I don't really have the time to pull the statute now, but I remember defending several retail theft cases in the past where my clients always received demand letters from law firms demanding a settlement fee (usually less than $500) to prevent it from filing suit on behalf of the retailer. In my opinion, this was completely within the law and I always advise my clients to pay. I know the statute provides for civil liability up to a certain amount including attorney's fees. The only issue I ever had with these demand letters is that they always seemed to be from out of state law firms. I always advised my clients that even if this particular law firm couldn't sue them in Illinois, the retailer would just hire a law firm that could.
Now it seems that one of these collection firms is being sued in federal court for mail and wire fraud for these collection tactics. Here is an article from the ABA Journal. I don't know if there is any merit to this case, at least in Illinois, because I know our statute provides for liability.
Any experience in the past with clients not paying these demand letters?