The recovery of civil recovery
How civil restitution has been reinvented and rehabilitated
By John Wilson, Executive Editor
It was a question of William Blake’s “Tyger Tyger burning bright” this spring as Tiger Woods made the biggest comeback since Lazarus. He lifted his game from zero to hero to once again sport the winning Master’s green blazer for the first time in twenty-two years. After years in a wilderness of prescription drug and alcohol dependence that earned him a criminal record and the disintegration of his marriage and lucrative sponsorship deals, all stemming from a crippling back injury that almost ended his career, the legendary golf pro stole the show at Augusta this April and secured his place in the golfing pantheon.
Bouncing back from adversity is not the exclusive preserve of sporting or pop icons as business has seen its fair share of corporate comebacks. When it comes to well-documented commercial turnarounds, there may be none more famous than that of tech giant Apple, today the world’s most valuable company. But twenty years ago, it was teetering on the edge of bankruptcy because it was losing $1 billion a year. All that changed when prodigal son and founder Steve Jobs returned to the fold, launching revolutionary products like the iMac, the iPod, and latterly, the iPhone, the trail-blazing technology that created what is now the ubiquitous smartphone platform.
In the world of loss prevention, civil recovery—the process that enables retailers to obtain financial compensation using the civil law against those who commit external or internal theft, fraud, damage, trespass, or similar offences—can be seen as the comeback kid after it faced its own wilderness in 2010 with the publication of a damning report from the Citizens Advice Bureau (CAB). In the CAB report, entitled Uncivil Recovery, the author Richard Dunstan, posited this conclusion: “In short, the practice of threatened civil recovery, as described in this report, is not only unfair (and arguably illegitimate), but provides no panacea for the (undoubtedly substantial) cost of retail crime. It does not target those responsible for most retail crime—criminal gangs and other persistent offenders—and it ‘recovers’ less than 2 per cent of the £977 million annual cost of the ‘security and loss prevention’ measures reportedly taken by retailers. Indeed, the principal beneficiaries of the practice would appear to be the civil recovery agents, who collectively profit by millions of pounds and have no obvious interest in seeing the reduction in retail crime sought by public policy.”
The report further claimed that retailers were making inflated claims against alleged wrongdoers even after they had got the merchandise back. Nationally, the CAB said it had been dealing with 4,000 cases a year of people who say they have been sent unfair demands. Dunstan vociferously defended his report and went on record to the UK media to say, “People do panic and pay. This relies on shame, fear, and ignorance of the law.”
Despite protestations from the accused companies that the costs charged simply covered the cost of the investigations and that the report itself was both unfair and inaccurate—not least in part because it claimed that innocent parties had been wrongly targeted for inflated payments—the CAB document had a far-reaching and damning impact on a perfectly legitimate practice. Although most of the named brands in the report continued to use civil recovery in their prevention arsenals in lieu of criminal prosecutions from ever-depleted Police resources, the third-party recovery companies found themselves in the midst of a PR storm with many media outlets holding to the line that the practice was ultra vires, a stigma that still, years later, continues.
In 2017, during a theft trial in Ireland, the judge halted proceedings to subpoena a senior member of a high street fashion retailer whose third-party civil recovery partner had issued a payment request to the defendant, despite the fact that a criminal plea had yet to be entered. All of these anti-civil recovery protestations were, firstly, without legal foundation because in law, civil proceedings can be issued at the discretion of the retailer, who instructs the third-party debt collection company at the same time as pursuing a criminal prosecution. Secondly, the media attention muddied the waters on what civil recovery actually was and what it was trying to achieve as a preventative tool to catch and halt the ongoing wrongdoing by those whose lives could be turned around by this early intervention shot across the bows.
Commenting at the time of the report, Jackie Lambert, the managing director of Retail Loss Prevention (RLP), the company that found itself the target for much of the criticism, argued that the CAB missed the point in its claim that civil recovery did not work to tackle organised retail crime. “Civil recovery is about being a deterrent. We have less than 3 per cent repeat offenders on our records, so it works,” she said in 2010.
Despite this and many other protestations, it would seem the damage had been done. Professor Joshua Bamfield, the founder of civil recovery in the UK who founded the Centre for Retail Research (CRR), said, “The CAB report was highly prejudiced in that it implied that retailers were trying to make money out of consumers, when in fact they were simply trying to get something back to cover costs of investigations. It is even worse today as there is even less chance of Police responding to calls about shoplifting.”
“Civil recovery is not as harsh as a criminal prosecution, which results in a criminal record and all the difficulty that presents in trying to find a job in the future,” he added.
The civil recovery industry responded by continuing to plough a course, albeit a less high profile one, until such time that it could, like Tiger Woods and Apple, successfully reinvent itself as an unambiguous force for good untarnished by negative and misleading lurid headlines.
What Is Civil Recovery?
Civil recovery was defined by the CRR as any criminal act that also gives rise to a tort or “wrong” under civil law. Civil recovery is a method of collecting the damages needed to compensate the retailer by administrative action. The retailer or its agent sends a civil demand to the shop thief a few days after apprehending the offender. This demand sets out the circumstances of the theft, the legal position, the damages claimed, and how these are to be paid. Follow-up letters are used against non-payers. On the basis of US experience, 40 to 50 per cent will pay against these letters, settling out of court rather than going to court.
With the definition clarified, many retailers decided to focus their civil recovery activity on internal thieves, those dishonest staff who for whatever reason—a sense of entitlement or in possession of gambling or payday loan debts—had made wrong decisions. This was done in a form of quid pro quo arrangement that would, in return for payment, not result in a criminal prosecution and record. They could simply and quietly leave.
Members of the National Business Crime Solution (NBCS) who now have recourse to civil injunctions can also opt to automatically channel the details of store theft through their chosen civil recovery partners to chase the payment, as part of their membership. The retailers themselves recognise that civil recovery is not a magic bullet that will solve retail crime in lieu of Police action, but it is “helpful” to have. “It’s useful but not the only tool in our arsenal, and it returns money into our profit protection budget,” said one senior LP practitioner.
Another user who has been using civil recovery for five years added, “We use two companies, one for internal cases and the other for external thieves. It is useful from a user point of view in that it is a low-maintenance exercise because once a report is done, the recovery company deals with everything else. The money we recover contributes towards the costs of the investigations and helps fund some investigation technology investments, as well as paying for our investigators to become trained in the Wicklander-Zulawski non-confrontational interview techniques.”
Paradoxically, what has helped has been the ongoing erosion of Police numbers across England and Wales’ forty-three forces. Whereas there has always been an ambivalence among Police towards store thefts, there is now an understanding among the retail community to not report thefts or frauds under certain values or to direct them through Action Fraud. Retailers have felt there are no alternatives other than civil injunctions (banning orders) and civil recovery as, in the absence of Police support, there can be no criminal prosecutions, so there is no recourse to justice or restitution. Indeed, many feel that the odds are now all stacked in favour of those who steal in the wake of restrictions including the General Data Protection Regulation (GDPR) and the greater use of defamation claims by external thieves, particularly in the Republic of Ireland where there is more of a civil litigious culture.
Another senior head of loss prevention said, “What I like about our civil recovery partners is the fact that they are lawyers first and foremost, so everything is by the book. They can also track and find those who have stolen from us in order to serve letters on them.”
Nermina Webster, a qualified lawyer from civil recovery company Business Loss Prevention, based in Derby, said, “We are seeing a lot of businesses coming to us to try and reduce their losses in some way. In return, it is our job to make sure that we are complying with all of the legal regulations and that we are not putting our clients’ brands at risk. This is one of our strengths.”
Her business looks at both external and internal civil recovery as well as enforcing store banning orders on behalf of clients. She continued, “The criminal justice system is increasingly stretched, and our clients know that even if they do report it to the Police or Action Fraud, the case has to be proven beyond reasonable doubt to guarantee a prosecution and that they are not going to get anything back. So many choose to take a civil action because they see all of the losses going out of their businesses with nothing coming back. We have seen an increase in demand because it is seen as a deterrent when, for example, there is a dismissal and instigation of civil proceedings. They are left in no doubt that if they don’t pay, they could be served with a County Court Judgement (CCJ), which will impact on their ability to get employment or credit in the future. We review and record everything—that includes the costs of the stolen goods and the cost of the time taken to carry out the investigation itself. So when we go to court, we can demonstrate to the judge who is making the order that the costs are reasonable.”
Jon O’Malley, managing director of CRS (Civil Recovery Solutions), based in Nottingham, said, “There has been a lot said and written about civil recovery, and many people still see it as a dark art. However, in today’s marketplace, on the high street and further afield, there is a growing and real appetite for it. We have never been busier because retailers recognise that it is a bona fide and absolutely necessary solution to some of their issues. For the last decade, since the CAB report, we have worked tirelessly with our clients to ensure our model and methodology is transparent.”
Confirming the line that civil recovery has reinvented itself, Jon claims CRS’s recent acquisition of Innovetra, parent company of stopsellingthat.com, the online tool that scours online auctions and social media sites for sellers of stolen goods, provides an end-to-end solution.
“The acquisition provides us with a one-stop-shop in that we can see those internal fraudsters who are selling stolen items online. We can also screen for postcodes linked to crime for employment screening purposes and also apply the civil recovery process to recoup losses where necessary. Compliance has all been tightened up across the board, and we have revamped our road map to take the complete civil-recovery solution to a different level. This seems to be working because we have seen a 300 per cent increase in demand for our legal resource,” added O’Malley, who also has offices in Leeds, one of the UK’s leading law centres.
Retail Loss Prevention
Probably one of the biggest “road to Damascus” moments has come from Retail Loss Prevention (RLP,) the company that became the main target of the 2010 CAB report criticism. Managing director Jackie Lambert, who bought the business from Joshua Bamfield in 2003, was personally impacted by the report and even received abusive correspondence.
“It was so bad, I even received death threats,” said Jackie. “It was really harsh criticism and unfair because we have always tried to look after those vulnerable people who, through no fault of their own, have got into difficult positions, which has resulted in them stealing. It could be that they are behind with payday loan repayments, which is not hard when the interest rates could be as high 1,700 per cent. These people don’t have any spare money to make even small repayments, so it is hardly surprising that they get into difficulty and the spiral of despair that might lead them to steal. It could be gambling addiction, which they can’t repay because of their low incomes. It could also be regulatory issues, including the introduction of the ‘bedroom tax,’ which has put them into difficulties.”
RLP has therefore taken a long hard look at the fair application of imposing the penalty. Jackie continued, “We are dealing with people who grew up in the X-Factor generation, who don’t necessarily have the knowledge of how to apply themselves but believe they can become famous overnight. At the same time, they are people who don’t understand how credit APRs work as they are possibly paying £10,000 for a television over a period of time—all they know is that they are paying £10 per week. In the world of corporate social responsibility, we need to look beyond notions of restorative justice in retail crime because people who are told to say sorry to receive a lighter sentence don’t really mean it.”
RLP has therefore started to change the model and is working with Nottingham Police on a unique pilot that is rather like the speed-awareness courses directed at drivers to re-educate them about the impact of their actions so that they can change direction and do not reoffend. The pilot is for those who do not participate in undertaking the education programme but will also be considered for further Police sanctions as they have refused, in essence, a restorative-justice measure for rehabilitation. The courses, entitled Crime Awareness Education and Restitution (CAER), work on the notion that with retail crime, there is no perception of a victim.
“We present the domino effect, the bigger picture, and taking the position that we must challenge the behaviour and the notion that retailers have to pay for something that is a broader societal problem with little or no consequence,” said Jackie.
The course is an online module whereby people are invited to answer a series of questions about themselves, their situations, and the circumstances surrounding the wrongdoing. There are three levels to the course, which differ in terms of time and content. The entry level is a ninety-minute course costing £100, secondly a 4.5-hour course costing £100, and finally a 7.5-hour course at a cost of £50. Half of the education costs are donated to charities, including MIND, food banks, and addiction charities. This ensures that those stealing for such issues can be signposted towards help, and those charities providing the support are receiving valuable funding.
This means that each delegate has three chances to be re-educated away from retail crime and towards rehabilitation. Each person directed towards the courses has twenty-one days to complete it, and those who do not engage after the three attempts at the course would only then face the penalty of civil recovery after they have exhausted attempts to help themselves.
“It’s a ground-zero approach where we try and rehabilitate first,” said Jackie. “Our slogan and theme is simple: turn around to CAER. It means turning lives around.”
RLP and the other civil recovery companies are all making their marks in changing the perception of civil recovery as portrayed in the CAB report of 2010. They have managed to reinvent civil recovery as the comeback kid that is more targeted in helping people to help themselves and steer a different course so that the financial penalty is almost a last resort. This helps restore the reputation of civil recovery and the reputations of the brands that use it on a daily basis. The perception of tigers as a creature once in danger of extinction has been transformed from a ferocious predator to that of a compassionate cub that is once again burning bright by helping both retailers and those who prey on them in equal measure.