By: John Sadlik
Retail-theft databases, which are used by retailers for background checks on potential employees and to track employee thefts, are facing increased scrutiny from private lawyers and federal regulators.
These databases contain information about accusations and admissions of theft from retail employees and are often used to justify passing over applicants for retail positions.
Though legal, the companies which maintain these databases must answer questions about whether or not they run afoul of the Fair Credit Reporting Act. The FCRA is aimed at regulating the collection, dissemination, and use of consumer information.
The databases are used by retailers like Target, CVS, and Family Dollar, and have been the subject of a recent wave of class action lawsuits. LexisNexis, which owned the Esteem database until this year, recently agreed to pay 13.5 million to settle a class-action lawsuit that alleged violations of consumer protection laws.
The Federal Trade Commission is examining whether it is too difficult for retail employees to correct inaccurate information stored in retail-theft databases. Information which can be the deciding factor in the decision to hire a new employee.
Admissions of theft by retail employees, which are shared by retailers these databases, usually come in the form of written statements that advocates say fail to give notice about their use.
Such admissions can be the product of questionable circumstances, as well. Made in the back of retail stores and under potentially intense pressure from private loss-prevention officers, advocates argue they can be the product of coercion. Often these admissions do not result in criminal charges and are made without a complete understanding of their consequences.