I don't have a problem with this considering the age of the child. I do know that although we do occasionally pop our two for certain offenses, we never do it in front of others. However, my son got into a really bad habit of cutting up when we had company or he had friends over. Finally I was like, "This is just not acceptable." so I started putting him in time out no matter if people were over or not. This is extremely humiliating to him to have to sit in his time out chair particularly when it's his friends who are over. And from what I can tell, it's been very effective.
I don't know how many times he's humiliated me with his behavior. And I don't see anything wrong with giving him a little taste of his own medicine. Imagine how humiliated this mom was when she found out what her son had done, particularly the stealing part. I just think it's giving him a little of his own medicine.