While the information in databases usually has limited details about suspected thefts and doesn't involve criminal charges, it can be enough to turf a job candidate's chances of employment, The New York Times reported Tuesday based on interviews with lawyers, regulators and employees.
The databases, which have tens of thousands of subscribers and are used by major retailers, are part of the fight against employee theft. The National Retail Federation reported that in 2011, the latest year available, losses of about 44 percent of missing merchandise, valued at about $15 billion, were reported.
Retailers "don't want to take a chance on hiring somebody that they might have a problem with," Richard Mellor, the trade association's vice president for loss prevention, told the Times.
However, labor lawyers and federal regulators expressed concern that the databases could be harming innocent employees' job searches, the Times said.
Anthony Rodriguez, an attorney with the Federal Trade Commission, said the agency has received complaints about the databases and is looking into whether they comply with the federal Fair Credit Reporting Act, a law that, among other things, is aimed at curbing inaccurate consumer information.
Some employees who submit written statements after being questioned by store security officers are unaware that they admitted committing a theft or that the information will be entered into the databases, the Times said.
Stores train loss-prevention officers to ensure the admissions are accurate, Mellor told the Times, and the databases reconfirms information.
But if there is an inaccurate statement, "your options for getting it out of a database are slim," he said.
Last summer, the FTC settled with HireRight, which provides a retail-theft database with its other types of screenings. Among other things, HireRight was accused of making it too difficult for consumers to dispute inaccurate claims.
Last week, LexisNexis agreed to pay $13.5 million to settle a class-action suit on behalf of 31,000 people who accused it of violating consumer protection laws by selling background checks to debt collectors.