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, such as 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 such major retailers 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.
Screening for suspected episodes of shoplifting is one part of a background check, as companies scour for evidence of criminal convictions or sex-offender registration. Almost all retailers perform background checks, according to a 2011 survey from the federation. But some background-check companies are wary of the theft admissions, which retailers submit to the databases.
"That is not a product that we sell, because I think it's a product fraught with risk and inefficiency," said William Greenblatt, the chief executive of background-check company Sterling Infosystems.
Federal authorities have zeroed in on background-check data. 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.
LexisNexis agreed last week to pay $13.5 million to settle a class-action suit 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.