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High-end retailer Barneys New York has agreed to pay $525,000 to settle complaints that it racially profiled black and Latino customers at its flagship New York City location.
The settlement follows a nine-month investigation by the New York Attorney General's office that found a "disproportionate number of black and Latino customers being detained for alleged shoplifting or credit card fraud," reports The New York Times. Critics labeled the practice "shop and frisk."
What spurred the investigation, and what should your business' policy be for detaining customers suspected of shoplifting?
Investigation Followed Lawsuit, Customer Complaints
The investigation was launched after numerous complaints from black and Latino shoppers that Barneys' security had detained them, even after they had legitimately purchased their items, reports The New York Times.
In a lawsuit filed against the retailer, 18-year Trayon Christian claimed that Barneys security chased him down several blocks from the store after he purchased a $350 Salvatore Ferragamo belt and falsely accused him of using a fake card. Christian says he was handcuffed and taken to a police station where he was detained for two hours before being let go with no charges.
As part of the settlement agreement, Barneys has agreed to work with an anti-profiling consultant, change its loss-prevention policies, and pay $525,000 in costs, fees, and penalties, according to a press release issued by the Attorney General's office.
What Can Businesses Learn From Barneys?
Barneys' problems with the law don't stem from its "shop and frisk" practice of detaining suspected shoplifters. In most states, stores have a privilege called the shopkeeper's privilege which allows them to detain suspected shoplifters for a reasonable period of time.
In this case, however, it was the rationale used to select those shoppers who were detained that was improper. Discrimination on the basis of race is prohibited in places of public accommodation, such as clothing stores and restaurants. In singling out minorities for detention and loss-prevention enforcement, Barneys was discriminating on the basis of race.
When determining your business's loss-prevention policy, be sure to make it race-neutral. Also, check with your state laws regarding the shopkeeper's privilege. If done in an unreasonable fashion, detention of suspected shoplifters can lead to liability for false imprisonment.
- Need legal advice on how your small business should operate? Consult with an experienced business attorney about your options.