retail news in context, analysis with attitude

Interesting piece in the New York Times about how some retailers are using a database to essentially blacklist employees accused of theft - but never formally charged or convicted - so they have trouble getting another job in retail.

Here's how the Times frames the story:

"The repositories of information, like First Advantage Corporation’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 admitted 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 like 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."

According to the story, the Federal Trade Commission (FTC) "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." In addition, "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. In the last year, the nature of the lawsuits has changed, too, as lawyers try to build class-action cases."
KC's View:
Fascinating piece, and you can read the whole thing here.

I understand why weeding out thieves is important, but what worries me is the "us vs. them" climate that seems to exist at some companies. It just doesn't seem consistent with a sustainable strategic approach to retailing.