Theft databases blacklist retail workers

Practice raises privacy concerns

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 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.

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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.

LexisNexis agreed last week to pay $13.5 million to settle a class action on behalf of 31,000 people that accused the firm of violating consumer protection laws by selling background checks to debt collectors. The company did not admit wrongdoing.


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. In the past year, the nature of the lawsuits has changed, too, as lawyers try to build class-action cases. HireRight did not return calls for comment, and the other firms declined to comment.

Some retailers are moving away from the databases. Home Depot, which just stopped using Esteem, said the decision followed a general review of ‘‘systems and services.’’

For Keesha Goode, $34.97 in missing merchandise was enough to destroy her future in retailing.

Goode, 28, was a clerk at the discount store Forman Mills in 2008 when she was accused of not ringing up a former employee’s purchases. Goode, who maintains her innocence, said she had agreed to write out a statement because she worried she would be sent to jail.

She received a letter from Dollar General alerting her that she had been turned down for a job partly because of her listing in Esteem, and a copy of the report showed that she had a ‘‘verified admission’’ for ‘‘theft of merchandise.’’


She wrote LexisNexis, ‘‘I was accused of not reporting on a former employee who was stealing merchandise, but I did not steal anything myself.’’

Labor lawyers and federal officials worry that the databases, which are common among retailers, end up hurting innocent workers.

The company responded that it had reinvestigated and ‘‘verified’’ the accuracy of the information. Goode, has a lawsuit pending against LexisNexis, accusing the company of violating the Fair Credit Reporting Act.