Colorblind Collaring

Avoid retail racism in your efforts to nab shoplifters and serve customers.
Magazine Contributor
6 min read

This story appears in the May 2001 issue of Entrepreneur. Subscribe »

When Amanda Berube started working at the Cambridge, Massachusetts, The Children's Place, a nationwide children's clothing retail chain based in Secaucus, New Jersey, she was surprised by one aspect of her training: instructions to shadow African American customers in hopes of preventing theft. Berube was also instructed not to give large shopping bags to African American customers, not to tell them about sales and not to invite them to apply for store credit cards. Berube, who is white, received similar instructions when she was promoted to the chain's Watertown, Massachusetts, location. When her complaint to the chain's district manager brought no response, she went to the state.

The Massachusetts Commission Against Discrimination sent African American and white "customers" to The Children's Place stores to test what treatment they received and soon collected enough adverse evidence to prepare a lawsuit. In December 2000, the chain agreed to a 22-step settlement. Corrective measures would include hiring a consultant to examine company policies, conducting anti-discrimination training in its Massachusetts stores and donating $50,000 to charity.

The case highlights a bind retailers may find themselves in if they include illegal discrimination in their approaches to identifying potential shoplifters. It's the retail equivalent of the much-maligned practice of racial profiling, where police officers log a disproportionate percentage of traffic stops for African American drivers (who essentially were committing only the misdemeanor of "driving while black." Retailers got away with it for years, but some customers are fighting back. Scattered lawsuits over the past decade have made it especially risky for retailers to discriminate on the basis of race.

In 1995, a jury awarded three African American teens $1 million because a security guard at an Eddie Bauer warehouse sale detained them after falsely accusing one of them of stealing the shirt he was wearing-which he had actually purchased at the sale the day before. Although the jury ruled that the guard did not racially single out the youths, Eddie Bauer got a lot of bad publicity over the alleged discrimination.

"Business owners should be very concerned about not adopting policies that look like retail racism," says Ken Taber, an attorney with the Salans law firm in New York City who handles employment discrimination cases. "It's easy to fall into the trap of using methods to prevent shoplifting that have racist undertones."

A Gap In The Law

The law prohibiting discrimination against retail customers is not as straightforward as one might assume. "There is actually a gaping hole in federal laws," Taber says. Title VII of the Civil Rights Act of 1964, which prohibits discrimination on the basis of race in a wide range of places open to the public, doesn't apply to retail stores. "In the 1960s, retail stores were not considered sources of discrimination," Taber explains. A lunch counter in a store would be covered but not the store itself.

The federal law most commonly applied in these cases, USC Section 1981, was established after the Civil War to allow minority buyers to purchase property. The law states that all persons within the jurisdiction of the United States have the same rights to make and enforce contracts as white citizens. Courts have ruled that buying or returning merchandise is covered by this law, as it involves making or modifying a contract to buy. However, Section 1981 may not protect customers who are merely browsing.

Consider a recent Louisiana case. An African American woman had made some purchases at a department store and was waiting for some friends and family members to finish their purchases. A local deputy, suspecting the woman of shoplifting, accosted her. The woman shouted obscenities, and the deputy told her to leave. When the woman sued under Section 1981, the U.S. District Court for the Eastern District of Louisiana ruled that because she was no longer actually shopping, she wasn't covered by the law. The court, however, refused to dismiss another of her claims-a common-law claim of battery. The court ruled that it was up to the jury to decide whether the deputy twisted her arm and hit her on the neck.

As the previous example displays, many of these cases aren't technically about discrimination. Some states-including Massachusetts, where the state pursued The Children's Place-have state laws against retail discrimination. But in states that don't, the plaintiffs' attorneys must bridge the gap in the federal law by alleging battery, false imprisonment or other common-law claims. In the Eddie Bauer case, the jury found negligent supervision, false arrest and defamation.

Taking Action

Some claims of retail racism involve not shoplifting policies, but perceived differences in customer treatment. William F. Causey, an attorney with Nixon Peabody LLP in Washington, DC, who represents retail chains, tells of a case he handled in which an African American woman bought a pair of sunglasses and found they were scratched. She tried to return them to the store but wasn't allowed to because she had no receipt. She asked a white friend to return them for her, and a different sales rep allowed the exchange without the receipt. The customer presumed the reasons were racist and filed a lawsuit. "We settled the case," Causey says. "The store is to train employees on diversity sensitivity, our law firm will review its policies on returns to make sure there's no discrimination, and [the store] provided a small monetary payment and new sunglasses."

Causey advises retailers to examine their policies and procedures to make sure customers are treated consistently. "The way stores get into trouble is treating each incident as an isolated event and not seeing the pattern," he says. "Make sure your policies are consistent with the law, and make sure employees understand them." In addition, Causey advises retailers to provide diversity and anti-discrimination training for all employees. Such training typically includes scenarios on videotape for employees to comment on. "Employees need to treat all customers the same and know how to deal with problems when they arise," he says. The cost of training is far less than the cost of a lawsuit.

To combat shoplifting, Taber advises moving to an electronic anti-theft system with sensors that must be deactivated at the checkout lane. "These are colorblind," he says. That can eliminate altogether the need for following customers around. Greeting customers as they arrive and making eye contact can also be strong deterrents to shoplifters-while making honest customers feel they're getting service.

Making sure you don't discriminate against customers is just good business, Taber says, especially given how many customers you can lose over bad publicity. "Any retailer would have to have a suicidal bent to deliberately alienate the African American community."

Steven C. Bahls, dean of Capital University Law School in Columbus, Ohio, teaches entrepreneurship law. Freelance writer Jane Easter Bahls specializes in business and legal topics.


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