Civil Recovery - not innocent until proven guilty anymore

[Jinn]

I was recently doing some research on tort law in the wake of so many discussions about 'tort reform' and I came across a section about "Civil Recovery" laws.

If you haven't heard about them before, 'Civil Recovery' is essentially a type of tort law that allows merchants to collect damages related to shoplifting, criminal damage, or simply the costs of "investigation" of shoplifting to anyone suspected of theft or damages, regardless of criminal liability. A well known case is that of Glenn Rudge:

Big Retail Chains Dun Mere Suspects in Theft - WSJ.com

After Miami handyman Glenn Rudge was accused of shoplifting an $8 set of drill bits at Home Depot, he thought he'd settled the matter when he showed his receipt to prosecutors and they dropped the charge.

But a few weeks later, a law firm hired by Home Depot began sending him letters demanding first $3,000, then a total of $6,000, implying he'd be sued if he didn't pay it.

This, to me, borders on racketeering. It flies in the face of the 'innocent until proven guilty' system that enables our rule of law, and I'm amazed to find out that all fifty states have some sort of civil recovery laws, and some federal installations like AX/PX have them.

The Accidental Thief - WSJ.com

When lawyers and debt collectors pursue alleged shoplifters for monetary penalties with letters and phone calls, retailers call it "civil recovery." But the people targeted by the practice see it as something else. They describe it as a humiliating and intimidating process that leaves them all but defenseless.

There is little oversight of a system retailers call "civil recovery," created by special laws passed in all 50 states. With no proof of theft, the retailers demand money -- often $200 but sometimes far more -- and promise to avoid suing if it is paid quickly. Laws vary by state, but in general, retailers can demand these sums even if the item at issue was worth far less and was quickly recovered and put back on the shelf.

Frankly I'm shocked this sort of thing exists, and that there isn't more outrage behind it. This is the sort of tort reform I could get behind. But what about the stores? According to the same articles above, "retailers last year lost an estimated $40.5 billion to "shrinkage" -- as the industry refers to shoplifting, employee theft, and other inventory losses -- up from $37.5 billion the year before."

I understand their need to recover damages for lost or damaged goods, and even to help pay for 'security agents' responsible for watching for theft. But I personally think it should be tied to the outcome of a criminal case. If the case is dropped, then the ability to collect civil liability should be too. It seems that retailers are given the ability to collect money in the civil system without any sort of regulation or legal authority. Whats to stop stores from interrogating you for 'stealing' (even if you haven't), and then sending you a claim for the costs of that 'investigation' under Civil Recovery? In the case of state law, they're allowed to take you to creditors; in the case of federal law, they're allowed to garnish your wages or even collect it out of a tax credit or refund due you from the IRS (as they did me - ZING!).

What do you think?

[yournamehere]

Personally, if it happened to me, I'd welcome the chance to see how a jury of my peers would rule; and how much in damages they would award me.

[Jinn]

Originally Posted by yournamehere

Personally, if it happened to me, I'd welcome the chance to see how a jury of my peers would rule; and how much in damages they would award me.

How would you bring the case? It's legal within the current tort law in all 50 states and in some federal jurisdictions.

[Willravel]

Wait, so this is legal? Holy shit.

If Home Depot tried to legally extort money from me, I don't know what I could do beyond paying. What legal recourse would I have? The only real recourse would be to do something illegal, like robbing a Home Depot in another state and then paying them off with that money.

[The_Jazz]

Jinn, torts have nothing to do with guilt. Absolutely nothing. Torts have to do with financial damages. Guilt has to do with criminal proceedings, which this isn't. It's an obvious civil action.

Were I Mr. Rudge, I'd call whoever wrote me the letter, inform them that I'm recording the conversation (Illinois is a 1 party state), tell them in no uncertain terms that if they have no valid debt and that as soon as their suit appeared, I'd immediately file a countersuit for malicious harrassment under the Fair Debt Collecting Act. It can be done by the individual in small claims court. That's all predicated on me doing absolutely nothing wrong, as it seems with Mr. Rudge.

Thing is, debt collectors, who are sometimes lawyers, are at the bottom of the pond. They're scum-eaters. Many of the people they go after are scum, and the debt collectors are rightfully pursuing them. But when they go to these extremes, there are federal laws in place to stop them.

Now, I've got no problem at all with companies going after actual criminals. I only get my dander up in cases like this, or when debt collectors do other things to find debtors.

[yournamehere]

Originally Posted by Jinn

How would you bring the case? It's legal within the current tort law in all 50 states and in some federal jurisdictions.

I'm no lawyer, but isn't it up to the plaintiff to take me to civil court to get the money, if I don't voluntarily submit to their extortion? As the defendant, I have the right to a trial by jury.

[Jinn]

You guys are missing the point; no suit needs to be filed with Civil Recovery -- you are given notice of an attempt to civil recovery in most states and if you fail to pay they take it to collections. In the case of federal civil recovery, they send you a notice of civil recovery and if you don't pay they take it from your IRS refund (if any) because the IRS is allowed to withhold money to settle other 'federal debts,' of which civil recovery is since 2002.

EDIT: Adding a link because I know that claim seems incredible:

http://en.wikipedia.org/wiki/Civil_R...s_(Shoplifting)

A conviction for shoplifting (theft) is not a prerequisite to the civil demand for damages by the retailer. The civil demand can be made and settled before a civil lawsuit is filed against the shoplifter in the appropriate civil court. A civil demand may be made by the retailer under most state laws whether or not a criminal prosecution has been initiated by the retailers' loss prevention personnel or local law enforcement.

[The_Jazz]

The thing about collections is that the debt holder has to prove that you owe the debt. Unless and until they do, you owe them NOTHING. Just because a debt collector says you owe doesn't mean that you do. And you have the right to dispute that debt.

Read the link I posted for someone who exploits stupid debt collectors for profit. Judges and juries don't really like debt collectors as a rule and don't like to side with them unless there's a good reason.

Seriously, Mr. Rudge could file suit himself in small claims court for a small amount (maybe under $100) and collect multiples of that from the debt collectors. What they're doing is illegal, and if you read the two articles you posted, Jinn, you'll see that they recognize that.

[Jinn]

I don't mean to be antagonistic, but I did read the articles I linked..

Lord & Taylor, for instance, never follows up civil-demand letters by suing suspected shoplifters, its loss-prevention manager said in deposition about a year ago, citing the cost of going to court. Lord & Taylor collected about $1 million in civil recovery from suspected shoplifters in a recent year, up from $850,000 the year before, the official testified.
...

Civil recovery has rarely faced legal challenge. A 1993 challenge to Ohio's civil-recovery process cited the federal Fair Debt Collection Practices Act. A U.S. magistrate said that law didn't apply because civil recovery wasn't an effort to collect a debt but "a settlement offer for potential tort liability."

It really doesn't seem that they think what they're doing is illegal; quite the contrary. They're defending it as a chance to settle a *potential* tort liability; if someone doesn't pay, they're collecting a payment without bringing a suit at all. And if someone refuses to pay, they can take them to collections for failure to pay a debt - again, without suit.

[Cynthetiq]

The thing is Jinn is that while it's illegal, the AG isn't pursuing it for whatever reason.

So just like running a red light is illegal, people do it until their caught and fined.

I'm with Jazz. I have a pair of collections agency calling me for some debt they believe I owe. I tell them to go fly a kite because I don't owe it and they need to prove it since the records they are pulling up are 15+ years old. Prove that it's me that owes the money. They cannot except to say, "You do owe the money." I call bullshit, send them a cease and desist letter and they sell my account to another collections agency. A couple years go by and I get a call again. Rinse and repeat.

[The_Jazz]

Jinn, companies do illegal things all the time. Wal*Mart (or any other big box retailer) has no legal right to check your receipt but they do it all the time. There's nothing especially illegal about claiming you owe a debt when you don't. If you're dumb enough to pay it, it's kind of an idiot tax in a way. It sucks to be them, but there's a very effective legal tool to get them to not only stop but to force them to pay you. The collection agency is the one that would most likely end up paying that penalty, but that's the cost of doing business. See my example above for that in action.

[Jinn]

The gaping hole in both of your arguments is when the organization is a federal organization. You can tell them to go fly a kite all you want, but then they just report you to the IRS, who is allowed to collect debts owned other federal organizations. And bam, it's taken out of your wages and/or your tax return.

[The_Jazz]

And Jinn, the hole in that argument is that the IRS doesn't collect for private entities. The IRS only collects for debts owed to federal agencies. Unless you're found guilty in court, which by all accounts above doesn't happen, there's no IRS involvement.

Or is there some federal involvement beyond the magistrate ruling against the Fair Debt Collection Act 17 years ago? That's the only mention I see. Otherwise, we're back where we started: if a private company incorrectly (for whatever reason) alleges you owe them money, you don't and you don't have to pay them shit. And you can collect penalties from them if they continue to pursue it without providing you with proof.

[Tully Mars]

Originally Posted by Cynthetiq

I'm with Jazz. I have a pair of collections agency calling me for some debt they believe I owe. I tell them to go fly a kite because I don't owe it and they need to prove it since the records they are pulling up are 15+ years old. Prove that it's me that owes the money. They cannot except to say, "You do owe the money." I call bullshit, send them a cease and desist letter and they sell my account to another collections agency. A couple years go by and I get a call again. Rinse and repeat.

I did this exact thing with AT&T for a number of years prior to moving to Mexico. So far no one has found me here, good luck with that. Bottom line was I didn't owe them money, never had an account with them. Just simply wasn't me. One thing I would add is make sure you keep an eye on your credit report and make sure it isn't recorded as a "bad debt" with any of the big three agencies.

[rahl]

Originally Posted by Tully Mars

One thing I would add is make sure you keep an eye on your credit report and make sure it isn't recorded as a "bad debt" with any of the big three agencies.

This is what worries me if a collections agency attempts to collect a debt. Doesn't it automatically affect your credit negatively when you go into collections? And if so, how can you rectify it?

[Hektore]

You can notify the reporting agency and have them remove the debt. They have to remove it unless the company reporting it can prove that you owe the debt.

Fair Credit Reporting Act - Wikipedia, the free encyclopedia

[Cynthetiq]

Originally Posted by rahl

This is what worries me if a collections agency attempts to collect a debt. Doesn't it automatically affect your credit negatively when you go into collections? And if so, how can you rectify it?

Originally Posted by Hektore

You can notify the reporting agency and have them remove the debt. They have to remove it unless the company reporting it can prove that you owe the debt.

Fair Credit Reporting Act - Wikipedia, the free encyclopedia

exactly. you can challenge what is listed in your credit report and the debtor must prove you owe the debt.

this is why they do not put it on your record, and they continue to sell it from one agency to another, so that they can keep calling you and keep calling you.