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US retailers falsely accuse people of shoplifting to claw back losses

Walmart, other companies have slick operations, hiring law firms to send tens of thousands of letters a year

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Shoplifting cost stores more than US$17 billion a year, according to an industry estimate. To get the money back, many companies employ aggressive legal tactics and take advantage of loosely written state laws, pushing for restitution even when people have not been convicted of wrongdoing.

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Crystal Thompson was arrested for allegedly shoplifting from Walmart. Her criminal case was dismissed after no one from the retailer appeared at a hearing to testify against her.

Mobile, Alabama

CRYSTAL Thompson was at home watching the Rose Bowl parade when a county sheriff came to arrest her on a charge of shoplifting from the local Walmart.

Ms Thompson, 43, was baffled and scared. An agoraphobic, she had not shopped at a Walmart in more than a year. She was taken to a Mobile jail, searched, held in a small room and required to remove her false teeth, something she didn't even do in front of her husband.

Four days after she returned home, the letters from Walmart's lawyer started to arrive.

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The lawyer demanded she pay the company US$200 or face a possible lawsuit. She received three letters over two months in early 2016.

Shoplifting is an intractable problem for retailers, costing stores more than US$17 billion a year, according to an industry estimate. To get the money back, many companies employ aggressive legal tactics and take advantage of loosely written state laws, pushing for restitution even when people have not been convicted of wrongdoing.

Many of the laws were established so retailers could pursue shoplifters without clogging up the courts.

Retailers, though, often move on both fronts, pressing criminal charges against suspects while demanding that they pay up before cases are resolved.

In many states, retailers do not have to return the money they collect if the cases are ultimately dismissed or the people are cleared.

A Walmart executive, in a court deposition, acknowledged that the company did not follow up to check on whether people it sought money from had been convicted of shoplifting.

Walmart and other companies have created well-oiled operations, hiring law firms to send tens of thousands of letters a year.

Walmart set a collection goal of about US$6 million in 2016 for one of its go-to firms, Palmer Reifler & Associates, according to a court paper filed as part of a lawsuit Ms Thompson brought against the retailer.

The firm also pointed out to Walmart that minors tended to pay off more frequently, the filing said.

"It is my word against this company," said Ms Thompson, whose criminal case was dismissed after no one from Walmart appeared at a hearing to testify against her. "I'm nobody special. I didn't feel like I had a prayer."

Walmart declined to comment on individual cases, citing continuing litigation.

"While there are multiple steps that our associates follow before initiating a civil claim against a customer, people can make mistakes," the company said in a statement.

Starting decades ago, the retail industry lobbied state legislatures for legal recourse to pursue shoplifters with fines. Retailers argued that the penalties would go a long way toward deterring future theft and that rampant shoplifting ate into already thin profit margins, potentially raising prices for consumers.

In some states, companies have been able to collect more than the value of the allegedly stolen items, up to US$1,000 in some instances.

Despite numerous lawsuits against retailers and news reports about collection tactics, the laws have remained largely intact.

Maryland is one of the few states to revise its shoplifting statutes. In 2016, the state began requiring retailers to report the number of collection letters they send. To date, no retailer has complied with the new requirements, according to state records.

In Burlington, North Carolina, Anna Marie Martin said two police officers handcuffed her and took her to jail, according to a lawsuit she filed against Walmart. Her alleged crime: stealing a Bryan Adams CD and two others, totalling US$25.62, then hitting a car in the Walmart parking lot and driving away.

Palmer Reifler sent her two letters demanding that she pay US$150 within 20 days. "You may be held civilly liable" for as much as US$1,000, the letters said.

Both letters were sent before the authorities determined that Ms Martin had been "mistakenly charged" and dropped the criminal case, according to her suit.

A Walmart employee had told the police that she was "80 per cent sure" that Ms Martin was the thief. Ms Martin recently settled her suit with Walmart for an undisclosed sum.

In a deposition this year in Ms Thompson's civil case, a senior Walmart manager at the time said Walmart did not audit whether the people who received the demand letters had committed a crime. He said such due diligence was the responsibility of Walmart's outside law firms, which had "expertise" in the area.

"What investigations do you expect the law firms to conduct to determine whether these allegations are true?" Ms Thompson's lawyer, David McDonald, asked the executive in a deposition. The executive replied: "We do not get involved in their processes because they are an independent contractor."

In Alabama, Palmer Reifler hired a lawyer who had not practised law in 27 years to sign letters sent to shoplifting suspects. The lawyer said he was employed part time at a funeral home while also working for Palmer Reifler.

In a deposition, he said he was typically paid a retainer of US$200 a month to sign collection letters. The law firm did not return calls seeking comment.

In Ms Thompson's suit, a Walmart employee acknowledged in a deposition that he mistakenly accused her of shoplifting in December 2015.

He said it had appeared that one of Ms Thompson's daughters failed to scan about US$70 worth of groceries at the self-checkout line. The employee followed the daughter out to the parking lot and wrote down the licence plate of her car, which was registered to her mother.

Based in part on the licence plate, Walmart sought a criminal complaint against Ms Thompson.

Mr McDonald said that if Ms Thompson's daughter took the groceries without scanning them properly, it was by mistake.

Video surveillance, reviewed by The New York Times, shows the daughter trying to scan and rescan groceries at the checkout machine for about 17 minutes. Walmart has not filed shoplifting charges against Ms Thompson's daughter. NYTIMES