Jimin Chen received two worrisome letters this summer. Both came from a law firm hired by Home Depot Inc. (HD)
The first demanded payment of $350 to settle claims that he shoplifted from a California store. According to Chen, in early June he had been wrongly accused of taking two pairs of work gloves, priced at $3.99 each, as he purchased nearly $1,500 worth of merchandise from Home Depot. A second letter demanded $625. Both helpfully included five ways he could pay, and both threatened legal action if he didn’t.
Chen didn’t pay. Instead, on Sept. 5, he filed a class-action lawsuit in Superior Court in Alameda, California, alleging that Home Depot is shaking down customers for arbitrary and unjust damages for shoplifting charges and using false threats of criminal prosecution.
There are laws in all 50 states that allow retailers to claim damages from shoplifters. Chen accuses the retailer of using the California law, which limits payments to $500, “to intimidate consumers into paying money to which Home Depot is not entitled.”
Stephen Holmes, a spokesman for Atlanta-based Home Depot, said the company hasn’t reviewed the details of the case but maintains that the general practice of civil demands is lawful.
By some estimates, $37 billion worth of stuff is stolen from stores every year. (About half of that is taken by employees.) Home Depot is one of many retailers that makes use of the laws to seek compensation -- and uses the same law firm to do so: Palmer, Reifler & Associates in Orlando, Florida.
Chen’s lawsuit calls Palmer Reifler a “demand letter mill” and claims it sends more than a million letters a year to consumers in the U.S. accused of shoplifting by Home Depot. Palmer Reifler, which calls itself “a leading civil recovery law firm in the loss prevention/asset protection industry,” isn’t named in the suit. The firm didn’t immediately respond to a request for comment on the suit.
Chen said that on June 6 he and a friend went shopping at a Home Depot in San Leandro, California. Before loading some lumber into the cart, he said in the complaint, they put on work gloves. When they checked out, all the merchandise was scanned, except for the gloves, which Chen had belatedly added to the pile. He paid $1,445.90 with his Home Depot credit card.
As he and his friend were walking toward the door, they were stopped by a security guard, who accused Chen of stealing the gloves, according to the complaint. Chen was taken to what he calls a “stew room” and questioned; while there he suffered an asthma attack, became agitated, and was handcuffed, he said in the complaint. After about 30 minutes he agreed to sign a document promising to stay out of the store for 90 days. He also provided contact information.
The first letter from Palmer Reifler arrived on June 10, the second on July 5. The first hearing in the case is scheduled for Oct. 8.
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