What Is Retail Fraud?

Retail fraud is a crime committed by an individual or group of individuals against a business that offers items for sale to the general public. Such crimes relate to obtaining merchandise without paying for the item, fraudulently returning items to obtain an undue refund, or otherwise defrauding a retail establishment of their rightful revenues. The particulars regarding what constitutes such crimes varies from one jurisdiction to the next.

Not all crimes of theft or misrepresentation constitute retail fraud. Small thefts are typically charged as petty theft, meaning shoplifting or similar minor charges. Large thefts and frauds of several thousands of dollars are charged as larcenies. Retail crimes classified as fraud generally fall somewhere between petty theft and larceny. In some jurisdictions, crimes involving retail fraud must occur during hours when the establishment is open for business with the general public. Crimes occurring outside normal operational hours, on the other hand, classify as larceny or burglary.

In the United States, each state and each subsequent jurisdiction determines at what dollar value or retail price a theft becomes an act of fraud. Likewise, each jurisdiction also determines exactly what acts constitute retail fraud. In some states, this crime includes worthless or dishonored checks; unauthorized or fraudulent use of credit cards; organized groups engaged in shoplifting or petty theft; as well as shoplifting of high value items, employee theft, or misrepresented return scams. Depending on the specific jurisdiction, such crimes may be misdemeanors or felonies.

The primary difference between general theft of goods and retail fraud lies in the value of items stolen and the method by which the defendant operates. In the case of theft by retail employees, the demarcation lies in taking advantage of an employers’ trust and employee privilege. The deceptive nature of such a crime, in most jurisdictions, constitutes retail fraud regardless of dollar value. Loss to the retail establishment in terms of monetary damages merely determines if the crime will be charged as a misdemeanor or a felony.

Retail customers commit similar crimes which fall under the same premise of fraud and are therefore subject to similar criminal charges. Switching price tags to get a lower price, removing price tags to claim outright ownership, or shoplifting merchandise worth more than state-imposed dollar limits are all examples of retail fraud committed by customers. In addition to these crimes, customers also commit retail fraud when they return items under false pretenses with the intent of getting a fraudulent refund.