Protection racket

A protection racket is a scheme whereby a group provides protection to businesses or other groups through violence outside the sanction of the law. Through the credible threat of violence, the racketeers deter people from swindling, robbing, injuring, sabotaging or otherwise harming their clients. Protection rackets tend to appear in markets where the police and judiciary cannot be counted on to provide legal protection, either because of incompetence (as in weak or failed states) or illegality (black markets).

Protection rackets are often indistinguishable in practice from extortion rackets since, for the latter, there will be an implied threat that the racketeers themselves may attack the business if it fails to pay for their protection. In an extortion racket, the racketeers agree simply to not attack a business. In a protection racket the criminals agree to defend a business from any attack. Conversely, extortion racketeers will have to defend their clients if threatened by a rival gang to avoid the client transferring their allegiance.