Macy's Ignores Govt. Subpoena For CRM Records In Lead-Tainted Necklace Criminal Case

Macy's, accused by the Los Angeles District Attorney's Office of selling lead-tainted necklaces, has taken a confrontational—and controversial—stance: It is refusing to share its CRM databases with the government, even if it means that consumers and children who are at risk of lead poisoning can't be contacted.

Macy's has declined to comment on the situation—other than an E-mail to reporters saying that it won't comment—so the only version of events is coming from the D.A.'s office, which says that Macy's has provided no explanation whatsoever. This leaves open the question of whether Macy's is refusing to turn the files over for legal—or other—reasons or if it simply cannot access and thereby produce such records, for technological and logistical reasons.

But Los Angeles Deputy District Attorney Daniel Wright said he is leaning more toward the "won't" as opposed to the "can't" theory, at least for some of the requested records. "It's aggravating," Wright said. "It's inexplicable to me."

Wright said he can understand how the retailer might not know the names and addresses of those who used cash to buy the necklaces that were made in China and imported a California business. But those who used a Macy's card or even another credit card should be easy to identify through computer records, Wright said.

Wright said he was forced in January to obtain a subpoena compelling Macy's to reveal the customer information. The company hasn't responded and a discovery hearing is scheduled for April 7.

The question of using CRM data for product recalls is hardly without precedent. When Costco and other retailers learned in January they'd sold food products containing tainted peanut butter, they went out of their way to use CRM information to identify people who bought the products and issue them alerts. They even placed phone calls.

The peanut butter case and the lead-tainted jewelry case are, of course, significantly different in that Macy's is facing criminal charges alleging it falsely advertised the necklaces as being "lead nickel free." Once a crime is asserted, even — as is the case here — if it's just a misdemeanor, a company tends to go into "admit nothing" mode. Nevertheless, Macy's will be hard-pressed to defend its stubbornness in either the world of public opinion or on a more "corporate citizen" ethical basis.

Macy's isn't explaining itself. "Given this is a matter in litigation, we have no comment to make," was the most Macy's spokesman Jim Sluzewski was willing to say.

Wright said his office wants the names of those who bought the products mainly so that they can be warned. He noted that Pecoware, the Chino-based company that imported the jewelry from China, has been much more cooperative than has Macy's even though it, too, faces fines if convicted. A voluntary recall of the necklaces, in which buyers were urged to contact Pecoware for a refund, was issued in February by the U.S. Consumer Product Safety Commission.

Officials said that, between January 2006 and November 2007, about 2,900 of the necklaces were sold and they contend Macy's sold more than any other retailer.

Wright said Macy's has offered no explanation to him for its refusal to cooperate. However, he said he doesn't think the company is keeping quiet due to fear of violating the privacy rights of its customers. "I don't think it has anything to do with that," said the prosecutor. "I just think they don't want to give out the information because they are afraid they are going to be sued by the people who bought the products. They never explained it. I've been asking for it for so long. I know they must know something like names, addresses and phone numbers."

Wright said he asked Macy's to notify the customers first, before providing the information to his office. "I know every product has a SKU code and people have to be billed if they buy it with credit card although the cash sales are impossible to track. I also know that a large number were purchased with Macy's cards and they would be extremely easy to track."

Wright said litigants in civil cases often have the right to refuse revealing customer information. However, that shield does not apply in California to criminal matters. He noted Macy's, as of Tuesday, April 1, hadn't even filed a motion to quash the subpoena and he's hoping the company will bring the information to the April 7 hearing.