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Retailers amass database on workers accused of theft

by JESSICA SILVER-GREENBERG New York Times News Service on April 03, 2013 10:40 AM

Facing a wave of employee theft, retailers across the country have helped amass vast databases of workers accused of stealing and are using that information to keep employees from working again in the industry.

The repositories of information, like First Advantage Corp.’s Esteem database, often contain scant details about suspected thefts and routinely do not involve criminal charges. Still, the information can be enough to scuttle a job candidate’s chances.

Some of the employees, who submit written statements after being questioned by store security officers, have no idea that they are admitting committing a theft or that the information will remain in databases, according to interviews with consumer lawyers, regulators and employees.

The databases, which have tens of thousands of subscribers and are used by major retailers such as Target, CVS and Family Dollar, are aimed at combating employee theft, which accounts for a large swath of missing merchandise. The latest figures available, from 2011, put the loss at about 44 percent of missing merchandise, valued at about $15 billion, according to a trade group, the National Retail Federation.

Retailers “don’t want to take a chance on hiring somebody that they might have a problem with,” said Richard Mellor, the federation’s vice president for loss prevention.

But the databases, which are legal, are facing scrutiny from labor lawyers and federal regulators, who worry they are so sweeping that innocent employees can be harmed. The lawyers say workers are often coerced into confessing, sometimes when they have done nothing wrong, without understanding that they will be branded as thieves.

The Federal Trade Commission has fielded complaints about the databases and is examining whether they comply with the Fair Credit Reporting Act, a federal law aimed at curbing inaccurate consumer information and giving consumers more control, said Anthony Rodriguez, a staff lawyer at the agency.

Last summer, the FTC settled charges with HireRight, which provides a retail-theft database along with other types of screenings. Among the accusations, the agency said, some records were inaccurate and the firm made it too difficult for consumers to dispute claims.

Since the recession, lawsuits have proliferated against the companies that operate retail theft databases, like LexisNexis, which owned Esteem until this year, HireRight and GIS, according to a review of court records.

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