Pickpocket is found under the Mischief menu at skill level 4. I believe that you may need to also be in the Criminal career track to see it, as it shows up with a special icon next to it (and my Sim is in that track).
To use it, you have to first introduce yourself and be having a conversation. The success rate is higher if you are having a good friendly chat, as the mechanism for the pickpocket is a hug with a pocket dip. ;) Once you use the interaction, it's grayed out for a period of time, and hovering says "Can't pickpocket again so soon, someone might get suspicious!"
I came here looking for how long the cooldown is on the interaction, but happy to offer the info I have so far. Cheers!