Apple has said they believe it's illegal to jailbreak an iPhone or iTouch

The Electronic Frontier Foundation has posted the news that Apple has filed comments with the US Copyright Office stating that the act of jailbreaking your iPhone is a copyright infringement and a DMCA violation, and therefore illegal. The EFF says that Apple is claiming that jailbreak apps still require modified versions of Apple's software, and Apple apparently believes that those versions are infringing on their copyrights.

But that most certainly needs to be tested in the courts before store employees can take the device from you. Assuming the story is true, it's a mall cop wannabe who was working the counter there.