Alan White

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The £15m scandal our libel laws are silencing

Alan White explains how critics of "retail loss prevention" - suing shoplifters - are being threatened with writs.

Are shops over-zealous about thieves? Photo: Getty
Are shops over-zealous about thieves? Photo: Getty

This is a story you won’t have read too much about, for reasons which will become clear. It starts at the turn of the century, when British high street stores began to allow a number of firms to make “civil recovery” demands for the administrative costs of processing shoplifting cases.

This practice is known as retail loss prevention, and it involves suing thieves in the civil courts. It seems reasonable enough - why should a shop or supermarket lose out just because they’ve caught someone committing a crime? Over the years, the industry grew. Citizens Advice reports that, since 1998, over 750,000 people have received letters demanding substantial sums as compensation for alleged shoplifting or employee theft. Civil recovery firms started to move into other areas. Hotel chains began to use them to chase customers who’d violated their non-smoking policy. Private parking firms went after people who’d violated their restrictions.

And over the years, a clear problem began to emerge. People were being pressed for costs despite not being found guilty of any crime. In one case, a young mother whose toddler opened a drink without paying received a bill for £87.50 for “staff and management time, administration and apportioned security costs”. A typical case was Sam’s. Aged 19, he was dismissed from his job with Tesco in July 2008, for the alleged theft of £4 cash from a till. He subsequently received a letter demanding £191.50, broken down as: £4.00 for the value of “the goods or cash stolen”, £112.50 for “staff and management time”, £33.75 for “administration costs”, and £41.25 for “security and surveillance costs”. Despite criticism from a QC and the Citizens Advice Bureau, the companies insisted that there were civil courts “precedents” which support such claims.

The complaints began to stack up on consumer forums, and the BBC's Watchdog ran a short feature. Oddly, whenever consumers stood their ground, the costs claims rarely seemed to be taken any further. According to Citizens Advice, of the more than 600,000 demands seemingly issued since 2000, only four unpaid demands have ever been successfully pursued in the county court by means of a contested trial.

Citizens Advice began to catalogue a steady stream of cases - no coincidence that they coincided with a rise in self-service checkouts. It soon put together one report, then another, showing that many of these cases were the result of consumer errors, and that many who were guilty had mental health problems and were caught taking extremely low value goods. As Denis MacShane MP told Parliament this year: “In essence, 90 per cent of all shoplifting in our stores is organised by gangs. About 8 per cent or 9 per cent is done by in-house stealing. The tiny one per cent is done—frankly, for the most part—by rather sad people.”

Now the story goes in a different direction. It’s about one civil recovery case, involving two girls who were caught shoplifting from a high street retailer. What happened next is, for the time being, detailed on their lawyer’s website: the case went to court, and the retailer’s assertion that its total losses were almost £137.50 was chucked out of court. Under cross-examination, a security manager agreed the incident had taken one hour and ten minutes to deal with - at a cost of £17, not £98.55 as claimed. He was carrying out his job, not distracted from a core function of it.

What’s interesting is what happened next. The retailer’s agent, Retail Loss Prevention (the biggest firm in the business), instructed libel lawyers Schillings to demand the law firm remove the above link from its website. And this wasn’t the only threat issued by Schillings, who also accused a national official of the Citizens Advice Bureau, Richard Dunstan, of "orchestrating" a three-year long "sustained campaign of harassment and defamation" against it and its staff, asking it to remove the two reports linked to above, and sent letters on behalf of Retail Loss Prevention to various websites.

One of them was the law site Legal Beagles. Like the other parties, it refused to accede to Schillings’ demands. Instead, it decided to publish the letter on its site. So far, this is where the story begins and ends. As MacShane said: “This is a £15 million racket used by a lot of major companies—corporate groups — such as Boots, TK Maxx, Primark, Debenhams, Superdrug and Tesco. They are all shops that we use.”

That the media has shied away from a detailed investigation of the industry, most likely for fear of vexatious litigation, is one thing. And no doubt the PR men have helped out too - does this Wikipedia entry strike you as entirely objective? But that the Citizens Advice Bureau should face legal threats merely for doing its job should tell you all about this country’s ludicrous libel laws. No doubt the billionaires who've journeyed here to settle writs over the last few years have pumped a little into our economy whenever they’ve popped into Harrods. The question is exactly how much we’re willing to receive for our freedom of speech.

10 comments

Loverat's picture

The poster who talked of fraud has a point. I have been banging on about this for years now. The attitude which currently prevails is that claimants/solicitors who 'over claim' from people they are suing are merely fighting fearlessly for their client and achieving the best deal. But is their behaviour any better than the shoplifter?

How about the solicitor who writes to 30 people saying they have libelled their client in a childish bulletin board spat. For example, one of the comments sued for was one defendant telling the claimant to 'grow' up during an online argument. In the majority of cases the solicitor asks for a 'reasonable offer of damages'. In other letters specific sums are requested and the defendants told that in most cases no less than 10K would be what the judge would award. We are know that is untrue so why did the solicitor acting in Smith V ADVFN write it?

From what the the claimant has said in the past he clearly thought he would receive 10K for each poster he sued. Who filled his head with such nonsense and why did his solicitor pursue the claims - breaking every protocol in defamation ? Why did they do this when the partner in charge of the litigation was an author of the Civil Procedure Rules? You could not make it up.

You wonder why this solicitor claimed such sums of money for claims which would quite obviously not be awarded in court . Clearly he was counting on the defendants settling. (as observed by the judge when he slated their behaviour in court) Not only that, the amounts were too high anyway and took no account of the fact 30 people were being pursued and the obvious overcompenation risk also observed by the judge.

These solicitors are currently being investigated by their regulator but perhaps could it be argued that the police should be acting instead?.

1maia's picture

I am a bit on the side of shops - at one point, i would estimate that about a twentieth of our stock seemed to disappear, and that was with all employees stalking all customers possible all of the time - it was a clothes shop and you can't really barge into the changing rooms. We were lucky, that chain didn't deduct the losses from our wages (fair, because otherwise you could be stealing it yourself). It's only when you experience it yourself you see the other side. I mean, if all the stuff gets stolen, my shop can't afford to employ me and my job goes, and it's not nice for the people who do pay. Also, older shoplifters are better - years of experience. A lot of the worst are cute-looking little old dears.

1maia's picture

I am a bit on the side of shops - at one point, i would estimate that about a twentieth of our stock seemed to disappear, and that was with all employees stalking all customers possible all of the time - it was a clothes shop and you can't really barge into the changing rooms. We were lucky, that chain didn't deduct the losses from our wages (fair, because otherwise you could be stealing it yourself). It's only when you experience it yourself you see the other side. I mean, if all the stuff gets stolen, my shop can't afford to employ me and my job goes, and it's not nice for the people who do pay. Also, older shoplifters are better - years of experience. A lot of the worst are cute-looking little old dears.

1maia's picture

I am a bit on the side of shops - at one point, i would estimate that about a twentieth of our stock seemed to disappear, and that was with all employees stalking all customers possible all of the time - it was a clothes shop and you can't really barge into the changing rooms. We were lucky, that chain didn't deduct the losses from our wages (fair, because otherwise you could be stealing it yourself). It's only when you experience it yourself you see the other side. I mean, if all the stuff gets stolen, my shop can't afford to employ me and my job goes, and it's not nice for the people who do pay. Also, older shoplifters are better - years of experience. A lot of the worst are cute-looking little old dears.

Loverat's picture

This case follows on the heels of other 'schemes' used by solicitors and civil recovery firms. Like many things these people are claiming to correct a wrong (e.g shoplifting) but have become blinded by their own greed. They are like claims management companies in a way who were described as a correction for the excesses of the banks but have now become part of the problem. A similar thing happened in the file sharing cases where several solicitors wrote thousands of letters demanding money from members of the public. Most solicitors involved in that have been fined and discliplined by their regulator.

Then of course there were the 'libel factory' case type of money making scheme. A solicitor writes to people who have commented on a blog and launch libel proceedings for trivia.

See - Smith V ADVFN

The above is happening too often. The only way for websites and consumer groups to succeed is to stand up against the threats and publicise them. Show any weakness at all (as some who payed up now realise) they will take advantage. I have no hesitation in telling Schillings and other law or recovery firms where to go. As for any solicitors tempted to get involved in speculative invoicing, mass claims, and filing vexatious libel actions - you will have to answer to the media and your own regulator. A formidable group of individuals has now come together to campaign against this.

Guy Chapman's picture

The "loss prevention" people may not be entirely happy with the Wikipedia article as it currently stands. I have blocked one of them for spamming, please let me know if the shills attempt to revert to an advertorial.

SweynTUV's picture

Reading that Wikepedia entry, all I can say is, someone must really love their job. Who would have thought that gouging a few quid from the bewildered could be so much fun.

Dougie Lawson's picture

There's a lot to be said for replying to these folks with a referal to the reply from Pressdram in the case of Arkell vs Pressdram 1971 (you can look it up).

Magpie's View's picture

The problem with these overclaims for costs is that it is fundamentally fraud . (Obtaining Pecuniary Advantage by Deception). Which leads to the bigger question : - Why are none of the people involved in conspiracy to Obtain Pecuniary Advantage by Deception ever arrested or prosecuted.

Dark Heart of Toryland's picture

Just one more sign of the transformation of the UK into a corporate kleptocracy.

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