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Walmart Extorts Shoplifters?
The high point of the Christmas season is over; for those people who don’t shop online and still frequent malls, today there will be a rush for people to rid themselves of the ugliest, most distasteful, and strangest gifts they’ve received. But for some folks, the thrill and satisfaction of shoplifting will have colored this season, and many retailers will have paid the price.
Until recently, Walmart Stores offered a choice to shoplifters: they could pay for and complete an education program as a result of their crimes, or face possible prosecution. Unfortunately, Walmart canceled the programs when local governments questioned whether Walmart was acting legally:
California Superior Court Judge Harold Kahn said in an August ruling that the program ‘will always be extortion per California law’ as long as it involves payment to Correction Education or retailers. Only a diversion program ‘under the aegis of prosecutorial authorities’ can request money under California law, the judge wrote.
Other governments and legislators have also been critical of the program.
The background on this situation is as follows:
Walmart hired two companies, Corrective Education Co. and Turning Point Justice, to provide training to first-time shoplifters who had been apprehended at one of their 2,000 stores; if the shoplifters preferred, they could choose to be reported to law enforcement; the great majority opted for the training. Shoplifters paid these companies $350 for their online programs; they also had to make restitution to retailers, bringing total costs to $400 to $425. Other retailers were using these companies’ services, including Burlington Coat Factory, Target, Goodwill Industries, and Bloomingdale’s. To my knowledge, Walmart is the only company that has been taken to court regarding this training and has lost.
Shoplifting has significant costs in terms of manpower and resources:
The average-sized police department spends more than $2,000 responding to a single theft, according to a tool created by RAND Corporation to calculate the cost of crime. Some field hundreds or even thousands of calls each year from retailers about shoplifters.
Police departments in communities where Turning Point and National Association of Shoplifting Prevention (NASP) offer their programs report 41 percent fewer calls from participating retailers and 70 police hours saved a month, according to the company. The police department in Arlington, TX, attributed a 50 percent reduction in retailer calls — the equivalent of more than 12,000 police hours — in part to the adoption of Corrective Education programs by Walmart.
Joe Schrauder, Walmart’s new vice president of asset protection and safety, reported:
Walmart did a small test of the education programs in stores in 2013, then rolled it out to a wider group in 2015, eventually hosting the programs in about 2,000 of its 4,700 U.S. stores. He attributed a 30% decline in shoplifting incidents in 2016 and a 15% decline this year mostly to more-visible theft deterrents, such as additional employees posted at store entrances, but said the programs had a positive impact.
Walmart is discussing ways to partner with local law enforcement organizations in order to restart the program because the costs of shoplifting continue to grow.
In addition, costs to retailers continue to rise, as reported in 2016:
Shoplifting and organized retail crime are major contributors to the external loss component of inventory shrink. The NRSS indicates that shoplifting accounted for 39 percent of the reported shrink in 2015—by far the largest contributing factor to retail loss in the survey. The average loss was about $377 per shoplifting incident, up from nearly $60 in 2014. This is the second sequential year that shoplifting has surpassed employee theft as the largest contributor to inventory shrink in the United States.
A report on shoplifting prevention documented that there were 27 million shoplifters (or, 1 in 11) in the US. The costs to police departments, shopping communities, and losses in sales taxes are immeasurable. The report also stated that the profile of a shoplifter crosses all ages and socio-economic boundaries.
The issues of costs and increases in crime are one major issue. But what does the rise in these crimes say about us as a society? Shoplifting has always existed; these reports also tell us that people who shoplift are not professionals. They do it out of greed, social pressures, and addiction. I’d also suggest there is an erosion of values, a lack of respect for boundaries and the property of others, and a missing commitment to leading a moral life.
I don’t know if there is any way to combat shoplifting from a moral or values perspective. But let’s not throw away opportunities like the Walmart training which ultimately protects those customers who are not guilty of self-centeredness and thievery. We can certainly make it more difficult for the thieves and less costly for the victims who suffer the costs of this illegal and immoral behavior.
Published in Culture
GOVCO is very protective of its monopoly on both exactions and the application of force.
Perhaps some California legislators will decide it’s time to change the law that forbids this practice.
The California Left has a monopoly on power and a list of people/corporations they hate. They dislike competition in many ways.
That, my dear Derek, is an understatement! ;-) Having lived in CA for many years, the tyranny just gets worse and worse. It’s fascinating that in the article I mention, those who are fighting it are not the police departments, but the legislators and judiciary!
I think they are also demonstrating their unwillingness to assist law enforcement in dealing with shoplifters; after all it’s the job of cops, right?
Ironic that a state which feels convicted criminals are too often overcharged objects to a strategy that keeps first time petty crime off a police record.
I was born in and spent my formative 73 years in CA. So yes: I’ve seen it up close and personal both as a GOVCO attorney and for many more years representing folks who had either been screwed by GOVCO. Or were using me to help them in their rent-seeking pursuits. Glad I got out while I was still young.
Isn’t it, Mim? But I rarely see rational decisions come out of CA–especially if they can save money.
Very good decision! I am so happy to be in FL! For the most part, government seems to stay out of our way–at least for now.
If anyone knows of repercussions in other states or with other legislators or police departments, I’d love to know. If it’s happening in CA, they usually lead the way.
Walmart’s only mistake was not labeling it a “restorative justice” program. They are all the vogue in California right now.
I would be disappointed if any rational state court system (aka, almost anything outside of the state of California) found this to be extortion under the circumstances — which is, of course, precisely what you look at in determining whether there was a crime. Maybe it is, maybe it isn’t under the strict wording of the statute but neither the goal nor the result is enrichment.
At some point, about five years into my career as an attorney, I noticed that the stupidest things companies ever do are the things they do on the advice of a consultant. In fact, I have come to think of consultants as people who get the bright idea that businesses should be doing something that no business is doing. It never dawns on them that the reason why no business is doing that thing is because the thing is patently illegal. And they don’t check. They just start peddling their idea for a fee.
Let me be clear – this scheme is obviously extortion. Any time you tell someone that you will report their illegal conduct to the authorities unless they pay up, that is extortion. Period. If an attorney writes a letter saying “You have wronged my client. Unless you settle for x dollars, we will sue you and report your client to the district attorney” – boom, that’s extortion. Every lawyer should know that, although many of them don’t know or don’t care. Personally, I have an ironclad rule against threatening, or even suggesting that I was thinking about, reporting anyone to any governmental agency for anything. You either report it, or you don’t, but you never, never, never use it as leverage.
And yet, here we have two “consultant” businesses who are telling their customers to commit a criminal act, and are profiting from it. And, apparently, what should be sophisticated businesses are going along with it. It never ceases to amaze me.
Thanks, Shawn. It sounds like you have some legal experience. I appreciate your sharing your thoughts on this issue. It sounds absurd to me, but I’m just a layperson!
I appreciate hearing from an attorney, Larry. Let me ask you: if Walmart notified law enforcement that this is their practice, and they make a call to the police every time they detain someone, is that still extortion? I don’t agree with your comment about starting something that has never been done; new ideas are initiated all the time and they don’t necessarily break the law. Why are police departments going along? Are they ignorant, too? Are they colluding if they do go along? Do you think there is a way that a collaborative effort could be established between the police and retailers to make this work? I don’t mean for my tone to sound confrontative; it’s just that you seem so certain that this is obvious and it’s not to me.
I disagree. I don’t think police should be involved if the thief and the robbed can come to a reasonable agreement on restitution.
Unless a retailer is actually extorting cash from a shoplifters, all Wal-Mart and other retailers were doing is what is a reasonable response toward a first-time shoplifter.
And unless they prohibit all retailers from such a program, it would seem the state of CA is in the wrong by targeting Wal-Mart.
Lastly, is it really so shocking that lawyers and judiciary are unhappy that they are being bypassed on the low-level thefts?
Sadly, its not like we don’t need services of police, lawyers, and judges for more pressing matters.
I’m sorry, Jules. I was being sarcastic here. I’m saying that judges and legislators would insist that cops should be doing this work, not the retailers. I agree with all your points; let’s free up the cops to do more critical work.
Oh? I thought Christmas was just getting started. Today is the 2nd of 12 days. We’re not even half way into the fruitcake and wine.
Also as a non-attorney, I’m wondering where’s the sense of entrapment and a profit motive by Wal-Mart? Also curious about what the online ‘training’ involves.
I sympathize with the sentiments of those who like this program. However, the minute I read the details of the program, I instantly recognized it as being illegal. Have CA change the laws, but yeah, as it stands I agree with the courts in California (possibly a first).
At first blush, I was uneasy about this.
But after thinking about it, whatever the legal definition of extortion is, I don’t consider it morally so. For one thing, it’s out in the open. Walmart wasn’t hiding anything (based on what I’ve read so far).
This is something best mandated by statute with some monitoring because there is a potential for abuse. In the end, though, I find Walmart’s idea a good one.
I don’t think the court ruling targets Walmart. It would apply to all retailers in the state.
If other reatailers in California are engaged in this practice, they will have to desist.
Where does this come from? I don’t see any indication that Walmart did or didn’t hire a consultant. They did hire third party companies to administer their program. Whether they did so on the advice of a consultant, I don’t know. Do you? Or are you assuming that since it’s a bad idea (your opinion) that it must be the fault of a consultant?
Also, as an attorney, you may only be called in to fix a problem. If a consultant gave good advice that was followed, you wouldn’t be called in the first place, so you wouldn’t see a positive outcome as the result of a consultant.
I have my own bugaboos regarding consultants. My opinion is they are often hired to justify a decision already made which is a waste of money.
Businesses do have to take risks to innovate. I find that attorneys are the enemy of innovation (along with accountants).
By “consultant,” I am referring to the two businesses that provide this “service” to Wal-Mart. As to how I formed this opinion, I saw it over and over. I saw it in my own cases, and I saw it in reported judicial decisions. Let me give you an example. I was contacted once by a client who had hired a consultant (she was an RN) who said she could help keep my client’s workers’ compensation costs down. She recommended that my client not hire anyone with a pre-existing disability, because such people were more likely to suffer a work related injury. Fortunately, my client thought this sounded fishy, and called me. I advised (of course) that this would be patently illegal under the Americans with Disabilities Act and California law.
I have seen this kind of thing over and over. People who have no idea what they are doing call themselves “experts” and peddle their supposed expertise to unsuspecting companies. And advise the companies to do things that will get them into all kinds of legal trouble.
A “sense of entrapment” is not an element of extortion. Nor does there necessarily have to be a profit motive, although there usually is. But if you use the threat of reporting someone to the authorities in order to coerce that person to do anything, whether it profits you monetarily or not, you are engaged in extortion. In this case, if Wal-Mart had told the shoplifters that it would report them to the police unless they paid Wal-Mart itself the $350 fee, everyone would see that it is extortion. (At least I hope they would.) The fact that the fee is paid to a third party does not change this. You could leave the money out of it entirely. If Wal-Mart told shoplifters that it would report them to the police unless they engaged in some kind of community service, that would still be extortion.
I agree. This is a good idea. And you are right that it requires a legislative fix. I work in an expungement clinic for pro bono and it seems like about half the clients there are trying to have either minor possession charges or shoplifting charges expunged from their criminal record. The computerization of criminal records and online access to public records means that everything about everybody is known, and when the economy sucks, that limits the ability of people with perhaps a single minor run in with the law from getting a decent job or a decent place to live, and this stuff can follow you forever.
Larry is right too, you can report a crime, but you cannot ask someone to do something under threat of reporting a crime.
Susan, I don’t doubt that a program could be established to divert first time offenders to some kind of educational regimen rather than criminal punishment. That happens all the time. Drugs, traffic violations, all kinds of things have that kind of diversion. But it has to be authorized by law. Private citizens (or companies) are not allowed to make up their own programs and use the threat of criminal prosecution to force people into those programs. It is simply the nature of government that government is authorized to use coercion under circumstances where individuals are not.
Now, about the police – I’m sure that police departments are happy to ignore minor crimes like shoplifting if there is no complaining party. The police (and DA) are effectively letting Wal-Mart decide whether to pursue prosecution. That makes the extortion problem even worse, because it gives Wal-Mart even more power to determine whether a shoplifter will be criminally prosecuted, which gives Wal-Mart even more leverage to coerce the shoplifter. Maybe the police shouldn’t have such a policy, but as a practical matter this kind of crime would be very difficult to prosecute without a complaining witness who will cooperate in the prosecution.
Well, as an attorney I try to find a way for my client to do what they want to do. Sometimes it takes some creativity. But if my client proposes to do something that is going to cause it legal problems, it is my duty to tell them that. You can say that I am the enemy of innovation, but I don’t see it that way. It is the law that is often the enemy of innovation. Politically, I am opposed to such laws in most circumstances. But it is my job to tell my clients what the law is, and not what I wish it was. Blaming me for stifling innovation is like blaming the weatherman for the snowstorm outside.
As Larry3435 says, it’s extortion.
Also, it’s not the job of a private industry to administer justice. Any thoughtful person should be able to envision all kinds of possibilities for abuse.
Saving the police money? This is vigilantism on a corporate scale. Lost sales tax revenues? Totally absurd.
Security of its inventory is the job of the shopkeeper. Their retail prices take losses into account. In other words, we the public pay to offset these losses. Walmart or any other retailer is free to cease operations in a given location or hire more security and/or take additional security measures . If a municipality finds that a local Walmart is taking up too much police effort, they can raise taxes. And what of the taxes businesses already pay?
Larry,
You’ve convinced me that my first glance position was wishful thinking.
The law is what it is.