Macy's Settles NY Racial Profiling Case

Macy's department store will pay $600,000 to settle New York state charges that it used racial profiling in efforts to detect shoplifters, parent company Federated Department Stores Inc. (FD), said Friday.

Under the agreement with New York Attorney General Eliot Spitzer (search), the company said it also agreed to change its training practices to ensure that security officers do not use racial profiling to detect shoplifters. Macy's did not admit to any wrongdoing, according to terms of the settlement.

Spitzer had been investigating complaints from black and Hispanic customers, many of whom were handcuffed in the stores after being suspected of shoplifting, his office said in a statement. The $600,000 will be used to cover the cost of Spitzer's investigation, which started in July 2003.

Macy's said it would discipline or fire any employees it found to be using racial profiling or any form of discrimination. The settlement also calls for Macy's to hire an outside firm to examine if its employees treat customers differently depending on race.

Other retailers including Dillard's Inc. (DDS) and J.C. Penney Co. Inc. (JCP) have been sued for allegations of racial profiling.

A Florida jury recently awarded a mortgage broker $2.64 million in a lawsuit against upscale retailer Neiman Marcus Group Inc.The broker sued Neiman Marcus after being accused of stealing shoes at one of its stores.

The Macy's settlement comes shortly after Spitzer indicted former Federated Chairman and Chief Executive James Zimmerman for perjury. The perjury charge was related to testimony given during an antitrust investigation involving Federated and May Department Stores that was eventually settled for $2.9 million.

Zimmerman pleaded not guilty to the perjury charge.

Shares of Federated, which also operates the Bloomingdale's chain, rose 68 cents, or 1.2 percent, to $58.05 in afternoon trade on the New York Stock Exchange.