Return fraud might seem like a harmless activity, but in California, it is treated as a serious offense. Depending on the circumstances, it can lead to charges such as petty theft, shoplifting, or grand theft, all of which carry significant penalties.
Here’s what you need to know about return fraud, how it’s prosecuted, and what defenses may be available. Contact Simmons Wagner, LLP at (949) 439-5857 for a free legal consultation.
What Is Return Fraud?
Return fraud involves deceptive practices to obtain refunds, store credit, or money for items that were stolen, altered, or fraudulently purchased. Common return fraud schemes include:
- Receipt Fraud: Using fake, altered, or found receipts to return items.
- Price Switching: Swapping price tags or labels to receive a higher refund.
- Repackaging Fraud: Placing less expensive items in packaging of higher-value products.
- Bad Check or Credit Card Fraud: Using stolen payment methods to buy and return goods.
- Employee Fraud: Collaborating with store employees to steal or fraudulently return merchandise.
According to the National Retail Federation, over 8% of all retail returns in 2018 involved fraudulent activity, resulting in significant financial losses for retailers.
How California Law Addresses Return Fraud
Return fraud in California is prosecuted under theft laws, including petty theft, shoplifting, and grand theft.
- Petty Theft (Penal Code 488):
Applies to property valued at $950 or less.
Punishable by up to six months in jail and/or a $1,000 fine. - Shoplifting (Penal Code 459.5):
Involves entering an open business with the intent to steal merchandise valued at $950 or less.
Punishable by up to six months in jail and/or a $1,000 fine. - Grand Theft (Penal Code 487):
Applies to property valued over $950.
Can be charged as a misdemeanor (up to one year in jail and a $1,000 fine) or a felony (up to three years in jail and a $10,000 fine).
For merchandise valued under $50, the crime may be charged as an infraction under Penal Code 490.1, resulting in a fine but no jail time.
How Return Fraud Is Committed
Most return fraud schemes involve two key steps:
- Acquiring Merchandise:
- Stealing items directly from the store.
- Using tricks like price tag switching or fraudulent repackaging.
- Purchasing stolen goods from third parties.
- Returning Merchandise:
- Requesting cash or store credit without a receipt.
- Using fake or altered receipts.
- Returning repackaged or altered goods.
Example of Return Fraud Prosecution
In People v. Davis (1998), a man entered a clothing store, picked up a shirt, and asked for a refund, claiming it was a gift. Despite not having a receipt, he was issued store credit. The man never left the store with the shirt but was arrested upon exiting. The court ruled that the man’s actions constituted theft by trick, demonstrating how California law interprets fraudulent return schemes.
Potential Defenses Against Return Fraud Charges
If you’re accused of return fraud, several defenses may be available:
- Mistake: You returned the item without any fraudulent intent.
- Lack of Intent: You didn’t intend to deceive or steal from the retailer.
- Claim of Right: You believed you had a legal right to the property in question.
- Mistaken Identity: You were falsely accused or misidentified.
How Retailers Prevent Return Fraud
To combat return fraud, many retailers have implemented sophisticated detection methods, including:
- Facial Recognition Software: Tracks customer activity in stores.
- Return Activity Tracking: Monitors patterns of frequent or suspicious returns.
- Video Surveillance: Captures evidence of fraudulent actions.
What to Do If You’re Charged with Return Fraud
If you’ve been accused of return fraud, the penalties can be severe, potentially leading to jail time, fines, and a permanent criminal record. Working with an experienced defense attorney is crucial to protecting your rights and exploring all possible defenses.
At Simmons Wagner, LLP, we understand the complexities of return fraud cases and are committed to providing the best defense for your situation. Contact us today at (949) 439-5857 to schedule a free consultation and learn how we can help you fight these charges.