Introduction
Most shoplifters evade detection and many who fail are never formally punished. For decades, retailers battling theft have relied on a mixture of law enforcement and self-help, sending some suspected shoplifters to the station house and others to the street. Recently, a third option has emerged, raising basic questions about the interplay between public and private forces in American criminal justice. Some retailers now hand over shoplifting suspects not to the police but to a for-profit, specialist corporation like the Corrective Education Company (CEC).
This “retail justice company” extracts payment from the alleged offender in exchange for a “restorative justice” course and a promise not to pursue criminal charges. The retailer pays nothing; in fact, in some cases, it reaps a portion of each suspect’s payment.
“Retail justice” is becoming a big business. CEC’s clients, for example, have included Walmart, Abercrombie & Fitch, Bloomingdale’s, DSW, and Burlington Coat Factory.
CEC reports an enrollment rate of roughly ninety percent, yielding thousands of “students” each year.
It offers discounts and payment plans for suspects who cannot finance the entire $400 fee at once and “scholarships” for the poorest few.
CEC claims its program saves retailers time and money, relieves pressure on an overtaxed criminal justice system, and cuts recidivism by providing “life skills and motivation for reintegration.”
The City of San Francisco, in contrast, alleges that CEC is little more than an extortion racket preying on the city’s residents.
The Indiana Attorney General has reached the same conclusion,
and a private-plaintiff class has sued participating retailers and CEC personnel for violating the Racketeer Influenced and Corrupt Organizations Act.
There is no scholarly treatment, legal or otherwise, of this private “retail justice system.” Private dispute resolution is of course common on the civil side.
And civil enforcement sometimes stands in for criminal justice to rectify wrongs that violate parallel civil and criminal laws. Yet rhetoric imagining a state monopoly over enforcement of the criminal law persists.
This supposed monopoly is itself of relatively recent vintage.
And it has never been absolute. Consider, for example, the local diner that lets the neighborhood vandal repay a debt by washing dishes,
or the role of violent vigilantism in our national narrative.
Private adjuncts to criminal justice institutions are common, too, like diversion programs or private probation. What is novel here is the way “private justice”—wholly divorced from the criminal justice system—has become routinized and institutionalized in a mass, for-profit industry, with buy-in from criminal justice actors.
Seminal work by Professors Elizabeth Joh, Ric Simmons, David Sklansky, and others has documented the extent to which “private police” prevent and investigate crime and apprehend suspected offenders.
Separate research plumbs the private prison
and probation
industries. But private criminal adjudication and sanctions are terra incognita—or maybe El Dorado, mythical altogether.
“Shopkeepers do not always report those they have caught,” one recent article begins, “but we have never heard of a shoplifter and storekeeper agreeing to a payment beyond restitution to settle the matter confidentially.”
CEC and its competitors, on the storekeeper’s behalf, do precisely that.
This Article begins, then, as a case study in the routinized, private settlement of a particular type of criminal dispute. The subject offense—shoplifting—is a minor crime with “major economic and social consequences.”
The New York Times has called shoplifting “the nation’s most expensive crime.”
Retailers’ losses from shoplifting approached $18 billion in 2016, or almost $50 million every day.
The effects of shoplifting reach both far and deep. At least one in nine Americans shoplifts at some point in life;
more than ten million people have been picked up in the last five years alone.
Shoplifting is a “crime of moral turpitude” that can catalyze exclusion or deportation for a noncitizen offender.
And it famously triggered a life term for Gary Ewing, who left a pro shop with a trio of golf clubs lining his pants leg.
In addition to its parochial significance, this private justice industry raises and informs broader questions of legal theory and practice. The Article explores these questions, traveling from the local to the global across four parts. Part I begins with a social history of shoplifting and review of the pertinent criminological literature. The focus is on who offends, why they do it, and how industry and the legal system have traditionally responded. Each of these inquiries informs the normative analysis the Article later undertakes: The “who” identifies the population principally affected by retail justice, necessary, among other things, to weigh distributive effects. The “why” helps predict how shoplifters would likely react to various deterrent measures. And the “how” reveals the baseline against which to evaluate retail justice.
Part I then documents how retail justice has transformed the practice of shoplifting enforcement to date. Shifting legal and economic pressures make the retail justice universe highly dynamic. The facts described here are best understood as a snapshot of this nascent industry and its most prominent pioneer. By the time this Article goes to print, in fact, CEC may be defunct.
There are signs of reincarnation, however,
and CEC’s principal competitor continues to do business.
Considering the forces that gave rise to retail justice in the first place, evolution, not extinction, is the most probable future course.
Part II conducts a preliminary evaluation of the retail justice system. If the media’s reception is any indication, the very concept will make some readers squirm. Likewise, the sole judicial decision on point characterizes the “irreducible core of CEC’s program” as “textbook extortion under California law.”
These views are understandable but, upon deeper reflection, more problematic than they first appear.
The “criminal compromise agreement” (or “restorative justice agreement”) the parties sign is a contract that, according to the standard Pareto assumption, should make them better off.
The Pareto assumption fails, however, when the conditions for efficient contracting are absent—if suspects are coerced or misinformed, for example, or if negative externalities, such as insufficient (or inefficient) general deterrence, result. Part II exhaustively—yet tentatively, given our incomplete understanding of this evolving industry—analyzes these potential “market failures,” sidelining some and flagging others for lawmakers’ attention. Part II also considers the potential distributive effects of retail justice—whether we should expect its harms and benefits to be visited equally upon different social groups. Part II’s recurring theme is that, while retail justice may not be ideal, it may still be preferable to criminal justice. Private justice, in fact, is the predictable result of, and a potential palliative for, aggressive policing and harsh criminal penalties.
That is not to say the California court was wrong in concluding that retail justice meets the legal test for extortion, or blackmail. After all, the retailer allows the suspect to pay money in exchange for a promise not to report a crime. The justifications for criminalizing blackmail, however, do not support a ban on retail justice. Even if retail justice is blackmail, in other words, it should not be illegal. Regardless of what one thinks about blackmail generally—a question probed in an extensive legal and philosophical literature—the reasons for its prohibition are at their weakest in this setting. This argument plows no new ground. But it does show why the normative debate about blackmail matters more than previously thought. Rather than an occasional victim who seeks compensation by threatening to accuse the perpetrator of a crime, retail justice is a burgeoning, large-scale industry. Primarily “academic” debates about blackmail are academic no longer.
The upshot of Part II is that the normative valence of retail justice depends upon empirical facts about its implementation and the environments in which it operates. Rather than ignoring retail justice or trying to stamp it out, lawmakers can direct their efforts to ensuring that it works fairly and efficiently. Part III briefly makes recommendations toward this end, focused on retail justice companies’ communication with suspects, retailers’ crime-prevention initiatives, and the collection and reporting of aggregate crime data that retail justice masks.
Part IV extends. It demonstrates how the study of private justice generates fresh perspectives on important criminal justice issues, such as the understudied role victims play in preventing crime.
Well-oiled criminal justice institutions, the Article contends, may actually discourage some victims from investing in socially desirable crime-deterring precautions. In other words, we may want the criminal justice system to be costly for victims when it would be cheaper for victims to prevent crime by taking precautions than for the public authorities to capture and punish offenders. We also want to concentrate public resources where they will not reduce private incentives to take precautions, such as when victims cannot afford precautions or will suffer irreparable harm from crime, and thus will purchase precautions regardless of public enforcement.
Part IV also highlights what retail justice teaches us about police and prosecutorial preferences. Critics claim that private justice usurps the prosecutor’s charging prerogative. Yet retail justice companies operate with the knowledge and (at least tacit) approval of criminal justice authorities. Where retail justice reigns, prosecutors still exercise discretion—they simply do so at a wholesale rather than retail level. The arrangement is more decriminalization than abdication. That prosecutors are willing to forgo so many easy cases, moreover, complicates academic models of prosecutors who seek to maximize convictions or conviction rates.
The same is true for police and arrests.
Finally, Part IV begins to generalize and speculates about the future of private justice. CEC’s ambitious “vision is to reinvent the way petty crimes are handled, starting with retail theft.”
Part IV considers the conditions that conduce to a model of “offender-funded” private justice like CEC’s, to begin to identify where else the model might work. An “offender-funded” model is best supported when a small group of victims each suffers a large number of low-level, nonviolent harms by known offenders, and the existing options for deterring those harms are flawed. Part IV also suggests that other large institutions, like universities and employers, might support a distinct model of private justice that outsources adjudication rather than sanctions.
In the end, understanding private justice sharpens our view of the criminal justice system. And understanding the criminal justice system—in all its manifold institutions, including the unconventional ones at its margins—is an essential step toward fixing it.
To be sure, private justice sits uncomfortably in the contemporary criminal justice landscape. Its ends, however, may turn out to justify its means. After all, the public system’s severity is the private system’s sustenance. The way out of private justice, for those who so desire, is not to squelch it but to starve it. Mollifying the criminal justice system would reduce both suspects’ demand for private alternatives and the ability of private intermediaries to extract rents in the form of hush money.
I. The Path to Private Justice
Leading economic and criminological theories struggle to explain the incidence of shoplifting because, unlike many crimes, shoplifting steamrolls race, class, age, and gender lines.
To sketch out a sense of who shoplifts and why, section I.A thus begins with a brief social history of shoplifting and overview of the criminological literature. This discussion identifies the individuals potentially affected by retail justice and helps to predict how they will react to the incentives retail justice, or its alternatives, provide. Section I.B describes how retailers and criminal justice authorities have traditionally responded to shoplifting, identifying the baseline against which to evaluate retail justice. Section I.C details how retail justice works and what it claims to accomplish.
A. Who Shoplifts and Why?
A caveat is required at the outset. It is difficult to determine, at any point in history, who is shoplifting and how much. Experts draw inferences from three imperfect sources: store apprehension statistics, criminal justice data, and self-report studies. Changes in the first two measures may reflect shifts in either commission or detection of shoplifting. Self-report studies may be more reliable, though respondents’ incentives to over- or underreport may vary with cultural norms (over time or among social groups) or even the manner in which a survey is administered.
Specifically, every era since the 1870s has experienced a supposed shoplifting “epidemic.”
Yet it is unclear, in each period, whether people were shoplifting more or retailers were catching them more often. Similar difficulties plague the “who” question: There is a “range and variety of selective factors that bring about the [apprehension] of a shoplifter and perhaps bring him to official attention.”
As one commentator put the point, due to “self-fulfilling prophecies” about criminality, “the shoplifting statistics ‘created’ by security personnel may not accurately reflect shoplifting reality.”
These difficulties are handled in two ways. First, when possible, multiple data types and sources are used to triangulate the facts. Second, when sources conflict, descriptions are hedged accordingly.
1. A Century of Petty Theft. —Shoplifting first captured public attention shortly after the Civil War, as department stores proliferated.
In this new retail setting, shop owners could no longer monitor the entire premises, forcing them to rely on clerks who had relatively weaker incentives to prevent theft. At the same time, customers were newly allowed to browse unsupervised and goods were moved to open display, making them easier to secret away.
Women were thought to do most of the pilfering.
“[F]emale fashion,” it was said, “afforded a lot of spacious hiding places for articles,” giving female thieves a technological advantage over men.
Doubtless more important, department stores successfully cultivated an almost exclusively female customer base.
Women charged with shoplifting often “accused the stores of permitting too much freedom: they became ‘over excited’ and over stimulated in the large stores[,]” which afforded them the “‘deplorable liberty’ to touch everything.”
Some medical experts agreed—items on open display, they argued, were temptations “better than Satan himself could devise.”
These women, moreover, were increasingly “well-to-do, of good character.”
Many retailers overlooked petty thefts by wealthy women or allowed the offenders to pay their way out of trouble.
Kleptomania—a “distinctive, irresistible tendency to steal,”
thought principally to afflict women—came in and then out of fashion as a defense.
Yet all the way into the 1950s, the middle- or upper-class woman remained the archetypal offender.
During the 1950s and ’60s, shoplifting gradually came to be seen as an adolescent problem, initially still concentrated among females in the middle and upper classes.
“[T]he under-21 group,” wrote one reporter, was then “on the greatest shoplifting spree in our history.”
Abbie Hoffman’s Steal This Book ushered the trend into the 1970s,
when, for the first time, researchers also began to find that male offenders outpaced females.
In the 1980s, the number of thefts known to the police skyrocketed, though the causes are unclear.
Early research on the racial and ethnic breakdown of shoplifters is scarce. Many stores did not collect (or release) these data and the premier shoplifting datasets excluded them.
A handful of studies from the 1970s and ’80s found similar patterns of shoplifting activity across racial groups of youth.
A single self-report study on adults found higher levels of general theft behavior among nonwhites than whites.
2. Contemporary Evidence. —Shoplifting remains widespread today—recall that more than ten percent of the population has shoplifted at least once, generating $50 million in losses each day.
On the “who” question, the modern view may consist of the unhelpful observation that “there is no ‘typical shoplifter.’ . . . [S]hoplifters come from varying social, age, and economic groups.”
Very likely there is geographic variation as well. Nevertheless, the best data support a few tentative generalizations. Two sources are especially useful: (1) sociologist Lloyd Klemke’s review of the social science literature through 1992; and (2) the National Epidemiological Survey on Alcohol and Related Conditions (NESARC), a large-scale, nationally representative survey from 2001 to 2002.
First, “there is a great deal of consensus that shoplifting is most frequent in the early part of the life cycle and that it declines as individuals move through the life cycle.”
NESARC, for example, found that two-thirds of shoplifting cases occur before age fifteen.
Second, contemporary evidence “appears to overwhelmingly support the conclusion that males are typically more active in shoplifting than females.”
NESARC found that nearly sixty percent of shoplifters were male.
Third, “racial and ethnic patterns of who shoplifts” seem to “vary dramatically in different places and times.”
“The limited research on race and ethnic variations in shoplifting,” Klemke finds, “suggests that only minor differences are evident in the population at large.”
NESARC shows something slightly different: “Native Americans had higher odds [of shoplifting] than whites, although blacks, Hispanics, and Asian Americans had lower odds of shoplifting than non-Hispanic whites.”
Native-born Americans also reported shoplifting at higher rates than those who are foreign born.
Finally, the bulk of the evidence suggests that middle-class individuals are most likely to shoplift. In NESARC, shoplifting “was significantly more common in individuals with at least some college education, among those with individual incomes over $35,000 and family incomes over $70,000, and . . . less common among those with public insurance.”
Still, Klemke does find “slight to moderate inverse relationships between social class and shoplifting behavior,” suggesting the truly wealthy are infrequently involved.
As for the cause, the evidence is mixed. Klemke, a sociologist, reads the evidence to support sociological explanations, while the psychiatrists interpreting NESARC emphasize psychiatric ones. “[I]t is highly likely,” Klemke begins, “that some shoplifters fit the pathological conception, others are best seen as societal victims, and many others fit the frugal customer conception”—that is, their motivation “‘is the same as for normal shopping: the acquisition of goods at minimum cost.’”
But in general, Klemke writes, recent studies “conclude that most shoplifters are characterized by relatively normal psychological health and personalities that are indistinguishable from non-shoplifters.”
They are not professionals “boosting” goods for resale. Klemke concludes that sociological theories stressing the individuals’ relationship to their environment can best explain who offends.
The NESARC data, however, challenge the notion that shoplifters resemble nonshoplifters along psychiatric dimensions. Researchers found that “[t]he prevalence of all antisocial behaviors was higher among individuals with a history of shoplifting than among those with no self-reported history of shoplifting.”
And because many of the behaviors associated with shoplifting can be “understood as a manifestation of impulsivity,” the authors concluded, “our findings are most consistent with the understanding of shoplifting as a behavioral manifestation of impaired impulse control.”
B. Private and Public Enforcement of Shoplifting Laws
As societal understandings of who shoplifts and why have evolved, so have industry and state responses to the crime. This section traces the path that led to the creation of a market for retail justice companies. As is shown, the enforcement model has long been shot through with ambivalence and discretion. Recognizing this reality is crucial when evaluating the changes that retail justice has wrought.
1. Ambivalence and Innovation. — From the earliest public reports of shoplifting, retailers have been fickle and ambivalent about formal law enforcement. Shoplifting hurts the bottom line, but overly aggressive enforcement can too. Wrongful arrests can trigger lawsuits,
and even legitimate arrests might hurt business by scaring away customers who fear being falsely accused.
Many Progressive Era retailers, for these reasons, pressed charges only selectively.
They hired store detectives to help spot known shoplifters and pooled information with other stores.
Although retailers periodically resolved to toughen up,
they mostly released first-time suspects after making a record of the offense.
Wealthy women, in particular, were often able to buy their way out of prosecution.
By the 1950s, retailers could take advantage of new loss-prevention technologies like closed-circuit cameras.
States, too, began to enact “merchant’s privilege” laws, shielding retailers from suit for false arrest as long as probable cause supported a suspect’s apprehension.
Within ten years, almost every state had one.
As crime rates then ballooned in the 1960s and ’70s, states raised criminal penalties
and enacted “civil recovery” statutes authorizing retailers to obtain super-restitutionary damages.
Arrests rose, too,
despite lingering retailer ambivalence about justice-system involvement.
By 1988, thirty states had passed civil recovery laws, which typically granted retailers a substantial civil penalty in addition to actual damages.
Retailers—or specialist firms that serviced them—sent formal demand letters to suspected offenders, followed, when necessary, by suit in small claims court.
For some retailers, civil recovery replaced criminal prosecution, but others sought both remedies simultaneously.
A 1998 survey found that retailers employed civil recovery around thirty percent of the time—roughly half the rate at which they sought criminal prosecution.
Today, every state has a civil recovery statute. The authorized recovery is typically $200 to $300 but can exceed $1,000, not counting attorney fees.
2. The Persistence of Discretion. —Retailers today remain reluctant to call the police, often opting instead to exploit their property rights to sanction suspected thieves.
But why? Theft, after all, is a classic, black-letter crime—a perfect fit, one might think, for criminal-justice-system attention. And retailers plainly regard shoplifting as a major trouble.
A few possibilities have been mentioned already, such as fear of suit for false arrest or of alienating customers.
Surely, though, these concerns are diminished by strong merchants’ privilege protections and improved surveillance capabilities that lower the risk of erroneous accusations. Store security also have ways to minimize any visible disturbance when apprehending suspects.
Part II explores this question more deeply. A quick preview here, however, helps identify the problem that retail justice companies claim to solve.
The starting point is to appreciate the enormity of the challenge shoplifting presents. The sheer number of incidents in some major retailers is staggering. In four Florida counties, for example, Walmart stores—which, for some time, employed a “zero tolerance” policy—called the police 7,000 times in one year on suspected thefts.
A single Walmart store in Tulsa averages over 1,000 calls per year.
A flow of cases this large has two principal effects.
First, it strains criminal justice system resources. “It’s hard to dedicate the manpower to process misdemeanor shoplifters,” explained one police administrator.
A “typical theft costs the average police department over $2,100 to process,” according to one account.
Response times can be slow.
Nor is the bottleneck in the police alone: “There are courts in some of our markets,” reported one major discount retailer, “that tell us not to bring them our casual shoplifters.”
Whatever the reason, “[f]or the criminal justice system players, low-level retail theft often occupies a large percentage of misdemeanor caseloads, clogging the desks of everyone involved.”
Not all shoplifting offenses are misdemeanors, moreover—in some states, the felony threshold zooms by quickly.
Second, calling the police in every case taxes retailers as well. “By involving the public criminal justice system, the [retailer] loses control over the process, and the costs—both in time and money—to cooperate with the public police and courts can be significant.”
Retailers are reluctant to have their employees miss work to meet with the police or testify in court, for example.
All the more so because the retailer receives no direct benefit from the offender’s punishment.
3. The Patterns of Discretion. — In the absence of retail justice, the fate of many shoplifting suspects is thus determined not by an exercise of police or prosecutorial discretion but rather by the retailer itself when deciding whether to alert the public authorities. On what basis do retailers make these consequential decisions?
Retailers have long employed “no prosecution limits,” contacting the police only when the stolen goods exceed some minimal value threshold.
Even Walmart, which, as noted, famously employed a “zero tolerance” policy for many years, eventually adopted a dollar-value cutoff—before contracting with retail justice companies.
Strict cutoffs aside, (admittedly dated) research finds that the value of the suspect’s take powerfully predicts whether the case goes public.
The quality of the evidence matters, too, presumably because retailers are reluctant to incur the criminal justice system’s costs when conviction is uncertain, and because they continue to fear liability for wrongful arrest.
Researchers disagree on whether and how personal characteristics of the suspect play a role.
All agree that women and men are referred to the police at similar rates.
Some have found that juveniles are treated leniently.
The evidence on race, however, is sharply conflicted.
Class may influence retailer decisions as well. One of the most recent academic studies found that poorer suspects are referred to the police more frequently.
The motivation, however, may be neither animus toward the poor nor empathy for the affluent. The study’s authors conclude, instead, that “[s]tore police skim the affluent for civil recovery and ship the less affluent to the public criminal justice system.”
Retailers, in other words, may view civil recovery as the first-best deterrent sanction and resort to criminal justice, a second-best, only when civil recovery will be ineffectual because the suspect is insolvent. In this context, criminal law, just as economic analysis prescribes, essentially functions as tort law for the indigent.
In fact, in a controlled, experimental setting, with civil recovery out of the picture, retail security investigators were more likely to refer clean, well-dressed offenders for prosecution than dirty, poorly dressed ones.
“In accounting for this,” the study’s authors explain, “investigators commented that they were more likely to be sympathetic towards a shoplifter who appeared to need what he stole than towards a shoplifter who appeared to be quite able to pay for the items involved.”
Similarly, customers in a different controlled study reported well-dressed shoplifters to store personnel twice as often as poorly dressed ones.
C. The Rise of Retail Justice
Where many observers saw only a failing system of law enforcement—overtaxed, cumbersome, ineffectual, possibly discriminatory, and overly harsh toward those snagged in its net—entrepreneurs saw an opportunity for profit and Pareto improvement. The basic idea can be simply stated: Retail justice offers private settlement of criminal complaints. Instead of calling the police, the retailer looks to a retail justice company, which extracts payment from the alleged offender in exchange for “rehabilitative education” and a promise not to file a criminal complaint. The payment—and possibly the “restorative justice” course—reduce the likelihood that the suspect will offend in the future, providing the same (type of) benefit to the victim that public law enforcement would. The payment and education are nonetheless preferable, from the suspect’s perspective, to contact with the criminal justice system. Neither the victim nor the public authorities spend anything. One leading company touts that the “program enables first-time offenders to correct their mistakes and avoid prosecution,” allowing retailers to “reallocate loss prevention resources” and law enforcement to “focus their efforts in more effective ways for their individual communities.”
Here is how the process works at what appears to be the leading outfit, CEC. CEC is a Utah-based corporation with a national presence, founded by a pair of Harvard Business School graduates in 2010.
CEC has venture-capital backing and reportedly took in $7.6 million in 2017.
CEC also boasts an impressive client list, which reportedly has included Walmart, Bloomingdale’s, DSW, Abercrombie & Fitch, Burlington Coat Factory, Whole Foods, American Apparel, Goodwill Industries, Sport Chalet, Kroger’s, Sportsman’s Warehouse, and H&M.
Store management—not CEC personnel—retain responsibility for monitoring the retail premises and apprehending suspected shoplifters.
Once apprehended, suspects are brought to a private room and screened for eligibility, typically including a criminal history check.
Those who qualify are given the option to watch a CEC video explaining the company’s “restorative justice” program.
They are told that, if they choose not to complete CEC’s program, “CEC will refer this matter back to the retailer,” which “may pursue other legal rights to seek restitution and resolve this crime at their discretion.”
Signing up costs $500, or $400 for those who pay in one lump sum, with “scholarships” available for the poorest few.
No money changes hands when the contract is signed. Suspects who agree to enroll are free to leave and have seventy-two hours to think it over, consult with a lawyer (if desired), and then pay a $50 deposit.
Even after paying the deposit and beginning the program, suspects can terminate the relationship and receive a partial refund.
For years, suspects who enrolled also signed a “Criminal Compromise Agreement” and admitted guilt.
Today, the contract is styled as a “Restorative Justice Agreement” and no confession is required.
The agreement states that, if the suspect completes the program successfully, the retailer “will consider the matter closed for all purposes.”
In particular, the retailer promises not to “pursue the matter with law enforcement” or seek civil recovery.
The contract cautions, though, that “law enforcement is not bound by this agreement” and covenants that, if the suspect is prosecuted notwithstanding successful completion of CEC’s program, CEC will refund all fees collected.
More than ninety percent of the individuals presented with the choice during CEC’s first four years opted to enroll, generating approximately 20,000 participants. An enrollee’s first actual contact with CEC is typically a call from a “life coach” who reaches out to “tell them about the course and make a payment plan.”
The core of CEC’s course, which most “students” take online over six to eight hours, was developed by a clinical psychologist and adapted by CEC “for the purpose of rehabilitating shoplifters.”
It “focuses on helping accused shoplifters develop life skills, so that they are less likely to reoffend in the future.”
On CEC’s own account:
There’s a chapter that helps them understand what could have happened if they’d gone through the traditional process. But after that, we [CEC] give them skills and the ability to actually go out and get a job . . . . These people that are getting apprehended typically haven’t been taught the life principles of how to build a resume, how to be presentable in an interview. They haven’t been given the skills to understand what a budget is, never mind how to manage their money. So as they’re going through the course, they build their own resume, they build their own budget, a work-out plan, an eating plan.
The retailer, for its part, saves time processing suspects, says CEC. “Studies have proven a 40% reduction in processing time when using CEC’s platform,” the company claims.
Initially, the retailer also collected a cut of CEC’s fee, around $40, each time it presented a suspect who enrolled.
CEC charges the retailer nothing for its services, which it touts as being “completely offender funded.”
“Law enforcement agencies have also noticed our impact,” CEC maintains, “seeing as much as a 40 percent drop in the number of calls for service in their communities.”
Journalists have found even larger effects.
CEC proudly advertises success in battling recidivism, claiming that it “reduces the likelihood that a shoplifter will come back to the store to steal again.”
“Less than 2% of shoplifters who complete the CEC educational program reoffend” at one of CEC’s retailers, “compared with estimates as high as 80% for those who do not participate in a restorative justice program.”
“CEC’s educational programs not only addresses [sic] behavioral issues, but provide life skills and motivation for reintegration,” the company’s website explains.
CEC is “continually reforming generations and changing lives, one day at a time,” it adds.
Indeed, CEC even offers testimonials from “graduates” who claim the program helped them “create new values, attitudes, and goals” and “achieve self-responsibility and self-worth.”
Contracting with CEC commits retailers to sorting cases according to predetermined characteristics, without any on-the-scene discretion. CEC permits retailers to set eligibility criteria including criminal history, age, and item value, but excluding race, gender, language ability, or related characteristics.
Suspects who are too young or too old,
and those whose thefts are too small, may be released, for example, while suspects who steal big-ticket items may be referred to the police. Fewer than one in ten CEC students is a juvenile.
Retailers set these criteria at the corporate level and embed them in a “black box”; the security guard simply enters basic information into a computer application and is instructed how to proceed.
There is less public information about CEC’s competitors, like Turning Point Justice (TPJ), though enough to discern that the basic model seems similar.
TPJ was founded in 2012 by a former district attorney from Salt Lake County, Utah, who had worked at CEC.
In an apparent effort to distinguish itself from CEC, TPJ touts a “restorative justice” program developed by the National Association of Shoplifting Prevention and used by courts—as part of postarrest diversion programs—for over twenty years.
Suspects pay $400 to $425 to enroll with TPJ, roughly $50 to $75 of which is designated “restitution” and sent to the retailer.
II. Evaluating Retail Justice
This Part pivots from description to evaluation. Sections II.A through II.C examine whether retail justice seems likely to harm suspects, victims, or the broader public, respectively. Throughout, retail justice is compared to the real criminal justice system, warts and all, though potentially significant jurisdictional variation is necessarily (and unfortunately) obscured.
Section II.D then explains why leading theories for prohibiting blackmail do not justify a ban on retail justice.
A note on structure: There is no intellectual consensus on why blackmail is illegal. Myriad competing theories emphasize disparate values and interests. Accordingly, rather than address the blackmail question at the outset, the normative issues are taken up in their most natural order. This discussion nearly resolves the blackmail problem, leaving only a few loose ends to tie up in section II.D.
A. Are Suspects Worse Off?
Retail justice companies, critics argue, prey on vulnerable consumers, wielding the threat of criminal prosecution to extract confessions and hefty enrollment fees. The profit motive, moreover, creates incentives for overzealous enforcement, the brunt of which disfavored groups or, worse yet, the innocent, will bear.
Indeed, the City of San Francisco asserted the interests of its residents when it sued CEC in 2015, seeking to halt its operation.
And the trial court recently accepted the city’s argument.
But are shoplifting suspects really better off without the retail justice alternative?
This section begins to work through this question in three stages: First, is retail justice a “bad deal” for suspects in an economic sense, such that we should reject the standard assumption that, because suspects choose it, it makes them better off? Second, even if retail justice makes suspects better off in general, does it disadvantage particular groups of suspects, such as the poor or people of color? Third, does the retail justice model encourage overenforcement of shoplifting laws, potentially even ensnaring suspects who are legally or normatively innocent?
1. Economic Efficiency: Is Retail Justice a “Bad Deal” for Suspects? —The “standard Pareto argument,” applied here, is that retail justice “improves the situation” of the suspects who choose it.
The agreement suspects sign to enroll with CEC, for example, is formally an offer to contract, which suspects are (at least ostensibly) free to reject. Sure enough, in marketing their services, retail justice companies emphasize how they help offenders by sheltering them from the criminal justice system and extending to them the proverbial “second chance.”
The standard Pareto argument fails, however, when the conditions for efficient contracting are lacking.
Four possibilities are considered here. The first three correspond loosely to contract law’s concepts of undue influence, misrepresentation, and mistake of fact. The last entertains the notion that, even if retail justice benefits suspects individually, it harms them as a class by exploiting a collective action problem among them. Perhaps surprisingly given the demographic data reported above, fewer than ten percent of the “students” at one major retail justice company are juveniles.
The following analysis therefore assumes an adult suspect, remaining agnostic on the potentially quite different juvenile case.
a. Undue Influence. —“Free consent is . . . a predicate condition of presuming mutually valuable exchange.”
To many observers, this is the principal problem with retail justice: Suspects pay the retail justice companies’ fees only under serious pressure from the threat of arrest and criminal prosecution. There is truth to this critique; shoplifting suspects face an unenviable dilemma. It does not follow, however, that they are worse off for being offered the choice or that retail justice companies should be prohibited from offering it to them.
“Even highly coercive threats are present in many types of legitimate economic bargaining.”
Duress is unlawful, but true duress occurs only when the “offeror” “manufactures a false choice for the offeree”: “your money or your life.”
Retailers, though, are perfectly free to call the police on suspected shoplifters. The choice is not “false” in the relevant sense. The ultimate source of pressure on a suspect is neither the retailer nor the retail justice company but rather the erratic and draconian criminal justice system the suspect is desperate to avoid.
Yet unlawful coercion is not limited to duress alone. When circumstances suggest that the pressured party acted under the domination of another and that his assent “does not reflect his preference” or is “contrary to self-interest,” the law may find that “undue influence” taints the deal.
This does not seem to describe the basic retail justice landscape, however.
Consider the choice from the perspective of a typical guilty suspect. The suspect must weigh the cost of enrolling with a retail justice company and completing the required course, on the one hand, against the expected consequences of contact with the criminal justice system (and civil recovery), on the other. Arrest is not guaranteed—one recent figure pegs the arrest rate for shoplifting nationwide at fifty percent
—and charges may never be filed. But consequences for the unlucky fifty percent include a full search of the suspect’s person and belongings,
along with the physical danger
and collateral consequences of arrest
and preventive detention
(even if she is never prosecuted
); a dizzying array of costs and fees (even if she is indigent);
and the possibility of conviction and punishment (ranging from days to years in prison and hefty fines),
with additional collateral consequences.
It would be perfectly rational for self-interested suspects to prefer the retail justice option. All the more so if they are risk averse and thus benefit from the certainty retail justice provides. In fact, it would be similarly rational, if tragic, for innocent suspects as well. While the probability of prosecution and conviction should be lower for an innocent suspect, they are not negligible,
and the consequences of arrest are just the same as for the guilty in most jurisdictions. Indeed, we have understood since Professor Malcolm Feeley’s famous tome that, for many accused misdemeanants, “the process is the punishment.”
Note that, despite the foregoing analysis, this conclusion does not necessarily depend on fine empirical judgments about the cost of enrollment or the likelihood of arrest or prosecution in the absence of retail justice. On one leading account of coercion, a proposal is coercive only if it threatens to make its recipients worse off than they would have been in the “morally expected course of events.”
Yet the maximal threat retailers (acting through retail justice companies) could make is to call the police on everyone who declined to enroll. This would entail no rights violation, however, and no threat to make suspects worse off than they are morally entitled to be. Shoplifting suspects have no moral entitlement to a particular probability of arrest or prosecution and no moral complaint if retailers were to pursue charges in every case.
This also means that not until the price of “tuition” exceeded the cost of actual criminal justice sanctions could we infer that retail justice “students”—most of whom we would expect to reject the offer at this price—were getting a raw deal.
Notice that the criminal justice system’s severity is the fertile soil that nourishes the retail justice alternative. Public choice theory predicts as much. As Professor Keith Hylton has explained in a related context, “[a] system of harsh punishments encourages rent-seeking—for example, bribe-taking—on the part of law enforcement officials.”
“As the harshness of penalties increases,” Hylton continues, “law enforcement agents have greater leverage with which to seek bribes, which can be demanded of the guilty and the innocent alike.”
Hylton is writing about public law enforcement agents, but private agents—with the power to stave off the public ones—can extract these rents as well.
b. Misrepresentation. — Retail justice companies boast about the transformational power of their “restorative justice” programs—which, they say, drive down recidivism—even posting testimonials from “students” describing their reformations.
These claims register as naïve, if not disingenuous. The pertinent “student” population, recall, has been cleansed of most repeat offenders. Multiple studies have found that shoplifters seldom reoffend after their first apprehension,
suggesting the baseline rate of recidivism may be low. Of those who do steal again, most will escape detection.
Estimates of recidivism based on subsequent apprehension will therefore understate the true rate, potentially severely.
To be sure, some CEC “students” are probably more serious criminals who have managed to keep their records clean. But the evidence suggests that rehabilitating this population is an enormous challenge.
An eight-hour online course is no brace against the deep-seated personal and structural forces that precipitate serious criminality.
Nor, for what it’s worth, does CEC’s course appear to incorporate even the most basic elements of the “restorative justice” movement in whose flag it is wrapped.
All this raises the possibility that retail justice companies misrepresent the benefits they deliver in exchange for the fees they collect. If any such misrepresentation is inducing suspects to enroll, the Pareto assumption (that enrollment benefits suspects) may be misplaced.
It seems doubtful, however, that this is actually the case. More likely, the retail justice companies’ claims about recidivism are immaterial to suspects’ decisions to enroll. Reliance is likely lacking. Indeed, in attacking CEC’s business model, San Francisco alleges that people pay CEC’s fees for no other reason than to avoid contact with the criminal justice system.
That hardly suggests suspects are being hoodwinked—quite the contrary. If suspects do not expect anything of value from the course—and would pay the fees even if no course were offered, for instance—then the retail justice companies defraud them of nothing if the course turns out to be worthless.
It is worth acknowledging that an emerging literature finds that training in “noncognitive” skills may generate large reductions in crime under certain conditions.
It’s not clear from available evidence that CEC’s courses incorporate this know-how. But it does raise the possibility that some forms of short-term “education” could have crime-reducing effects—a public good with positive externalities. We would expect the market to undersupply a good like this, making the normative question whether the state ought to provide a subsidy.
c. Mistake. —A third potential “market failure” that could undermine the efficient-contracting assumption stems from asymmetric information. Maybe suspects choose retail justice, the argument goes, because they harbor misconceptions—which the retail justice companies exploit, or even foster—about their expected sanctions in the criminal justice system, particularly as first-time offenders.
Worse yet, some critics argue, retail justice companies afford none of the procedural rights criminal defendants enjoy—in particular, no judicial oversight and no assistance from counsel who might help them assess their odds before paying to enroll.
If suspects understood the prosecutor was unlikely to pursue charges, for instance, they would have little reason to pay the fee. Indeed, San Francisco’s legal theory hinges partly on the purported leniency of its criminal justice system, which, it says, belies the threatening messages CEC delivers to shoplifting suspects.
(CEC appears to have tempered its messaging since the lawsuit was filed, now saying less about what suspects can expect if they decline to enroll.
)
This argument suggests an important limit on the circumstances in which retail justice can be assumed beneficial based on suspect choice. The more retail justice companies exploit the misapprehensions of their “students” about the criminal justice system, the better the case for regulating their activity. The risk may be highest where local justice is most lenient, suggesting, among other things, that retail justice companies might wish to tailor their messaging to local legal context.
The point should not be overstated, however. Even factoring in the possibility of diversion, nonprosecution, and other channels of mercy, criminal justice system contact in most jurisdictions is something to be feared and avoided at virtually any cost. An arrest alone can be devastating, even in San Francisco.
As for procedural protections, we ought not to lionize this aspect of the criminal process either. Most misdemeanor prosecutions, argues Professor Alexandra Natapoff in her searing exposé, “baldly contradict the standard due process model of criminal adjudication,” lacking “the evidentiary and procedural protections that are supposed to ensure the guilt of the accused.”
Perhaps most shockingly, there is “compelling evidence that . . . petty offenders in particular[ ] often do not get counsel even when they are legally entitled to it.”
Those who do get an attorney may receive only a few minutes of consultation before entering a plea.
Judicial oversight is scarce.
Yet the collateral consequences of conviction attach just the same.
It may well be that more people underestimate than overestimate the criminal justice system’s horrors.
d. Collective Action / Externalities. —Finally, it may be that, while any particular suspect, viewed in isolation, benefits from an expanded choice set, the class of suspects as a whole is actually harmed. That is, retail justice companies may appear to help suspected shoplifters only by exploiting a collective action problem that prevents them from banding together in resistance. Professors Oren Bar-Gill and Omri Ben-Shahar have modeled the point in the plea bargaining context.
The basic intuition is that, if all defendants could agree to insist on trial, they would overwhelm the criminal justice system and prosecutors would be forced to forgo prosecution in many cases.
As Bar-Gill and Ben-Shahar note, “Plea bargains are contracts with externalities: each defendant who accepts a plea frees prosecutorial resources to pursue other defendants.”
In fact, Bar-Gill and Ben-Shahar’s argument may in some ways be stronger in this context than in its original setting. Bar-Gill and Ben-Shahar rightly acknowledge, in the plea bargaining context, that prosecutors’ budgets are endogenous and may increase if plea bargaining were abolished, allowing prosecutors to pursue more cases.
In the context of retail theft, we can actually observe the counterfactual—the world without retail justice. We know that, in the absence of retail justice, retailers and prosecutors in fact have declined to prosecute many suspects.
At the same time, the arrest rate in this counterfactual world is still fairly high—fifty percent
—and retailers can seek civil recovery as well. And the threat of even more arrests and civil recovery—if suspects were to boycott retail justice—is more credible than the threat of more prosecutions in the plea bargaining case, as arrests and civil recovery are cheaper than prosecutions.
This matters because the expected costs of an arrest alone—with its concomitant physical risk and collateral consequences
—are likely higher for most suspects than the costs of paying a retail justice company and completing its course. All the more so once we factor in the chance of civil recovery and of prosecution conditional on arrest, and if most suspects presented with the dilemma, all of whom pass a criminal-history check, are risk averse.
2. Equality: Are Certain Groups of Suspects Worse Off? — Even if retail justice is a good deal for most suspects, concerns may persist if its effects are discriminatory on the basis of race, class, or some other morally irrelevant characteristic. Notice that one’s conclusion on the former issue frames the latter: If retail justice is a “good,” we should ensure that it is not being reserved to the privileged classes. If retail justice is a “bad,” however, our concern is that it is being forced upon disfavored groups. Based on the foregoing analysis, this section makes the former assumption: that retail justice is generally beneficial because it prevents harmful contact with the criminal justice system.
The appropriate baseline for an analysis of distributive effects is the manner in which the criminal justice system distributes criminality within the large pool of individuals who cause others harm. Sociologist John Hagan distinguishes between “suite” criminals, whose harmful and immoral acts are frequently treated as noncriminal matters, and “street” criminals, whose similarly motivated conduct is branded as deviant.
A similar dynamic marks the early history of retail theft, where “kleptomania” or private payments shielded well-to-do ladies from the criminal justice system, while poorer offenders went to jail.
Some contemporary shoplifting research suggests that lower-class offenders continue to be treated more harshly than wealthier ones, and there may be age and race effects as well.
Against this baseline, retail justice companies appear, at first blush, to promote equality by “leveling up,” extending to low-status individuals the lenient treatment previously beyond their grasp.
Retail justice, that is, shelters not “suite” criminals but “street” criminals, and not just wealthy shoplifters but poor ones as well. And on its face, at least, it applies even-handedly to suspects of every race and gender.
There are, however, reasons to be cautious in this assessment. This section quickly sketches out five. Three of these can be safely put to bed, in the weak sense that they do not reveal retail justice to be worse than the system that operates in its absence. The same may be true of the remaining two, but the case is muddier. Accordingly, Part III recommends that lawmakers require retail justice companies to collect data that will facilitate close monitoring of these distributive effects.
The first concern stems from the fact that shoplifting is a “middle-class crime.” One might worry that retail justice coddles the middle class while neglecting the truly poor—who may commit other forms of theft—replicating the regressive class dynamic Hagan describes, just lower down the economic ladder. Yet, if the research is to be believed, retailers already favor the middle class over the poor.
Perhaps more important, shoplifting is a “middle-class crime” only in the sense that the middle class is overrepresented in the population of offenders.
In absolute number, more shoplifters hail from the lowest income bracket than any other.
Second, shifting from public to “offender-funded” private justice transfers the costs of shoplifting, in a rough sense, from taxpayers to suspects. This cost structure may disproportionately burden the poorest suspects. More than that, retail justice may simply be inaccessible to the very poor, who cannot afford the enrollment fees. Retail justice companies purport to make their programs accessible to all through a combination of payment plans, discounts, and “tuition scholarships.” CEC says that ninety percent of suspects presented with the option choose to enroll.
But we do not know why the other ten percent do not or, relevant here, how many decline due to financial constraints.
Yet the premise of this second point is false: Public justice, too, makes its “users” foot the bill. “As criminal justice costs have skyrocketed,” Professor Laura Appleman observes, criminal justice institutions have begun to impose “fees and fines at every turn,” and thus “the burden to fund the system has fallen largely on the system’s users, primarily the poor or indigent.”
Just as the fees paid to retail justice companies disproportionately harm the poorest suspects, so, too, do the criminal justice system’s fees.
Even publicly funded counsel is no longer free in most jurisdictions.
Those who truly cannot pay spend years fighting their debts or, worse yet, are jailed for nonpayment, leading observers to lament the return of debtors’ prisons.
Third, it is not known where, geographically, retail justice companies operate. We do know that they have serviced retailers frequented by both the wealthy (Bloomingdale’s, for example) and less well off (such as Walmart). But we do not know which Walmart stores, for example, used their services. If the stores are situated primarily in (relatively) wealthier regions or areas with racial demographics that skew white, then retail justice may be sheltering those populations disproportionately, with economically or racially regressive effects. And because private industry is choosing whom to protect, there is no obvious mechanism through which an angry public can hold the responsible parties to account.
We are not so demanding of criminal justice institutions in this respect, however. While selective enforcement and prosecution are prohibited, courts have made discrimination virtually impossible for defendants to prove.
And we certainly do not demand equality across jurisdictions as opposed to within them. If the criminal justice authorities in heavily black City A decide to enforce shoplifting laws to the hilt, for instance, while mostly white City B’s authorities are far more lenient, a black shoplifting defendant in City A cannot point to City B in support of a selective-prosecution claim. (That is not to say the law has this right, however. Part III advocates data collection that would permit review of precisely this type of disparity within retail justice.)
Now for the two more nagging concerns: One is that the retail justice apparatus may enable or encourage store security to be more aggressive in ways that bear disproportionately on disfavored groups. This is not inevitable—one can imagine a world in which store security do not change how they patrol when retailers shift from public to private justice. If retail justice companies pay retailers or security firms for each enrollee, however, these payments may, as San Francisco alleges, “encourage[ ] security companies . . . to target not just individuals who may have shoplifted, but those who are most likely to fear getting turned over to the police” (who, presumably, are most likely to enroll).
It is not entirely clear what San Francisco has in mind as the target population here. The dynamics are complex. Different social groups may dread police contact for different reasons—the fear of physical mistreatment (perhaps highest among young black males), for example, versus the fear of deep social and professional embarrassment (perhaps highest among wealthy, middle-aged, white professionals), versus the fear of deportation (for undocumented immigrants). One might just as well assume security guards would target individuals they think are most likely to be able to pay retail justice enrollment costs—those who appear to have money to spare.
Data collection is necessary to resolve this concern with any confidence.
Finally, there is the fact that, after querying both internal and public records, retail justice companies refer repeat offenders to the police. This is a sensible approach to deterrence: Prior sanctions failed, suggesting the need for harsher medicine. Yet the practice bakes in whatever biases infected earlier interactions with enforcement authorities. If we believe the police (public or private) disproportionately target black men, for example
—or that customers are more likely to report apparent thefts by blacks than whites
—then a suspect’s prior record depends in part on his race. By relying on this measure, the retail justice companies discriminate as well.
How this compares to the alternative, however, is an empirical question. Relative to a retailer employing a zero-tolerance policy, which calls the police on every suspected shoplifter, retail justice companies may fare poorly. But zero-tolerance policies appear to be rare. More often, retailers make discretionary decisions, or apply some simple rules of thumb, to determine when to make the call.
Given the discretion involved—and that one rule of thumb in fact has been to call the police on repeat offenders—it would not be surprising if bias played a more, not less, important role when retail justice is absent. Retail justice companies, in other words, introduce (or perhaps exacerbate) one potential bias (from prior police interactions) but eliminate another (from the discretionary decision of when to call the police). The latter bias may well outweigh the former, but it is hard be sure. Again, more data are necessary to answer this question.
3. Overenforcement: The Costs of Casting a Wider Net. —The profit motive, critics contend, creates incentives for overzealous enforcement of the law, possibly sweeping in innocent as well as guilty defendants. San Francisco’s lawsuit alleges, in this vein, that CEC’s “payment structure creates a powerful incentive to pressure people to enroll in CEC, regardless of the evidence, if any, of their guilt.”
Academics have debated the basic point for decades. In the 1970s, economists Gary Becker and George Stigler sketched out a system in which private citizens investigate crimes, apprehend and try suspected offenders, and retain the proceeds, such as fines convicted defendants pay.
Professors William Landes and Richard Posner countered that a public monopoly on criminal law enforcement may be preferable because it enables “discretionary nonenforcement” of the law by prosecutors.
Discretionary nonenforcement is an efficient way to temper the (inevitable) overinclusivity of criminal statutes without creating loopholes for defendants.
Decades later, the Landes–Posner notion of “discretionary nonenforcement” became the linchpin of Professor Ric Simmons’s argument to prohibit (most) private criminal settlements, like the ones retail justice companies facilitate. Simmons argues that private criminal settlements should be prohibited “because they remove the prosecutor from the settlement process.”
“[T]he prosecutor,” Simmons reasons, “plays a critical role in selecting which cases should be prosecuted, how they should be charged, and what sentence is appropriate.”
“[T]he parties who negotiate a private criminal settlement,” in contrast, “do not practice discretionary nonenforcement.”
As a descriptive matter, it is misleading to say that retail justice companies usurp the prosecutorial role or edge prosecutors out of the picture. Prosecutors simply exercise their discretion at the wholesale level.
They are not unaware of what retail justice companies are doing;
indeed, at least some prosecutors actively encourage it.
Prosecutors bent instead on preserving their monopoly could simply subpoena retail justice companies’ business records and prosecute some of their “students,” which would quickly put an end to the business endeavor.
In a sense, San Francisco’s lawsuit, which seeks to rout retail justice companies from the jurisdiction, is the exception that proves the rule.
This descriptive point, however, even if correct, does not resolve any normative concerns about overenforcement—most significantly, whether retail justice encourages the enforcement of shoplifting laws against innocent suspects, as San Francisco alleges. It helps here to distinguish between “actually innocent” defendants, who have not in fact violated the law, and “normatively innocent” defendants, who “did it . . . [but] did not thereby offend the public’s moral code.”
Normative innocence is a state of “relative blameworthiness,” resulting from a normative judgment of whether the defendant “ought to be charged.”
There are powerful disincentives for store security to target actually innocent individuals. The prospect of tort liability for false imprisonment and related harms undoubtedly looms large, especially when, as is common, surveillance video has captured the pertinent events. Retailers also wish to avoid the negative publicity wrongful accusations bring about. Indeed, this pair of concerns has long been thought to motivate retailers’ relatively lax approach toward shoplifting detection. There is no persuasive evidence that the incentives retail justice creates, at least to date, are strong enough to turn the tide.
The harder question concerns the effects of retail justice on normatively innocent suspects, for whom the prospect of increased enforcement seems more plausible. The evidence suggests, however, that such suspects are rare. In their discussion of overenforcement, Landes and Posner were concerned with prohibited conduct “that the legislature . . . did not in fact want to forbid.”
Their examples involve “minor infractions of the traffic code” and “violations of building-code provisions that, if enforced, would prevent the construction of new buildings in urban areas.”
Likewise, in his work on normative innocence, Professor Josh Bowers focuses on “petty crimes that typically lack concrete victims,” many of which are “mala prohibita offenses.”
Bowers gives examples like “an indigent man . . . arrested for hopping a turnstile to get to his first day of work” and “an elderly man . . . arrested for selling ice pops without a license on a hot summer day.”
As sympathetic as some shoplifters surely are, few, if any, of them are normatively innocent under these frameworks. There can be little doubt that the legislature did intend to criminalize even small-ticket retail thefts by individuals in great need. Nor is shoplifting merely a victimless, regulatory offense. That so many shoplifters historically have escaped prosecution likely reflects judgments about prosecutorial resource constraints and priorities rather than judgments about normative innocence the retail justice companies now upset.
A separate overenforcement concern involves concededly guilty suspects. If the profit motive of retail justice motivates more aggressive enforcement of shoplifting laws—or greater efficiency enables it—then retail justice may feed the beast of overcriminalization. For example, a retailer that, before contracting with a retail justice company, only rarely called the police, may now sanction a much larger percentage of suspected shoplifters. This is troubling for those who believe that society’s principal criminal justice problem is not underenforcement but its opposite.
There are several reasons, however, that the overcriminalization argument is more complicated, and probably weaker, than it first appears. As an initial matter, the fact that society has criminalized shoplifting might be thought to signal that, setting aside enforcement costs, the efficient level of shoplifting is zero.
That more guilty individuals are sanctioned, the argument goes, moves us closer to that ideal and cannot count as a demerit for retail justice.
Skeptics should consider two additional points. First, as mentioned earlier, retailers that work with retail justice companies—at least with CEC—specify eligibility criteria including age and item value.
Reportedly, many retailers do not turn suspects over to CEC whom, based on these criteria, they would not have referred to the police.
Retail justice, in other words, does not necessarily lead retailers to cast a wider net. Second, even if some retailers do now cast a wider net, the consequences of being ensnared, which involve no contact with the criminal justice system, are less severe.
Retail justice thus distributes punishment more equitably across the population of offenders. To put the point differently, we might just as well say that the net has narrowed in the sense that fewer, rather than more, shoplifting suspects will enter the criminal justice system.
B. Are Victims Worse Off?
It might seem odd that retailers, which long have lamented the scourge of shoplifting, would abandon the criminal justice system in favor of a more lenient, private alternative. Why would retailers not want the strongest deterrent sanctions available?
Is it possible that, in opting for retail justice, retailers actually act against self-interest?
It is possible, but unlikely. These retailers are sophisticated entities that contract for retail justice under calm conditions with ample information. The interesting question is not whether retail justice makes retailers better off but why it seems to do so. Some possibilities have been mentioned above, but a deeper exploration is now in order.
As an initial matter, it is not actually clear that the premise of the question posed here—that is, that retailers are embracing a more lenient approach—is true. The reasons recall the preceding discussion of overenforcement. It does seem fair to assume that, in an individual case, criminal sanctions inflict more disutility on the suspect than the retail justice companies’ fees and coursework.
From the prospective offender’s viewpoint, however, the relevant question concerns not the actual but rather the expected sanctions in each system. Expected sanctions, of course, fold in not only the anticipated magnitude of sanctions but also the likelihood of apprehension and the likelihood of sanctions conditional on apprehension.
Because the mechanism for apprehension—the retailer’s private police—is held constant across the two systems, the likelihood of apprehension should not differ drastically. But it should be slightly higher in the retail justice setting if the private police use time they save processing offenders to apprehend additional suspects,
or if they are given financial incentives to procure retail justice “students.”
The likelihood of sanctions conditional on apprehension may also rise with the shift to retail justice, but heterogeneously across retailers, depending upon the criteria used to establish eligibility for enrollment.
All things considered, then, retail justice likely substitutes weaker but more certain sanctions for stronger, less certain ones. Retail justice companies also dispense sanctions more swiftly.
Empirical research consistently attributes deterrence more to the certainty and celerity of sanctions than to their severity.
Accordingly, the retail justice companies’ claims to effective deterrence may be more plausible than they initially appear.
(The comparative claims may be misleading nonetheless, given the low baseline rates of recidivism for first-time shoplifters who are apprehended.
)
In any event, regardless which system better deters potential shoplifters, the choice to opt for retail justice does make one thing clear: Retailers believe their return on investment in deterrence is higher in the private than the public system. But this, too, might seem odd, for economists have long regarded crime deterrence as a classic public good.
Government must provide a criminal justice system, the argument goes, precisely because private parties will view the returns as insufficient to motivate adequate investment in deterring crime. This is because private actors cannot capture all the benefits of their expenditures on deterrence—if I hire a security guard to patrol in front of my house at night, my next-door neighbors benefit as well, with no obligation to contribute.
In fact, retailers have already paid taxes to finance the police, prosecutors, courts, and prisons. Why bypass these public institutions? Retailers that opt out cannot, of course, demand a tax refund. The obvious answer might be the kickback from retail justice companies, when available, but this is ultimately a sideshow; many retailers continue to work with CEC even absent this minor remuneration. The better explanation is that, notwithstanding that retailers have paid taxes, prosecution of shoplifters in the criminal justice system remains costly and inefficient from the retailers’ perspective. The taxes paid are sunk costs and what drives retailers is the price of going forward.
Assisting in the public prosecution of shoplifting suspects is costly to retailers in several ways.
Employees may need to testify or sit for interviews with police detectives during business hours. The merchandise in question may languish in evidence lockers, unavailable for sale. Frequent visits from the police, to take suspects into custody, could drive away other customers who see the police as a threat or as a signal that criminal activity is afoot. Retailers may even be reluctant to lose the business of the suspected shoplifter himself, who may double as a paying customer or whose family and friends may be regulars.
What the retailers receive from the criminal justice system in return, moreover, often proves too paltry to justify the costs. In many jurisdictions, shoplifting is a low-priority crime. Police response to calls can be slow—requiring the retailer to maintain prolonged custody over the suspect—and prosecution infrequent.
The criminal justice system simply does not provide a service valuable enough—or deterrence strong enough—to justify the costs of participating in it. Of course, the quantity of criminal justice resources available to fight shoplifting is not fixed. In theory, the state could respond to these constraints by sending help. Indeed, some police departments have hired additional officers specifically to respond to calls from Walmart.
Yet this seems not to be the norm.
In addition, just as in the initial public-good analysis, the retailer cannot capture all the benefits of its expenditures on deterrence here, inside the criminal justice system, either. A retailer’s participation benefits other outlets the suspect may have targeted. In other words, because victims are required to expend resources (beyond background taxation) to obtain deterrence through the criminal justice system, and because those expenditures produce positive externalities, the criminal justice system has not solved the public-good problem after all.
* * *
To nail down the point and to tee up the next section’s analysis, consider who bears the costs of shoplifting under three different systems of law enforcement.
In the first, retailers do nothing other than expel red-handed shoplifters with a warning. They then attempt to shift the costs of their inventory “shrinkage”—which are relatively high, given their lackluster efforts at deterrence—onto their customers in the form of increased prices. To the extent that market competition prevents them from transferring all the expenses, this do-nothing approach effectively allocates the costs of shoplifting to the retailers and their customers together.
The second approach—criminal prosecution of some suspects—spreads the costs more widely. Here, the taxpayers bear the expense of the justice system’s deterrence-producing institutions, partially offset by “user fees” collected from suspects and defendants. Retailers assume the costs of assisting the prosecution as well as the residual costs of shrinkage, some of which they pass through to their customers.
Finally, consider the retail justice model. Retail justice, recall, is entirely “offender funded.” Taxpayers bear no enforcement costs because the criminal justice system’s institutions are not involved in any way. Retailers bear no enforcement costs either, as they simply hand off suspects to the retail justice companies. In fact, the retailers may make money in the form of kickbacks. The net effect is to shift costs from retailers, customers, and taxpayers onto the suspects themselves. It is not hard to understand why retailers would prefer this option. And it looks appealing from society’s perspective as well, if it produces deterrence more efficiently.
C. Is Society Worse Off?
This last point turns out to be more complex than it first appears. This section contemplates the effects of retail justice on social welfare beyond the interests of suspects and victims. It begins with a discussion of the social costs of crime, focusing on prevention and enforcement costs, before pivoting to consider the more diffuse effects of decreased transparency.
1. The Social Costs of Crime. —Society’s goal, within a utilitarian framework, is to minimize the total social costs of crime, which include the direct costs incurred by victims, the costs of prevention and enforcement, and any unjustified costs imposed on defendants and their families.
In some settings, private settlement of criminal disputes would raise concerns about insufficient general deterrence, if victims settle for too little when prosecution was otherwise likely.
Underdeterrence seems improbable here, where the “fine” is a multiple of the average shoplifting take,
and where retailers have continued contact with the offenders. Especially outside the biggest cities, individuals who shoplift from major retailers likely continue, out of practical necessity, to patronize those same stores in the future. This means retailers at least partly internalize the expected costs of monitoring and recidivism, motivating them to seek socially efficient levels of deterrence.
The more interesting issue concerns prevention and enforcement costs. Retail justice companies may minimize these costs to retailers, but they do so partly by externalizing them—that is, by shifting them to suspects. This cost externalization may, in some cases, create incentives for retailers that are perverse from society’s perspective. The crucial point is that the availability of a costless (or even profitable) mechanism for adjudicating and sanctioning shoplifting encourages retailers to favor enforcement when prevention (that is, victim precautions) might deter crime more efficiently.
The choice between prevention and enforcement is ubiquitous in society, yet the pertinent legal literature is surprisingly thin.
Potential victims often employ the two strategies simultaneously. I rely on the criminal justice system to deter home invasions by catching and punishing burglars, for example, but I also lock my door. The hard question concerns the socially optimal level of precautions—should I not only lock my door but also build a moat? Victims, it turns out, commonly take too few or too many precautions, depending on the circumstances.
Victims overinvest in precautions that generate negative externalities, such as diverting crime toward other victims.
Victims underinvest, in contrast, in precautions that generate positive externalities, such as deterring crime against other victims.
The classic example involves competing precautions against auto theft: The Club, a pole-like device that locks the steering wheel, and Lojack, a radio transmitter that allows police to locate a stolen car. The Club merely displaces crime to other owners. Not so for Lojack—in fact, because potential thieves cannot tell which cars have Lojack, Lojack reduces theft for every car that might have Lojack. The predictable result? “People buy too many Clubs and not enough Lojacks.”
Familiar precautions for retailers include strategic lighting and store layout, security cameras, greeters, well-spaced personnel, item placement (with small, valuable items out of customer reach), and security tags.
Retailers employ these precautions to varying degrees, and they seem to make a difference. Indeed, data from observational studies of customers show great variance among stores in rates of shoplifting. One interpretation of these data is that “certain characteristics of stores should . . . be considered as an important variable influencing the amount of shoplifting that occurs.”
“Certain stores,” that is, “may be viewed as prime targets for shoplifting because of the nature or quality of merchandise, or because they are seen as having poor security.”
While it is hard to be sure, there is reason to think at least some retailers employ these measures too sparingly. In an echo of Victorian era rhetoric about the devilish temptations of department stores, that is certainly the sense one gets when reading media coverage of Walmart’s enormous demands on the police. Walmart, some experts say, “lays out its stores in a way that invites trouble and often doesn’t have enough uniformed employees to make sure everything runs smoothly.”
Its stores “can feel messy and disheveled,” allowing “troublemakers to rationalize that the company doesn’t care.”
Journalists found that Walmart stores call the police far more often than Target stores in the same jurisdiction, even when controlling for store size and hours of operation.
This discrepancy suggests that there is ample room within a successful business model for greater investment in precautions. And given that most shoplifting is situational and impulsive, rather than premeditated,
such investment ought to reduce aggregate theft rather than merely displace it.
Most often, as in the home-invasion example, the prevention-enforcement question concerns the allocation of crime-deterrence responsibility between private victims and public authorities.
In the retail justice context, however, the analysis differs. As noted, retail justice companies permit retailers to shift deterrence-related costs from themselves (and their customers) to suspects. Whether this makes society better off depends on whether retailers or suspects are the “least cost avoiders.” It is tempting to think the answer is obvious—it must be suspects, who can avoid the costs simply by refraining from offending (or arousing suspicion). But this misapprehends the real issue.
As Professor Alon Harel argues, “The identification of the criminal as the ‘cheaper cost avoider’ does indeed mean that it is socially desirable that criminals avoid carrying out crimes. But given the persistence of criminal activity, the salient question is who should bear the costs of preventing such activity.”
In the traditional case, again, we compare the cost of victim precautions with the cost of state enforcement.
Here, instead, we compare the cost of victim precautions with the cost of retail justice enforcement, which, of course, is ultimately financed by suspects’ fees. Costs in the retail justice model include the expense of developing and administering the “restorative justice” course, the creation and maintenance of supportive technology,
and the time spent by suspects taking the course. It seems plausible that these costs exceed the expense to retailers of some of the common precautions mentioned above. In sum, while retail justice may reduce enforcement costs relative to the criminal justice system, victim precautions might—in some situations, even if not in many—reduce them even further.
2. Transparency. —By operating wholly outside official institutions, critics argue, retail justice undermines “the community’s collective interest in the administration of justice as a public event that binds and defines us.”
More concretely, retail justice frustrates popular oversight of the criminal process, deprives citizens of valuable information about offenders in their midst, and silences public condemnation which, on some theories, differentiates the criminal process from all others. These three critiques are considered in turn, followed by a discussion of the effects of retail justice on official crime data.
Initially, notice that, without secrecy, the retailer and suspect never reach a bargain. Secrecy is what the suspect pays for. For these transparency considerations to win out, then, the benefits of publicity must outweigh any welfare gains already discussed.
a. The Publicity Norm in Criminal Cases. —The public jury trial remains the gold standard for American criminal justice. In reality, however, the trial’s rarity, not its quality, makes it precious. Only a fraction of shoplifting charges lead to public trials; prosecutors drop some cases, divert others, and plead out most of the rest.
Plea bargaining nominally takes place under the auspices of a public system, but the deals themselves are struck behind closed doors.
Increasingly, the public is excluded even from the parts of the plea process that are supposed to be transparent.
It turns out, then, that the public’s ability to audit the criminal process by observing its institutions at work is illusory, at least in the mine-run misdemeanor case.
It is far from clear that the shift from plea bargaining to retail justice meaningfully exacerbates the problem. At most, the difference is one of degree.
On the second point—that retail justice deprives the public of useful information about offenders, preventing, for example, the identification of potentially troublesome recidivists
—the realities of criminal justice again blunt the critique. Recall, first, that, in a world without retail justice, many retailers call the police infrequently, often banishing suspected offenders instead.
Of the suspects who are arrested, many will escape formal charges or obtain diversion, leaving behind records of questionable utility for tracking repeat offenders.
Moreover, retail justice companies keep records for precisely this purpose—to identify and screen out repeat offenders. To be sure, unless retailers pool information, this technique will catch only shoplifters who reoffend at the same retailer or another retailer that contracts with the same retail justice company,
so coverage is admittedly imperfect. But the system likely captures a great number of cases, and the ones that slip through the cracks probably present little serious danger.
The third transparency concern: Professor Henry Hart famously theorized that conduct is “criminal” precisely when (and because) it incurs the “moral condemnation of the community.”
Retail justice precludes the collective act of public disdain.
Is this a serious demerit?
We might ask first whether, in the most practical sense, retail justice dampens the message of condemnation the legislature sought to convey by criminalizing shoplifting. This is an empirical question and, for reasons related to the discussion of deterrence above, the answer may be no. If, absent retail justice, the criminal prohibition against shoplifting is grossly underenforced, then retail justice, by potentially reaching more offenders, may actually amplify rather than muffle the criminal law’s message—at least to the principal audience whose behavior it is designed to control. One thing retail justice companies do, after all, is underscore the social harms that shoplifting inflicts.
And this seems, significantly, to satisfy retailers’ retributive thirst.
Still, the administration of retail justice involves no public disapproval of the offender. One might assume this is a problem. For one thing, holding all else equal, it weakens deterrence.
It also interferes with “one of the state’s most important tasks in articulating and enforcing the criminal law: declaring societal norms in public and labeling as ‘criminal’ the behavior that runs afoul of them.”
Yet maybe that is the wrong inference to draw. Perhaps the stronger inference is that the public authorities, which (with some exceptions) seem at least complicit in the operation of retail justice, do not believe that most first-time shoplifters deserve public condemnation.
As Part I showed, the historical record reflects longstanding ambivalence toward the offense. Legislatures could, after all, enact mandatory reporting statutes to ensure the private police send every suspected shoplifter to the public system. But they do not. Nor has any state legislature made a move to ban retail justice from the marketplace.
Perhaps, then, it is best to conceptualize what is happening here as a novel species of decriminalization. There are entirely sensible reasons one might favor such a policy, including the belief that it will reduce, rather than elevate, the rate of subsequent criminal offending.
b. Crime Data. —A somewhat different concern is that retail justice distorts official crime data. Every suspect retail justice companies poach is a statistic that will not show up in public data recording offenses known to the police. Jurisdictions in which retail justice companies thrive will therefore publish crime rates that are artificially depressed. Shoplifting is reported in official FBI crime data as “larceny-theft,” which, in turn, constitutes the largest component of the umbrella category “property crime.”
To be sure, even absent the effects of retail justice, selective reporting and prosecution plague official shoplifting data.
Various shoplifting “epidemics,” for instance, may not have been epidemics at all but rather the manifestation of changes in retailer behavior, such as increases in the rate of apprehension and police referral.
To some extent, though, this dynamic exists for all but the most serious crimes, which are reported and prosecuted more consistently.
There is no reason to think these background measurement errors are distributed unevenly across jurisdictions in any significant way. Retail justice, in contrast, concentrates and magnifies the effects. If a small city’s Walmart switches from an aggressive police referral policy to CEC, for example, the drop in official property crime statistics could be instantaneous and significant without any change in the underlying crime rate.
Crime data are central to a variety of personal and policy decisions in contemporary society.
Families may consult crime rates when choosing where to settle.
Academics use them to research the determinants of crime and potential solutions.
Governments allocate funds with crime rates in mind.
Police officials are evaluated partly on their ability to drive crime down.
When retail justice distorts crime data, it warps these personal and policy decisions too. That is not to say the effect cuts in any clear direction—it depends on local needs and incentives. Law enforcement, for example, may support retail justice when it perceives the benefits from depressing crime rates to outweigh the cost of resources forgone—or vice versa.
D. Is This Blackmail?
According to the California court ruling on San Francisco’s lawsuit, CEC’s business model is “textbook extortion.”
Whether that decision is correct as a matter of California law is a question better left to other fora. Answering it, in any event, would not resolve the legality of retail justice under other states’ blackmail (or extortion) statutes.
The more fruitful inquiry is whether the justifications for prohibiting blackmail support banning retail justice. Even if retail justice is blackmail, in other words, should it be unlawful? There is substantial dissensus on whether and why blackmail should be illegal in the first place.
This section explains why several leading blackmail theories fail to justify a prohibition on retail justice. Professor James Lindgren’s influential theory comes closest but ultimately it, too, falls short.
Assuming for present purposes that the agreements between CEC and shoplifting suspects are indeed blackmail, they are what commentators call “opportunistic” and “incriminating” (or “crime-exposure”) blackmail. They are “opportunistic” because the putative blackmailer, CEC, does not expend resources to acquire the incriminating information; the retailers gather it in the course of ongoing security efforts.
They are “incriminating” (or “crime-exposing”) because the information suspects wish to suppress relates to criminal activity, as opposed to, say, noncriminal but embarrassing personal facts.
Many leading theories of blackmail simply do not apply to opportunistic and incriminating blackmail.
The discussion below considers only ones that do.
Professor Mitchell Berman’s “evidentiary theory” would criminalize opportunistic, incriminating blackmail because “it tends both (a) to cause or threaten identifiable harm, and (b) to be undertaken by a morally blameworthy actor.”
Berman’s theory is unpersuasive largely for the reasons Ric Simmons lays out: First, in general, motive is (rightly) irrelevant to criminality; second, and more important, incriminating blackmail does not necessarily reveal a “morally blameworthy” motive.
As Simmons observes, both the Model Penal Code and some state statutes actually condone certain forms of incriminating blackmail.
Ohio, for example, provides a defense to blackmail when the blackmailer’s “purpose was limited to . . . [c]ompelling another to refrain from misconduct or to desist from further misconduct [or] [p]reventing or redressing a wrong or injustice.”
As Simmons shows, Berman’s insistence that incriminating blackmail is morally blameworthy “is contingent upon the premise that we all have a civic duty to report crime, and it is morally wrong to fail in that duty in order to pursue one’s goals.”
According to Berman, such failure “tends to bespeak a disregard for the common good and the concrete interests of actual and potential victims.”
There is certainly not, in the ordinary case, any legal duty upon citizens to report crime. And whether there is a civic or moral duty seems questionable, at best. Less than half of all criminal victimizations are reported (by victims) to the police;
witnesses likely report crime far less often than that. Any civic reporting duty is honored only in the breach. Berman disregards, moreover, the possibility that incriminating blackmail in fact serves the interests of “actual and potential victims” by deterring crime, thus fulfilling the very same obligations the putative reporting duty imposes.
In the shoplifting context, specifically, it would be strange to maintain that retailers violate a civic duty to report crime at the same time public authorities complain they report too often—even threatening to fine retailers for reporting.
It would also be odd to say that CEC disregards victims’ interests when it works at the behest of those very same victims. And how, moreover, are we to discern CEC’s true motives? Profit is surely a principal motive, but CEC professes other plausible motives as well. Berman’s theory cannot resolve these questions.
Landes and Posner argue that “the decision to discourage blackmail follows directly from the decision to rely on a public monopoly of law enforcement in . . . criminal law.”
That public monopoly, in turn, traces to concerns about under- or overdeterrence: underdeterrence if blackmailers sell their incriminating information too cheaply; overdeterrence if they blackmail individuals whom prosecutors, in their exercise of discretionary nonenforcement, would have left alone.
Part II has responded to these arguments already.
So has Professor Jennifer Gerarda Brown in her cogent critique of the Landes–Posner position.
In short, when there is no significant problem of judgment-proof defendants, and little if any efficiency of scale from centralized public enforcement, there is scant reason to assume the public monopoly on criminal justice is justified.
The blackmail theory that comes closest to supporting a ban on retail justice is Lindgren’s. Lindgren understands blackmail as “the seeking of an advantage by threatening to press an actual or potential dispute that is primarily between the blackmail victim and someone else.”
Incriminating blackmail, to Lindgren, is “bargaining with the state’s chip,”
which is “unfair in that the threatener uses leverage that is less his than someone else’s.”
It also “involves suppressing the state’s interests.”
According to Brown, Lindgren “would outlaw blackmail because it harms third parties”—here, the state—“by compromising their rights.”
Note that, in acting through the retail justice companies, retailers may not actually gain any net leverage if they also waive their civil-recovery rights. Even putting that aside, Lindgren’s critics, including both Brown and Simmons, have the stronger position. They point out that “the blackmailer ‘appropriates’ the state’s leverage but also creates some deterrence value that inures to the benefit of the general public.”
“Nothing is actually being ‘stolen’ from the state,” in other words; rather, the blackmailer “is advancing the state’s goals (at least part of the way) and saving the state money.”
One can also read Lindgren, however, as worried about the blackmailer’s unjust gain rather than the blackmail victim’s loss.
Indeed, this reading, more than any other theory, likely captures our intuition about the “wrongness” of retail justice: Even if we posit that retail justice benefits suspects, victims, and society more broadly (by deterring shoplifting efficiently), why should retail justice companies be permitted to profit from appropriating the state’s leverage?
As Berman has argued, however, and as Lindgren later conceded,
Lindgren’s theory is better at describing blackmail than justifying its prohibition. “Lindgren provides no reason,” Berman writes, “why use of someone else’s leverage for individual gain should be made unlawful, let alone criminal.”
“Furthermore,” Berman adds, “if the use of such leverage is wrongful, it’s not clear why the squandering of another’s chips—by deciding neither to threaten nor to make a given disclosure—is not likewise wrongful and thus properly criminalizable.”
In the end, that retail justice may qualify as blackmail under some (perhaps many) state statutes does not tell us that the reasons for its prohibition are well founded. Blackmail laws have always rested on shaky theoretical footing. And the theories that may justify prohibiting blackmail in certain settings do not extend persuasively to the case of retail justice.
III. Summary and Recommendations
Close examination of retail justice paints a finer picture than popular press accounts can afford. Even a casual observer, to be sure, can compile a laundry list of qualms about the industry. But no shorter is the list of (well-founded) grievances about public criminal justice. After careful reflection, it is not clear that retail justice is worse than its public counterpart, and in several important respects it may be better.
This conclusion holds, however, only if certain conditions—suggested in the preceding discussion and crystallized in this Part—are met. The normative valence of retail justice, that is, depends upon empirical facts about how it is implemented and the environments in which it operates. Rather than ignoring retail justice or trying to stamp it out, lawmakers can help ensure that it operates fairly by regulating it in the following respects.
First, in most circumstances, the availability of retail justice makes shoplifting suspects better off by allowing them to opt out of the criminal justice system, with all its dangers and lingering legal consequences. The exceptional case is one in which the suspect harbors misconceptions about the criminal justice system—believing the expected sanctions to be harsher than they really are—and thus artificially inflates the benefits of avoidance. So, while retail justice should not be prohibited under the banner of protecting suspects’ interests, the state should ensure that retail justice companies do not mislead suspects about the severity of the criminal justice option. And if resources for enforcing this antifraud rule are scarce, they should be focused on jurisdictions in which criminal justice is particularly lenient, where the risk of misapprehension is highest.
Second, in many settings, society might prefer retail justice to criminal justice because it generates deterrence more efficiently. Essentially, the “tuition” fees suspects pay to retail justice companies serve as fines that are administered at lower cost than criminal justice sanctions. If, however, retailers could prevent crime even more cheaply by investing in precautions, then retail justice allows retailers to pursue private gains at the expense of social welfare and should be curtailed. The difficulty is how to identify these settings. One possibility is to require retailers to demonstrate compliance with industry best practices for loss prevention as a precondition to opting into retail justice.
In the long run, one could even imagine a municipal “loss prevention code,” akin to a fire code, applicable to retailers above a certain size.
Third, because it buries criminal violations, retail justice distorts official crime data. Given the interest in, and manifold uses of, these data in contemporary society, states should require retail justice companies to publish aggregate data about the cases they process. An analogy is the Clery Act,
which regulates the reporting of campus crime. While colleges and universities are not required to call the local police whenever they learn about crimes committed on campus, the Clery Act does obligate them to keep and disclose information about certain offenses. Institutions subject to the Clery Act must track and publish crime statistics and maintain public logs with details about each such incident brought to their attention.
Clery Act offenses are more serious than shoplifting; nevertheless, given the volume and economic impact of retail theft, reasonable people (say, prospective business owners) may value aggregate shoplifting data in planning their affairs.
Fourth, the distributive effects of retail justice are indeterminate. Many of the potential racial and economic biases that concern critics of retail justice manifest to the same degree in the criminal justice system. It is possible that retail justice could exacerbate bias—for instance, by incorporating bias from suspects’ prior interactions with the police. Yet this is true only if this bias is stronger than those of retailers that exercise discretion in determining when to call the police, many of which may look at the suspect’s record in addition to other personal characteristics. This seems unlikely, though vigilance is appropriate given the stakes. Data reporting by retail justice companies should therefore include information on the race and gender of suspects, as well as the locations of operation, to allow for state and public monitoring of disparate impacts.
Finally, because, under ordinary circumstances, retail justice has the potential to make everyone better off, prosecutors should refrain from enforcing blackmail laws against the retail justice industry, absent particularized concerns including those flagged throughout Part II. In the long run, if the retail justice experiment is successful, lawmakers might consider amending blackmail laws, where necessary, to ensure they do not prohibit the practice.
IV. Extensions
Beyond its parochial significance, the study of retail justice also generates fresh perspectives on several important criminal justice issues. This Part draws out these points. Section IV.A extracts lessons for institutional design from the discussion in section II.C of victims’ incentives to take precautions. Section IV.B demonstrates how retail justice challenges conventional views about police and prosecutorial motives. Finally, section IV.C speculates about the possible next frontiers of private criminal dispute resolution.
A. Lessons for Criminal Justice System Design
Recall the conclusion that, while retail justice may reduce the sum of prevention and enforcement costs relative to the criminal justice system, victim precautions might reduce costs even further. This insight extends in interesting directions. Most economically minded legal scholarship on criminal justice, as noted earlier, analyzes offenders’ incentives alone. Only a handful of writers discuss the role of victim precautions in reducing crime. They have emphasized the ways in which the substantive criminal law is, or could be, used to encourage efficient precautions. For example, the tendency of the criminal law to punish attempts more leniently than completed crimes can be understood as a way of discouraging excessive private investment in precautions, which, by thwarting some completed crimes, turn them into mere attempts.
What is true of the substantive criminal law is also true of criminal procedure and the design of criminal justice institutions. Just as the rules of criminal law can alter victims’ incentives to invest in precautions, so can other aspects of the criminal process. When returns on participation in the criminal justice system increase sufficiently from the victim’s perspective, victims will begin to rely on the criminal justice system when they would have previously invested in precautions—even where precautions remain more cost-effective from society’s vantage point. Precautions and public law enforcement are substitutes, as others have noted.
This substitution effect, in turn, generates two observations. First, in contexts in which cost-effective precautions against crime are available, a criminal process that is costly and cumbersome from the victim’s perspective—while doubtless frustrating to the victim—may be socially beneficial if it encourages victims to invest in efficient precautions.
Second, wholly apart from the many other downsides of an overweening criminal justice system,
an outsized apparatus may have the additional, unrecognized disadvantage of discouraging certain victims from taking socially efficient precautions. There are important (and illuminating) limits on the reach of this argument, but first consider the basic point.
Suppose the police in my neighborhood excel at catching bicycle thieves—they have ample manpower and spare no expense in tracking down a stolen bike. Suppose they have also made it simple for me to file a bicycle-theft report via a smartphone application. In this world, it would be sorely tempting not to spend money on a professional-grade lock for my bike and not to go out of my way to find a rack every time I need to park. If my bike disappears, I will file a report and the police will get my bike back—using taxpayer resources far greater than what the lock and minor route deviations would have cost me.
Now suppose there is no convenient smartphone app—to file a theft report, I have to get myself to the police station, wait in line, provide ownership documentation, and fill out a stack of paperwork. That lock and those bike racks start to look much more attractive, a salutary shift from society’s perspective. Similarly, suppose that filing a report remains easy but the likelihood of recovery is greatly reduced because the police department is resource constrained. Again, investment in private precautions begins to sound more appealing, which is socially beneficial.
That the criminal justice system and private precautions are substitutes tells us something not only about the size or type of criminal justice system we might want but also how to allocate enforcement resources within that system. More specifically, the desire to avoid distorting victim incentives supplies an argument for directing enforcement resources toward certain victims and crimes rather than others. Regarding victims, there is no concern about reducing investment incentives among individuals who lack the resources to make the investments in the first place. In other words, while a cheap, effective criminal process may reduce investment in socially efficient precautions among the wealthy (like retailers), it is unlikely to affect the spending patterns of the poor. The debate about whether the criminal law is over- or underenforced in poor communities—especially poor communities of color—is fraught and complex.
The suggestion here is only that the victim-precaution angle supplies one argument in favor of those who would prefer greater enforcement in these settings.
Just as the substitution argument may apply to some victims but not others, the same is true for crimes. Here, too, it makes sense to allocate criminal justice enforcement resources where they will not lead victims to forgo spending on socially efficient precautions. In some contexts, for example, there may be no accessible, efficient precautions because available precautions are ineffective or unduly expensive (in either financial or personal terms). In other contexts, the private harms of victimization—which ordinarily are not compensated through the criminal process—may be so substantial that victims will continue to take precautions even when law enforcement is effective and inexpensive for the victim.
* * *
The preceding discussion may help make sense of public hostility toward Walmart’s heavy demands on the criminal justice system. As a taxpayer, Walmart is entitled to some basic level of public protection, regardless whether it takes socially efficient precautions to prevent crime on its premises. But when it begins to make excessive demands on the criminal justice system—demands, perhaps, beyond those it would make if it did take efficient precautions—then continuing to meet those demands begins to look more like (regressive) redistribution than merely spreading the costs of crime across the tax base.
At this point, it only seems right that Walmart itself, or the consumers who choose to patronize it, pay the excess. By reducing the value of criminal justice assistance to Walmart, we may encourage Walmart to shift its deterrence strategy away from enforcement and toward prevention.
B. Police and Prosecutorial Motives
Acquiescence in retail justice, section II.C.2 argued, may best be understood as an exercise, rather than abdication, of police and prosecutorial discretion. It is discretion at the wholesale level. But why are the public authorities exercising their discretion in this way? Put differently, what can acquiescence in retail justice tell us about police and prosecutorial preferences and priorities?
Legal scholars tend to assume that prosecutors seek to maximize either their convictions or conviction rates, often because these are thought to be the measures by which they are evaluated for promotion or election.
The retail justice story challenges this position. Most shoplifting cases are easy wins for prosecutors—the stolen goods are recovered and surveillance footage captures the offender in the act. Plea deals come quickly. Prosecutors fixated on collecting convictions would be foolish to cut off this flow of easy wins. Likewise, if police aimed to maximize arrests, as some maintain,
why would they not push hard against, rather than encourage, an arrangement that steals easy ones out from under their gaze?
What retail justice suggests instead is something like a crime-control model of prosecutorial and police behavior. As long as they are assured that retailers are taking care of the problem and not allowing thieves to run rampant through their stores, prosecutors and police seem generally content to focus their attention and resources on other problems. Again, this is not because there are not arrests to be made and convictions to be counted—there are (and cheap ones). But the resources are better spent elsewhere. This behavior seems less consistent with a conviction-maximizing hypothesis than with models in which the goal is to maximize social welfare or deterrence subject to a budget constraint.
C. The Next Frontiers
Recall CEC’s ultimate vision: “to reinvent the way petty crimes are handled, starting with retail theft.”
If retail theft is just the beginning for the industry, what comes next? Put another way, what characteristics of the retail setting have fostered these private justice institutions, and are there other settings that share the same traits? Several conditions, it seems, conduce to the particular model of “offender-funded” private justice the retail justice companies embody. The claim is not that each of these conditions is strictly necessary on its own, but rather that, the more that are satisfied, the more likely it is that “offender-funded” private justice will work.
First, the stakes are low in the typical shoplifting case—the average take is $129.
This allows retail justice companies to extract fees sufficiently high to deter future thefts and thus protect victim and third-party interests. Given offenders’ solvency limits, the same is unlikely to be true for more serious crimes.
Moreover, because retailers at least partly internalize the risks of recidivism, they are unlikely to opt for private justice when it would underdeter;
police and prosecutors would be less likely to step aside in such a case as well.
Second, shoplifters are typically nonviolent. Were the contrary true, private justice companies might be more reluctant to take responsibility for suspects because of physical safety risks to their employees and potential future victims.
Any concerns about underdeterrence would be heightened as well.
Third, shoplifting has identifiable victims, in contrast with so-called “victimless” crimes like drug use or prostitution. Victims are the most obvious candidates to initiate the private justice process.
Moreover, shoplifting victims often know who the offenders are. Perhaps not “often” in an absolute sense, if it is true that shoplifters are apprehended only one time in forty-eight.
But when an offender’s identity will ever be known, the chances are high the victim knows it through in-store surveillance—only infrequently will police investigation supply the information.
Fourth, a relatively small number of victims each suffers a huge number of thefts.
This reduces transaction costs by allowing private justice companies to profit from contracting with a few major clients. Were the number of incidents much lower and dispersed among victims, not only would transaction costs rise, but also private justice companies might need to raise enrollment fees. This would reduce the rate at which suspects enrolled, as private justice became unaffordable or, at the least, less appealing relative to the criminal justice system. It might also heighten the sense that private justice companies are exploiting suspects, attracting state attention.
Finally, shoplifting victims have few appealing options for sanctioning offenders other than calling the police. “Offender-funded” private justice is, in a sense, a method of outsourcing sanctions. In some settings, the nature of the relationship between offender and victim will allow for flexible and tailored (nonlegal) sanctions internal to the relationship. This is not the case for retailers and their arms-length customers.
Where else, then, might these conditions be present? The retail setting itself supplies one obvious example, as shoplifting is not the only prevalent form of retail theft. Theft by employees only narrowly trails shoplifting as the leading source of inventory shrinkage.
The average take is higher for employees than shoplifters,
which might suggest the need for a higher fee to achieve adequate deterrence. At the same time, the employment relationship allows the employer to monitor its employees closely, achieving some deterrence through means other than the fee.
It is possible that many retailers prefer to use job-related sanctions—such as demotions, job transfers, or pay reductions—to punish employees who steal. This could explain why CEC’s employee-targeted program appears to be slow to launch.
But it is also not implausible to imagine employers that would prefer to keep discipline separate from the terms and conditions of employment, to maximize the chances of restoring and preserving the employment relationship.
Another example might be a landlord who oversees a large number of rental units in an urban setting. The landlord, just by the odds, likely encounters all sorts of nonviolent, low-level criminal offenses on her properties, including drug use (or distribution) and noise violations. Doing nothing may be unappealing, as these crimes likely depress rental values, making the landlord a “victim” of even so-called “victimless” crimes. Calling the police, as in the retail environment, may be time-consuming, ineffectual, and frightening to current or prospective tenants. Eviction is surprisingly expensive.
Compared to these more traditional options, an “offender-funded” model of private justice has a certain appeal.
There is also the possibility of a different, plausible model of for-profit private justice. Instead of outsourcing sanctions, private justice could outsource adjudication. Consider two examples. University disciplinary committees frequently adjudicate student crimes committed on campus—from the mundane, like vandalism, to the explosive, like sexual assault.
The school’s continuing relationship with its students makes available sanctioning mechanisms—like academic probation or suspension—that may be preferable to what an external provider (including a court) can offer. If, however, a private justice company can adjudicate cases more efficiently, schools might pay them to handle this part of the process.
Likewise, many employers—not just retailers battling employee theft—handle on-the-job crimes in-house.
It is possible that some would prefer to outsource adjudication and then impose job-related sanctions on those found guilty. Of course, nothing would stop an employer (or university) from outsourcing both adjudication and sanctions. The decision presumably would turn on a comparison of the sanctioning alternatives, likely focusing on cost-effectiveness, including consequences for the future of the relationship.
Conclusion
Legal scholars long have focused on the role of police and prosecutors as gatekeepers for the criminal justice system.
How these actors exercise their discretion determines who escapes the criminal justice system’s net and who is entangled within it. This Article highlights how late to the game police and prosecutors can be—the station house phone rings only when the private gatekeepers that precede them place the call. In these settings, the question is not whether individuals suspected of crime will enter the justice system but rather which justice system—public or private—will assess their guilt and administer any necessary sanctions.