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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.

“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.”

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