Civil recovery statutes are civil laws, specific to each state, that spell out what type of damages may be requested for acts of retail theft and how those damages and/or losses may be recovered from the party causing them. Many retailers are unclear on whether a certain state’s civil recovery statute will be applicable to the theft of cash or cash obtained through some fraudulent act. This confusion generally surrounds specific words contained within each statute that have a specific legal meaning, which may vary greatly from the layperson’s subjective interpretation.
The majority of state civil recovery statutes do not allow for an “additional damages” recovery (whether defined under the statute as penalty damages, liquidated exemplary damages etc.) when the act is a cash theft or fraud, although cash thefts and acts of fraud may often still be pursued for restitution and actual damages naturally stemming from the theft, where appropriate.
Each state statute defines what types of theft falls within the reach of the statute and sets forth a civil remedy for such acts of theft. Some states require a letter to be sent prior to filing suit and most states laws encourage civil letters to be sent in an attempt to resolve these civil tort claims before taking up courts’ time and valuable resources over these types of claims.
The question that often arises is, “What constitutes merchandise theft as opposed to cash theft?” Obviously, a person who takes and carries away merchandise from a store with the intent to steal commits merchandise theft. However, whether a particular state statute’s additional damages provision applies to an act of theft is not always this obvious.
Theft where merchandise is involved, but used in such a way so as to deprive the merchant of cash or the merchandise’s full value, may also fall within the definition of merchandise theft. Depending on the circumstances of the theft, underringing merchandise, sweet hearting merchandise, passing merchandise, ticket (“price indicia”) switching, refund fraud, and credit fraud may also constitute merchandise theft. The general question will be whether merchandise was involved and the extent to which the merchandise was converted to a use detrimental to the merchant’s property rights.
For example, it is generally clear that merchandise is involved when a person who does not work for a store switches the price indicia to pay less for an item, when an employee “sweethearts” by intentionally underringing the value of the merchandise thereby allowing a person to pay less for the merchandise than the stated sales price, or when an employee “passes off” merchandise to someone without charging the stated sales price.
Whether an act constitutes merchandise theft is less clear when the employee commits refund fraud or credit fraud. The question here is still whether merchandise was involved in the theft. Did the employee take possession of merchandise to perform the refund fraud or credit theft? If so, it is more likely that a state civil recovery statute that is specific to merchandise theft could be applicable.
As mentioned earlier, the words contained within a certain state’s civil recovery statute can be legal “terms of art” that have a very specific legal meaning, but may not have the same meaning to a layperson. After review of various provisions contained within many of the state civil recovery statutes, below are some general legal definitions for words commonly found in civil recovery statutes.
Larceny or Theft. The taking of property without the owner’s consent with the intent to deprive the owner of the benefit, use or full retail value of the property.
Larceny by False Pretenses. A false representation of material fact which causes the victim to pass title to his property to the wrongdoer, who knows the representation is false and intends thereby to defraud the victim. This is often the case when someone switches the price indicia on merchandise and obtains the merchandise for a lesser value.
Larceny by Trick. Purposely obtaining property of another by deception. This differs from larceny by false pretenses in that title to the property does not pass.
Fraud. An intentional misrepresentation (or perversion of truth) for the purpose of inducing another to rely upon it to part with something of value belonging to him or to surrender a legal right.
Embezzlement. To willfully take or convert to one’s own use, another’s money or property, of which the wrongdoer acquired possession lawfully, by reason of some office or employment or position of trust. This differs from larceny in that the object of the embezzlement was in the lawful possession of the person, not just in the custody of the person. Embezzlement will generally be applicable to higher-level employees and larceny will be applicable to lower level employees.
Injury. Any wrong or damage done to another, either in his person, rights, reputation, or property. The invasion of any legally protected interest of another. This is an area that is confusing for many lay people because they don’t understand that even when merchandise has been recovered after a theft, the victim has suffered an injury to its property rights.
Restitution. The act of making good or giving equivalent for any loss, damage, or injury.
Pecuniary Loss. A loss of money, or of something by which money or something of money value may be acquired.
Actual Damages/Compensatory Damages. Generally elements of actual or compensatory damages are argued to include time and expenses involved in investigation, detection, and apprehension of offender, including processing paperwork, damages for restocking and retagging, lost opportunity to sell the item, and similar costs to the retailer.
Civil Penalty Damages. These are additional damages on top of actual damages and are sometimes also referred to as “exemplary damages” and may also contain or be called “liquidated exemplary damages” and are generally designed to deter and often civilly punish a responsible party for the act of theft. In some states, the amounts are expressed as a mathematical calculation in relationship to the items of property that were attempted to be taken. They are often used in state civil theft statutes to designate a type of civil penalty for the act of theft. They are similar to, but not the same as, punitive damages in some states. When civil theft statutes use the term liquidated damages or liquidated exemplary damages, those terms are often used as a type of civil penalty designed by the legislature to be a fair estimation of damages that would usually be difficult to calculate on a case-by-case basis.
Also note that many civil recovery statutes use the terms “goods for sale,” “retail merchandise,” and “property offered for sale” to define merchandise in general.
The jurisdictions whose civil recovery statutes allow for additional damages for cash theft, refund fraud, or credit fraud include the District of Columbia, Florida, Georgia, Massachusetts, Minnesota, North Carolina, North Dakota, Ohio, South Carolina, Texas, Virginia*, and Wisconsin. Additionally, the state of Indiana allows for statutory damages for cash thefts as long as the retailer suffers a pecuniary loss. The civil recovery statutes of Arizona, Illinois, and Michigan limit recovery to specific forms of cash theft. The Arizona civil recovery statute would allow for credit fraud, but not for cash theft or refund fraud, while the Illinois and Michigan civil recovery statutes would allow for refund fraud, but not cash theft or credit fraud.
Given the differences in language and intent, each state’s civil recovery statutes must be carefully read and each term given its proper legal meaning to determine which theft acts or types of theft are applicable.
*Virginia has two civil recovery statutes. Va. Code Ann. Section 8.01-44.4 applies when no criminal charges are filed and Va. Code Ann. Section 18.2-104.1 applies only when the person has been convicted of violating Va. Code Ann. Section 18.2-103. Va. Code Ann. Section 8.01-44.4 (no criminal charges filed) allows for liquidated damages for employee theft that includes cash theft, refund fraud, and credit fraud.