Chop shops are illegal automobile garages that buy stolen cars, disassemble them, and sell the individual parts for a profit. Chop shops often disassemble a car within hours of purchasing it from the thief who stole it—making it difficult for the police and the rightful owner to find the stolen vehicle. Chop shops are often operated in residential garages and small commercial spaces to avoid detection, but are usually part of a large criminal network or organization.

It is a crime under federal law (18 U.S.C. § 2322) to knowingly own, operate, maintain, or control a chop shop. There are significant fines and penalties under federal law for operating a chop shop—up to 15 years imprisonment for a first conviction, with the maximum fine and imprisonment doubled for any subsequent conviction.

States also have criminal laws (located in the penal or criminal code or statutes) that prohibit the operation of a chop shop. An offender may be prosecuted under state chop shop laws in addition to a federal prosecution, or instead of a federal prosecution.

In New Jersey, operating a 'chop shop' is a criminal offense under state law, in addition to being a federal crime. State statutes specifically address the illegal disassembly and sale of stolen vehicles and their parts. Under New Jersey law, it is illegal to own, operate, or work in a facility that is used to dismantle stolen vehicles for the purpose of selling their parts. Penalties for operating a chop shop in New Jersey can include fines, restitution, and imprisonment. The severity of the punishment typically depends on the value of the stolen parts and the individual's role in the operation. These state-level penalties are separate from, and can be in addition to, the federal penalties outlined in 18 U.S.C. § 2322, which include up to 15 years of imprisonment for a first conviction and potential doubling of fines and imprisonment for subsequent convictions. Individuals involved in chop shop operations may face prosecution under both state and federal laws, depending on the specifics of the case and the decisions of law enforcement and prosecutors.