This letter is known as a "civil demand". These demands are routinely made but rarely acted on. In other words, your chances of being sued are slim so you can ignore it if you want to. Just know that if you don't pay after this first letter, you will probably get second and it will likely request an even higher amount. Again, you can choose to ignore it. However, if you decide to make payment, pay no more than a nominal sum, for example $50 or so, depending on the value of the merchandise. Put this in a letter to them and don't speak with them directly, as these people are notorious for their threatening tactics. Additionally, if you choose to pay and do so before your court appearance, such a payment will not negatively affect the case. Further, if the court orders restitution, make sure to present proof of the civil demand payment so that you can argue tht no additional restitution is owed. At this point, you may want to consider obtaining legal representation. An experienced criminal law attorney can defend against the charge on a technicality and possibly get it dismissed. At the very least, they can be instrumental in arranging an alternative sentence for you, which can leave you with no criminal record or at least the ability to clear it.