Question: How much does it cost a grocery store to install 69 cameras and six DVRs?
Answer: About $250,000.
Question: How much does it cost to maintain the store’s recording system?
Answer: About $100,000.
Rafael Cuellar, the owner of a grocery store in Passaic, NJ, estimates he has spent around $350,000 to install and maintain his store’s camera and recording devices. Doesn’t that seem like an awful lot of money to spend to repel or catch shop lifters?
Yes, it is. Which is why preventing shop lifting wasn’t the reason Mr. Cuellar invested in his security network in the first place. The cameras and recording devices are in place to monitor every inch of his store to protect Mr. Cuellar from frivolous lawsuits.
“Yesterday alone we had a consumer who came back in [the store] and claimed she fell,” Mr. Cuellar recounts in the video, Supermarket Swindle. “Once the loss-prevention director said, ‘Let’s pull it up on the camera,’ she goes, ‘No, I just twisted my ankle.’ And the story changed all of the sudden.”
Indeed, Mr. Cuellar said that one-third to half of all the lawsuits filed against his company every year are fictitious or overblown. Fictitious or not, however, all those lawsuits raise Mr. Cuellar’s insurance premiums, which are his second largest expense behind payroll.
In other words, spending nearly half a million dollars on cameras and DVRs is a drop in the bucket compared to what Mr. Cuellar would spend on a reward settlement, which could be in the millions.
Just one such reward settlement has the power to wipe out Mr. Cuellar’s small business.
But it’s not just store owners who suffer the expenses of frivolous lawsuits. Consumers pay as well. The Food Institute estimates that feeding a family of four will cost $4.16 per week more this year than last. That’s an extra $200 a family must spend this year.
Rising food prices are just one consequence of frivolous lawsuits. Mr. Cuellar notes that he could have invested a lot of the money he spent on cameras to hire more employees or cut prices. But the danger is too great.
“Being an entrepreneur, you always want to continue to grow,” Mr. Cuellar says. “But I do think twice about it, because of the things I can’t control.”
Unless we enact measures to combat lawsuit abuse, small business owners like Mr. Cuellar will continue to funnel their hard-earned money into protecting what they have, not building what they want.