Walmart, Other Retailers Participate in Extortion, Accused Shoplifters Claim in Class Action

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Accused shoplifters claim that popular retailers including Bloomingdale’s, DSW, Walmart, Kroger, and Abercrombie & Fitch use a “corrective education program” amounts to extortion.

Plaintiffs who wish to remain anonymous claim that retail chains around the country have been partnering with the Corrective Education Company (CEC) to provide an allegedly extortive “program” as an alternative to legal charges for consumers accused of shoplifting.

Retailers allegedly involved, and who have been named in the extortion corrective education program class action lawsuit include Bloomingdale’s, DSW, Walmart Inc., Kroger, and Abercrombie & Fitch. Allegedly, these, and other, businesses partnered with the Corrective Education Company to offer what they call a “restorative justice” alternative to a legal charge for accused shoplifters.

The accused shoplifters class action lawsuit also claims that the executives of the Corrective Education Company, not just the retailers, are guilty of the violations. Darrell Huntsman, Glenn Bingham, and Brian Ashton, co-founders of the CEC; board of directors member Jeffrey S. Mitchell and board of director chairman Richard Haddrill; and Vice President of Finance and Operations Chris Cottrell have come under fire.

The accused shoplifters claim that the program is extortion and represents a violation of RICO, the Racketeer Influenced and Corrupt Organizations Act.

In 2015, Slate summarized the program, detailing how the program coerces accused shoplifters into participating.

According to a report by Slate, when a shopper is accused of shoplifting, he or she is taken into a private room where an employee of the retailer runs their name through a database to see if there are warrants out for their arrest. The employee then gives the accused shoplifter two options—the first being to call the police who may arrest them, take them to jail, and put a misdemeanor on their permanent record. The second option is that the person can participate in a program “designed to make you never want to steal again.”

In the second option, the accused shoplifter can allegedly leave the store that day with no indication of the shoplifting accusation on their record. However, over 90% of accused shoplifters given this choice reportedly choose the second option. The shoppers claim that they are then given a choice to pay $400 at once or $500 over a period of time to participate in the program.

The Corrective Education Company class action lawsuit claims that this practice amounts to extortion because it preys on individuals fear of law enforcement, legal proceedings, and the stigma of having a criminal record to encourage individuals to participate in the program.

According to the accused shoplifters’ representative, the program, and the retailers’ participation in it is “using the power of law enforcement…to compel [accused shoplifters] to take a class for a for-profit program… That fundamentally is against what American jurisprudence stand[s] for.”

Additionally, the retailers shoplifting extortion notes that the program represents a RICO violation because retailers who participate receive a kickback or financial reward from the CEC each time that an individual participates in the program.

The accused shoplifters are represented by Joel Fleming, Jason Leviton, and Jacob Walker of Block & Leviton LLP.

The Corrective Education Company Extortion Class Action Lawsuit is Jane Doe et. al. v. Walmart Inc. et. al., Case No. 5:18-cv-02125-LHK, in the U.S. District Court for the Northern District of California.