Evan Schuman's StorefrontBacktalk

Macy’s is “playing a dangerous game of hide the ball” in relying on its privacy-protection policy to fight a subpoena seeking the names of customers that bought children’s jewelry containing possibly toxic levels of lead, according to a new court filing from the Los Angeles District Attorney’s Office.

In a rebuttal to court documents filed by Macy’s, in which the company is fighting a state request for CRM and POS data identifying people who bought the items, Los Angeles Deputy District Attorney Daniel Wright wrote that “Macy’s is attempting to conceal from customers the fact that it sold them lead-contaminated jewelry for their children.”

Given that prior judges have ruled that a benefit to consumers is helpful in establishing the need for a subpoena to overcome retail privacy policies, Wright told Superior Court Judge Fred Rotenberg that “it is hard to imagine more of a benefit than allowing Macy’s customers to take a toxic substance away from their children. (Macy’s) is playing a dangerous game of hide the ball and the only one who loses are the children it puts at risk.”

The case is important because it raises many critical retail IT issues, including how private–or proprietary–the courts should consider data, including purchase histories from CRM/loyalty and POS payment files. Beyond privacy issues, such subpoenas could force retailers to publicly reveal that they are collecting and saving a lot more information than they want to disclose. There are also PCI implications, where a merchant could theoretically be shown to be saving prohibited payment card data.

Macy’s faces misdemeanor charges of false advertising because, according to the complaint, it labeled the necklaces as being lead-free when knew or should have known that they quite full of lead, a toxic substance. The U.S. Consumer Product Safety Commission examined the children’s necklaces and found that they “contain high levels of lead.”

The D.A.’s office and the state of California said an earlier case in California established that “Macy’s has repeatedly sold lead-contaminated children’s jewelry and shows that Macy’s was fully aware of the problem, the danger it poses, yet did nothing. Macy’s previous prosecution by the Attorney General only shows that Macy’s knew, or by the exercise of reasonable care should have known that children’s jewelry it sold was not ‘lead free.’ Macy’s (earlier) prosecution is also a prior bad act and shows a common scheme or plan to sell lead-contaminated children’s jewelry.”

That earlier case began in 2004 when California accused a lengthy list of major retailers–including Macy’s, Wal-Mart, Burlington Coat Factory, J.C. Penney, Kmart, Nordstrom, Sears, Forever21, Kohls, Walgreen, Target, QVC, Saks, The Gap and Toys R Us–of selling lead jewelry to children and not labeling it as containing lead. That case was settled in 2006 with the retail defendants paying substantial fines to the state of California.