Wow. That must be awful for you to hear, particularly if he's been ok, behaviour wise, at school before now.
I agree with you that 12yrs old is too young to be hanging around shops etc. However, whatever we agree or disagree with, if they are your rules, then stick to them! 12 years old is still young enough to do as they are told.
I don't have a lot of advice, although expect I may be watching this thread as my 12 year old stepson is starting to go through the rude/attitudey stage too. Hormones, friends who do more than they do, internet etc. It can all contribute.
I believe for us, we need to step up the discipline NOW. And make sure that he knows exactly the consequences for his behaviour. Which will mean a sit down, write it down, talk with him. If you do this, this will happen, the second time, this will happen. All the while stepping it up.
Determine too, what his "currency" is. What will have an impact on him if it were taken away? Pocket money? X-box? I just think if we let it go at 12 yrs old, what will they be like at 15yrs old? (and being that I have two kids, 15 & 17yrs, I've been there done that!)