Barneys New York Inc. has cleared a major hurdle in its battle to put the “shop and frisk” controversy of holiday 2013 behind it.

This story first appeared in the August 12, 2014 issue of WWD. Subscribe Today.

In a settlement with the office of New York State Attorney General Eric Schneiderman following a nine-month investigation, the retailer has agreed to pay $525,000 in costs, fees and penalties and to take a series of remedial actions to settle allegations that it engaged in racial profiling last year directed at two black shoppers.

The settlement wraps up the state’s investigation into the Barneys incidents while an investigation into Macy’s treatment of Rob Brown, an actor in the HBO series “Treme,” is ongoing, according to a spokeswoman at the Attorney General’s office and a spokesman for Macy’s. Brown filed suit against the retailer after being stopped by the NYPD in June following the purchase of a $1,350 gold Movado watch for his mother.

RELATED STORY: Retail Task Force Sets Roadmap to Address Racial Profiling >>

Although the state matter with Barneys is settled, investigations by the New York City Commission on Human Rights are continuing, according to a spokeswoman for the agency. The commission sought information on the loss-prevention policies of 17 large retailers doing business in New York City and in December subpoenaed documents from Macy’s and Bloomingdale’s, both units of Macy’s Inc., and said it would subpoena documents from Gap Inc.’s Old Navy and Banana Republic brands.

In the Barneys case, Trayon Christian filed suit against the retailer, New York City and the New York Police Department, alleging discrimination, after he was detained by NYPD officers following his purchase of a $349 Ferragamo belt on April 29 of last year. And Kayla Phillips filed a $5 million notice of claim against the NYPD after buying a $2,500 Céline bag two months earlier. The settlement with the attorney general’s office ends both suits.

In commenting on the settlement, Schneiderman said, “Profiling and racial discrimination remain a problem in our state, but not one we are willing to accept. This agreement will continue our work to ensure there’s one set of rules for everyone in public accommodations, including customers in New York’s retail establishments. This agreement will correct a number of wrongs, both by fixing past policies and by monitoring the actions of Barneys and its employees to make sure that past mistakes are not repeated.”

Mark Lee, chief executive officer of Barneys, commented, “We are pleased to have come to an agreement with Attorney General Schneiderman. During the entirety of our 90-year history, Barneys New York has prided itself on providing an unparalleled customer experience to every person that comes into contact with our brand — open and welcoming to one and all.

“We are a truly progressive company that has absolutely no tolerance for discrimination of any kind,” he continued, “and believe this agreement will help build on that commitment and further strengthen our organization in the years and decades to come.”

Schneiderman’s office found that Barneys “maintained inadequate records of stops made by their loss-prevention employees, but despite these lapses, existing records showed a disproportionate number of black and Latino customers being detained for alleged shoplifting or credit card fraud.”

After the investigation, the Attorney General’s Civil Rights Bureau concluded that Barneys lacked “objective, race-neutral criteria for investigating potential shoplifting and/or credit card fraud” and engaged in “excessive force and handcuffs” in its treatment of detainees.

Among the steps being taken by Barneys as part of the agreement, the retailer will:

• Retain an independent antiprofiling consultant with expertise in the prevention of racial profiling in asset protection;

• Establish new record-keeping requirements on investigations, detentions and false stops conducted by loss-prevention employees;

• Limit access to closed-circuit television areas by local law enforcement officers and maintain records of visits by local officers;

• Adopt new loss-prevention detention policies and a new antiprofiling policy;

• Develop and conduct antiprofiling training for loss-prevention and sales employees, and

• Investigate customer complaints of profiling.

Marc Morial, president and ceo of the National Urban League, expressed satisfaction with the settlement, saying the resolution “builds on many of the steps that Barneys instituted” since public furor about the “shop and frisk” episodes built to a climax late last year.

“Whether it is in a store, on the street or anywhere else, no one should go through the humiliation and indignity of being eyed with suspicion, followed or detained simply because of the color of their skin,” Morial said. “We are hopeful that this agreement represents a significant step towards ending this injustice and can serve as a template for all retailers.”

He commended Barneys “not only for its response, but for helping to lead the charge in making sure all retailers understand that there is a significant problem in this industry and for taking steps to fix the situation.”

The controversy took on national implications as it ensnared Shawn “Jay Z” Carter, who collaborated with Barneys on an exclusive holiday collection, dubbed BNY SCC Gallery. Carter was under pressure to withdraw from the deal, but he stuck with Barneys after Barneys earmarked 100 percent of all sales to benefit the Shawn Carter Foundation, which provides opportunities for young people facing socioeconomic hardships, up from the original 25 percent. Carter also worked as part of an advisory group at Barneys to study racial profiling, according to sources.

A retail task force, including retailers, the Urban League’s Morial and members of other civil rights groups hammered out a Customers’ Bill of Rights, which was subsequently adopted by the Retail Council of New York State and posted on its Web site for use by its 5,000 members, who range from sole proprietorships to national chains with a retail presence in The Empire State.

Rev. Al Sharpton of the National Action Network quickly weighed in on the Barneys controversy last year, and Sharpton has remained involved as he’s pursued other matters, including the recent shooting of Michael Brown in St. Louis. He met with officials from Macy’s and Barneys, along with New York City Police Commissioner William Bratton, earlier this year. Bratton was named to serve his second tenure as NYPD commissioner last December, as the controversy about the racial profiling incidents picked up steam. His predecessor, Ray Kelly, wasn’t directly involved in talks during the final days of his term as head of the NYPD.

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