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Qualify Customers, But Don't Profile Them

The Rev. Al Sharpton may be a controversial figure but his reminder is a good one: that racial profiling is a poor way to qualify customers.
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Thank God for Al Sharpton. I'm not a big fan. But that doesn't matter. Society needs people like him.

Because it's guys like him that reminds us all when businesses make mistakes, particularly when it comes to race. Macy's and Barneys made this mistake recently. Now they're paying the price. Yesterday they were forced to issue a "Customers' Bill of Rights" because of two recent alleged racial profiling incidents in their New York stores.

Facing Up

According to one report, "the customers separately accused Barneys of racial profiling after they said they lawfully purchased expensive items but were detained by police on suspicion of credit card fraud. One customer sued Barneys, saying he was accused of fraud after using his debit card to buy a $349 Ferragamo belt in April. Another filed a notice saying she would sue after she was stopped by detectives outside the store when she bought a $2,500 Celine handbag in February."

Barneys denies this. I don't believe them. I do think these customers were racially profiled. Period. They were black. They were in Barneys. They were buying expensive stuff. They didn't fit the profile of the typical customer. Neither did Treme's Rob Green when he was cuffed by police at Macy's because he was "buying an expensive watch" for his mom and accused of credit-card fraud.

"Profiling is an unacceptable practice and will not be tolerated," the bill of rights reads. "Any stores who have pledged to follow the bill of rights are "committed to ensuring that all shoppers, guests and employees are treated with respect and dignity and are free from unreasonable searches, profiling and discrimination of any kind."

Let's not kid ourselves: Every business owner profiles his customers. It's part of the qualification process. We want to make sure that the customer is a legitimate buyer and that we're going to get paid. If a customer is dressed poorly, comes from a lousy neighborhood, behaves badly, drives an old car or gives off other signs of being a credit risk, then our antennae go up. And yes, race plays a part of that profiling. People, for whatever reason, have their prejudices. Some white people don't trust black people. Some Orthodox Jews don't trust Reform Jews. Some black people don't trust black people who have darker skin. It's silly. But it's reality. And unfortunately, a business owner's prejudices ultimately make up his rationale for doing or not doing business with a certain customer.

Profiling helps when qualifying a customer. But here's what I've learned: morality aside, racial profiling is totally ineffective. I've had the scariest looking black guys from the worst neighborhoods in Philly hire me to install software and they've turned out to be great customers. I've been employed to do the same at the plush suites of coiffed-up white men from the Main Line with Yale degrees who stiffed me and treated me terribly. The color of your skin is a lousy determination of one's ability to pay. Racial profiling is a poor way to evaluate customers. It's ineffective. More importantly, it's unnecessarily risky.

And it's getting riskier as our country's racial makeup dramatically changes. There are more customers with different colored skin and speaking foreign languages than ever before. There are 53 million Hispanic Americans in the U.S. and the Census Bureau predicts this number will increase to 128.8 million by 2060. What’s more, 44 million African Americans make up the largest minority in the U.S.. The population of Asian Americans grew 46% from the period 2000 to 2010, more than any other major race group. As these numbers grow so does the ineffectiveness of racial profiling as a means of qualifying customers. This is America in 2014. If you want to do business in U.S. today you must accept this. Otherwise, you will go out of business.

Barneys and Macy’s and yes, even the New York City police (they were part of this debacle too) need to accept this. Companies that allow a corporate environment where racial profiling is part of their customers' qualification process will ultimately be doomed to fail. They will be singled out in social media and lampooned in the news. They will be forced to humbly apologize to society with silly statements like a "customers' bill of rights." There will always be people like Al Sharpton looking for an opportunity to further their own agenda by picking on corporations who make these mistakes. But thank God for guys like Sharpton. Whatever you may think of him, he's there to remind people, particularly business people, not to let race be a factor in how you qualify your customers. The practice is not only morally wrong, it just doesn't work very well.

Last updated: Dec 11, 2013

GENE MARKS | Columnist | Owner, Marks Group

Gene Marks is a columnist, author, and small-business owner. He oversees the Marks Group, a 10-person technology consultancy to small and medium-size businesses. A certified public accountant, Marks has also worked in the entrepreneurial services arm of KPMG. He writes for The New York Times, Forbes, and The Huffington Post.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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