Tall Toy Stories

Toys "R" Us sells toy guns, police car models, and fake badges, but the chain's traffic in make-believe apparently extends to real-life law as well. More than a year after retrieving her son from the back office of a San Francisco Toys "R" Us store—after a security guard caught him carrying around a Yak Bak toy in his pocket—Margaret Chant received a letter containing a fake civil complaint. "You may stop this suit from being filed by making payment according to the terms of the demand letter enclosed," it warned. The demand letter asked for $365 in civil damages. Unable to come up with the money, Chant contacted Berkeley, Calif., attorney Larry Hildes.

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"The first word out of my mouth was 'scam,'" Hildes says. He says the letter, sent by Florida attorney James R. Palmer, who represented Loss Prevention Specialists (LPS), a Florida collections firm contracted by Toys "R" Us, contained several improprieties. The most obvious: California law allows retailers to collect damages only if a person leaves the premises with merchandise.

So why did Chant receive a letter? "We're under contract to send a letter to everyone we get a report on," says LPS president Read Hayes. Rebecca Caruso, a Toys "R" Us spokeswoman, claims that the chain has a right to seek such damages.

Hildes has filed a lawsuit against LPS, Palmer, and Toys "R" Us. "[LPS] has no ability to bring lawsuits except in Florida," says Hildes. "Fifty percent of the people who get these letters pay, so [LPS is] just playing the percentages."