Merry-Go-Round Enterprises Inc. has ended a long-standing practice of marking checks written in its 675 stores nationwide with a code identifying customers by race, the clothing retailer announced yesterday.
The decision came in response to inquiries fielded by the Joppa-based company after the policy was disclosed yesterday in the Boston Globe. Merry-Go-Round owns three upscale clothing outlets in Boston known as Cignal stores, and a Colombian-born customer at one of them was angered to learn of the racial identification practice, according to the Globe.
In Baltimore, Merry-Go-Round representatives apologized to a spokesman at the national headquarters of the NAACP and said the check-coding practice had been discontinued.
"I talked to them earlier today and they faxed up a release that indicated that the policy had been rescinded, and they apologized for it," said Jim Williams, director of public relations for the NAACP. "They couldn't explain to us why it was ever instituted in the first place."
In addition to racial identification, checks also were marked with a customer's sex and Social Security number, as well as a number identifying the store where the purchase was made.
"For some period of time, in the company's check collection department they recorded various identifications on the checks themselves," said Bruce Harrison, a Baltimore lawyer representing Merry-Go-Round.
"It had no relevance to the company's acceptance of checks," Mr. Harrison said. "There was no attempt to hide the practice. It was clear that nobody had considered the possibility of this practice being misinterpreted.
"While it's clear that the company is embarrassed with regard to thisbeing misinterpreted by someone and can understand how this might be misunderstood by someone, the company has not used this for any improper practice at all," Mr. Harrison said. His firm, Shawe & Rosenthal, represents Merry-Go-Round in labor matters.
Michael D. Sullivan, Merry-Go-Round's chief executive officer, elaborated on the check-coding policy yesterday.
"It was really always for identification, and only in the simple event that the check does not clear," Mr. Sullivan said. "You need to be able to identify the customer if the check does not clear, and you want to be able to prosecute to collect a bad check. The first thing they ask you for is a physical description of the customer."
Asked if he could understand the check-coding flap, Mr. Sullivan said: "I can't, except if they thought that we were deciding whether or not we were going to accept their check. But that wasn't the case, and it never has been."
The practice was dropped "immediately -- not that we feel we've done anything wrong, but we're in the customer service business," he said.
Merry-Go-Round posted record earnings for the fiscal year that ended Feb. 2. Net earnings increased 68.6 percent, to $37 million, or $1.10 a share, from $22 million, or 69 cents a share, last year. Meanwhile, revenues increased 31.2 percent, to $628 million, compared with almost $479 million a year ago.
A co-founder of Merry-Go-Round, Baltimore businessman and philanthropist Harold N. Goldsmith, died in a Colorado plane crash in February.