Retailers Compiling Databases on Former Employees

Retailers across the country face their number one loss: employee theft, every day. Banding together, they have helped amass large databases against accused former employees and are using those databases to keep employees from working in the industry.

These information repositories, like First Advantage's Esteem database, contain little information regarding suspected thefts and rarely involve criminal charges. Retail employers still rely on the information to make hiring decisions.

These databases are legal. They are comprised of written statements from accused employees who were questioned by store security officers. The employees often have no idea they've admitted to committing theft or that the information will be stored in a database.

The databases have tens of thousands of subscribers and are used by major retailers across the country, like Target, aim to fight employee theft. The National Retail Federal report losses of about $15 billion dollars in 2011. They "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.

Federal regulators have growing concerns, however, that the databases are too broad and are harming innocent employees chances of work. Workers may be coerced into confessions or have no understanding that their personal brand, and all future job applications, may be adversely affected.

The Federal Trade Commission (FTC) is determining whether these databases comply with the Fair Credit Reporting Act (FCRA), a law aimed at eliminating inaccurate consumer reporting by giving consumers control over their information.

While almost all retailers regularly perform criminal background checks, some background screening companies do not participate in the theft admissions databases. Liberty Screening does not sell this product because of the high risk of inaccurate information.

Most recently, two high profile screening agencies, which provide retail theft database to it's customers were targeted by the FTC. The FTC argued that the records in the databases were inaccurate and that disputing the accuracy of the records was too difficult for consumers. Lawsuits continue to be in the rise with some law firms attempting to build class-action cases.

Check with your vendor, or with Liberty Screening. When new products are offered, get all the information before signing up for the service. Ask your vendor detailed questions about how they gather and then validate the information they are selling to you. As always, make sure the vendor understands the FCRA and complies with it, otherwise, your organization could be complicit in using bad data to make important decisions.