sanctions or police response that would be expected historically.
The Search for Alternative Solutions
Retail companies are in business to sell merchandise—not to catch shoplifters. Naturally, these businesses would much rather avoid theft in their stores and have taken many steps and allocated tremendous resources toward these efforts. In today’s dynamic and competitive environment where the wants and needs of the customer remains our greatest priority, there needs to be a balance between protecting merchandise and ensuring our products are available and accessible to the customer. Brand, image, price, quality, convenience, and service are hallmarks that drive the success of every company, and that can’t and won’t change if the company hopes to remain in business.
Over the past several decades, retail has made significant changes in response to shoplifters and other forms of retail crime. First and foremost, today’s retail companies have stressed deterrence as a primary response to theft, focusing on customer service, employee training and awareness, advanced prevention tools, cutting-edge technology, and similar measures to dissuade the theft problem. When shoplifting does occur, increased implementation of “no chase” and “no touch” policies and a willingness to let violent shoplifters go rather than attempt to physically detain them has become a common industry practice.
Yet despite ongoing efforts to deter shoplifting, the problem persists. In fact, with the lack of police response and a reduction in the consequences for stealing, the doors have opened to a more persistent problem and the potential for a more volatile criminal element. This leaves retailers searching for new and better ways to respond to protect their products, their customers, their employees, and their businesses.
In response to the reduction in criminal sanctions, the lack of police response, and the criticism that retailers may be overutilizing public resources, retailers have sought out alternative programs to provide sanctions for shoplifting and control the huge financial impact on the retail industry. These include the use of civil demand programs, which have statutory endorsement in the majority of states, and the recent introduction of “restorative justice” programs.
Civil Recovery Programs
The use of civil recovery has been widely supported in the retail loss prevention industry for over thirty years, and all states have provided statutory provisions for these programs. Civil recovery laws make any person who unlawfully steals or tries to steal merchandise liable to the merchant. In simple language, this means that a shoplifter can be financially penalized by a merchant for stealing or attempting to steal from them—even if the merchandise is recovered.
These laws do not in any way prohibit a merchant from taking additional legal action against the offender, such as turning them over to police or pursuing prosecution for the crime. They are designed to impose financial penalties on shoplifters to offset costs directly associated with the tools and personnel required to defend against shoplifting and related crime—a practice that would appear fair and reasonable.
“Civil recovery is a tried and true process backed by statutes that are state-specific. These programs, when managed with an ethical and transparent focus, address recidivism while helping a company’s bottom line,” stated Stuart Levine, CEO of The Zellman Group.
Maintaining a civil recovery program with processes that are uniform and fair from beginning to end is paramount. For example, high-dollar demands and added fees are often at the root of legal inquiries. Retailers in partnership with their service providers should set consistent standards within established statutory guidelines—but not necessarily at the maximum penalty allowed by the state.
Further, the process, including civil demand notices, letters, calls, and all follow-up, should be inscrutable and fully defensible based on specific state statutes. There are also ancillary laws designed to protect consumers, which emphasizes the importance of ensuring compliance to the requirements of legislation such as the Telephone Consumer Protection Act (TCPA) or Fair Debt Collection Practices Act (FDCPA). Violation of these laws are an additional source of initial accusation and potential legal action, which ultimately negatively impact civil recovery for merchants.
Nevertheless, criticisms routinely appear in mainstream media with accusations of unfairness even though these programs have a solid legal foundation, and many personal defense attorneys are prospecting this area for potential lawsuits. As a result, some retailers have pulled back on their use of civil recovery.
Restorative Justice Programs
Restorative justice programs were intended to create a process where first-time shoplifting offenders were offered an opportunity to avoid criminal prosecution. Rather than incurring the significant time and expense to all parties involved when a shoplifter is apprehended—including those the offender would incur when faced with penalties imposed by the criminal justice system—an alternative solution was offered with the idea that there were benefits for the offender, the company, and the community at-large.
Taking a page from the criminal justice system’s traditional restorative justice diversion program, participants had to be first-time offenders and not involved in organized retail crime. If eligible, offenders were educated about the program and offered the choice to participate in and pay for the educational program or refuse the opportunity and opt instead to follow the traditional path of criminal prosecution and have their day in court. Those who signed up completed an online course intended to make them examine why they shoplifted, and why it’s a bad choice. They paid restitution for the thefts and footed the bill for the courses.
The initial response to these programs was largely positive with both retailers and police agencies where implemented. Participating retailers cut their calls to police in half, saving significant resources for local communities. Repeat shoplifting offenses for those going through the programs were less than 5 percent. Intended to create a process where offenders can learn from victims and the community to make amends, restorative justice programs were meant to establish a cooperative rather than adversarial process—one intended to help make things right, show perpetrators the impact that their crimes can have, and take the steps to see that the behavior doesn’t happen again.
However, while some prosecutors and police departments have applauded the implementation of restorative justice programs in the retail sector, others have taken great exception and umbrage. In 2015, a suit brought by the San Francisco City Attorney asserted that the tactics used by Corrective Education Company (CEC), one of the companies that were administering restorative justice programs, were illegal, and the court issued a permanent injunction against CEC in California. “We should all be concerned about privatizing our justice system,” said City Attorney Dennis Herrera, adding that the company was “enriching itself on the backs of others, and many of the people they prey upon have limited means and are just barely getting by.”
In Minnesota, the legislature is considering a bill that would make retail restorative justice programs illegal in the state. In Indiana, the State Attorney General’s office issued an opinion that the CEC program was “open to abuse” and should be illegal. This has resulted in most retailers suspending their restorative justice platforms, ceasing to provide first-time shoplifters with the option of going through the program.
So What’s a Retailer to Do?
If the penalties for shoplifting are reduced and the criminal justice system refuses to handle cases or complains about the volume, but at the same time don’t want retailers taking actions into their own hands through the use civil penalties, how are retailers supposed to control the issue especially in light of the current opioid crisis and the belief that shoplifting activity is feeding into the problem?
If resources are so stretched that law enforcement doesn’t have the manpower to respond to legitimate crimes taking place in retail stores—to the point that the stores are being threatened with charges of being labeled a “public nuisance” based on their response to those crimes—how are retailers expected to respond?
Some critics claim that retail companies either don’t take crime seriously or don’t want to spend the money necessary to prevent it. Then other critics claim that businesses like retail are too tough on those previously convicted of criminal offenses and should make hiring decisions without regard for their criminal history.
On top of all of this, throw in the perceived issue that violence and threats are on the rise in the retail sector, and it is fair to ask, “What is a retailer to do?” As the climate evolves, the concerns are mounting, leaving us with important questions that are lacking feasible and/or manageable answers.
As retailers face the many challenges of an evolving society, we must also continue to search for the best and most productive solutions to all the needs of the business. This requires an ongoing effort to challenge ourselves and our decisions to ensure that we provide the best possible outcomes. When it comes to theft and related retail crimes, we must always look for internal solutions to the many concerns on our plates. We must also work with community leaders, legislators, and law enforcement, jointly communicating our thoughts and ideas while pursuing effective and reasonable answers to the many questions that we face.
This is a shared responsibility requiring the cooperation and support of everyone involved. Communication is important, but so is perspective. We aren’t referring to a youngster stealing baseball cards and bubble gum. This is a multibillion-dollar problem that is only getting more serious—and more dangerous—as we move forward.
Retailers are in business to sell their products and turn a profit. Serving the retail customer is our primary responsibility. We invite the public into our stores, present our products in a way that is attractive, desirable, and convenient to our customers, and persistently look for ways to best serve those customers, meet their needs, and keep them coming back. But among the wave of valuable customers that enter our stores every day, we can neither avoid nor ignore those who are intent on malicious actions that threaten the retailer’s bottom-line—and even more importantly, threaten the safety of customers and front-line staff. It’s something that is an unavoidable aspect of the business and in many ways beyond our control.
There remains a fine but clear line between protection and service. There is a responsibility to attempt to manage those guests with less-than-pure intentions and those making poor decisions. Our first desire is to control theft through prevention and deterrence, but hard-core, repeat, and violent offenders need to be dealt with appropriately. All of this must be accomplished while remaining respectful to the needs and perceptions of our customers and maintaining the public trust.
Retail businesses serve and support our communities. They strengthen local economies by offering essential products, providing jobs, generating tax revenues, and championing community projects. The burden of dealing with all these concerns shouldn’t simply fall on the shoulders of our retail community. Retailers are not “the bad guy” in this equation.
So what’s a retailer to do? Together we need to find the answers.