For those retailers worrying about the legal threats associated with the Fair and Accurate Credit Transactions Act (FACTA), in particular the rule that says they can't give a customer a receipt displaying the payment card number, other than the last few digits of the payment card nor can it show the expiration date, they can rest a lot easier this week. That's thanks to a ruling on Wednesday (May 28) from a federal judge and the passage of a bill this week softening the law.
The new proposed law—which passed both the House and Senate this week and is awaiting President Bush's signature—essentially removes the expiration date requirement of the law. So assuming the president signs it into law, the bill just got a lot easier to navigate.
The core bill has run into quite a few legal setbacks over the last year and this week got another dose of judicial frowning.
On Wednesday (May 28), U.S. District Court Judge William Acker ruled in favor of retailers in some FACTA cases involving Hooters, La Paz Restaurante, Express Oil Change and Rave Motion Pictures.
The judge's ruling said the $100-$1,000 fines for every incident would be excessive punishment for retailers whose actions could not be shown to have cost anyone any money.
"As a matter of simple arithmetic, when the financial condition of each defendant is considered in conjunction with the expected number of FACTA violations, a class recovery would put each defendant out of business," the judge wrote. "Annihilation is assured if each member of the class gets what FACTA purports to guarantee him."
Acker found much of the FACTA receipt provisions to be beyond what Congress had the authority to do. "Without undertaking to write a law review article, or to write briefs for the anticipated appellees, this court, with some hesitation, but with little doubt, has reached the conclusion that the above-quoted provisions of FACTA, as applied to these defendants, are unconstitutional."
The judge's argument is that once a retailer is found to issue non-compliant receipts, a customer could deliberately come back repeatedly, solely to increase the amount of the fine.
"If the same customer returns to the same establishment five times in five hours and uses his credit card each time, there will be five FACTA violations, each of which will trigger a strict liability recovery of not less than $100 and not more than $1,000," the judge wrote. "The possibility for a misuse of credit cards by customers reaches astronomical proportions more than the possibility of misuse of credit card information by thieves."
Acker specifically takes exception—in an unorthodox interpretation—that giving the jury the option of fining anywhere from $100 to $1,000 is too much discretion. It's unusual, because courts generally allow jurors to make some decisions, subject to the approval of the court.
In this case, though, Acker disagreed.
"Courts and juries cannot be called upon to make up the rules as they go. Courts cannot be expected to tell a jury, 'Just do what you think is right' so long as you do not award less than $100 or more than $1,000," the judge wrote. "'Doing what is right' does not meet the standard of 'due process.' Many a jury has done what it thought was right and it was wrong. As an enforcer of the Seventh Amendment, this court must insist upon a jury's having a chance at fairly performing its adjudicative function and not simply flying by the seat of its pants. This court could not in good conscience tell a jury to award 'not less than $100 and not more than $1,000' and then wait for the jury's puzzled look."
The danger, in the court's view, is some retailers being treated very differently than others. "If a jury is allowed to wander indiscriminately between $100 and $1,000 for each willful FACTA violation, one jury can decide that a particular violation calls for $100, while another jury can
decide that precisely the same violation by the same vendor is worth $1,000, while other juries can, willy nilly, award something in between."
The judge then added a zinger at the legislative branch: "Congress is, of course, presumed to know what it is doing, a presumption here in jeopardy." |
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Over the last month, I've been struck by an unusually large number of reader E-mails that fundamentally question whether E-Commerce will ever truly work: Whether it will consistently make money, be profitable and be, well, worth all of the effort.
If the slip of a lip can sink a ship, perhaps a retailer's flick of the click can kill a prestigious campaign mighty quick. The best way for a retail chain to make a customer happy is to offer him/her a program that few others can get. And the best way to undermine that—as Best Buy discovered on Wed. (Sept. 3)—is to then accidentally make that offer to every single reward customer you have.
It looks like Amazon is no longer backing up its pricing, putting an end to its Post-Order Price Guarantee — a policy that allowed customers to recover the difference from an Amazon price drop within 30 days of a purchase. As of Monday (Sept. 1), customers who place orders on Amazon.com are not offered the 30-day guarantee, a customer service representative confirmed.
Security is nothing if not filled with seeming contradictions, and the latest version of PCI—slated to be officially unveiled next month (October)—is highlighting a beauty: To most effectively protect payment-card-related systems, protection must be focused on anything that is not related to payment card data.
Quite a few retailers have been involved in site changes to make the Web more accessible to those with vision difficulties, but Target has been the most aggressive in fighting such efforts. As such, Target's settlement has an especially strong chance of pressuring retailers to aggressively embrace such changes.
Wal-Mart on Wednesday (Sept. 3) launched what it dubbed the Walmart Smart Network—a series of next-generation digital-ad systems—to 2,700 stores. The funky aspect of this rollout is that all 27,000 screens will be centrally controlled via an Internet Protocol Television connection.
Site navigation problems and unpleasant booking engines are driving customers away from online travel sites and pushing them through the doors of traditional, more personable travel agencies. Even though sales for online travel sites are growing, fewer travelers are actually booking their trips online.
A TJX senior executive is apparently trying to push chip-and-PIN, arguing that cyberthieves are focused on the United States partly because we haven't adopted it. "Criminals, I believe, are focusing on the countries that haven't added that higher level of security," TJX Vice Chairman Donald G. Campbell said.
Calvin Klein finally gave its HTML blessing to E-Commerce, offering its first for-sale items on its Web site, although the E-Commerce launch is U.S.-only. Anyone visiting from outside the United States will be routed to the existing corporate brochure site.
It seems clear that most retailers are adopting one of two distinctly different strategies when it comes to data security and compliance. Let's label them Cost-Effective Compliance (CEC) and Compliance-Driven Security (CDS). Both approaches are based on best practices and solid risk management principles. But, GuestView Columnist David Taylor argues, they lead to quite different spending patterns, technology decisions and business cultures.
A retail IT lesson from the world of politics? Maybe. Web tracking firm Keynote was studied the text message blast sent by the U.S. presidential campaign of Barack Obama, the one in which his campaign promised to tell supporters his VP selection before it was broadly announced.
Has Amazon decided what it wants to be when it grows up? More to the point, are there indications that it has now decided that one thing it does not want to be is yet another thin-margined retailer?
The IT chief at Netflix has pointed the finger of blame for its site problems last month at "a database corruption event in our shipping system." The problem prevented customers from receiving their DVDs for about three days.
Almost a year after TJX settled with banks and bank associations impacted by the worst data breach in credit card history, another bank has come forward with its own lawsuit against the retailer, claiming the incident compromised some 4,000 of its customer accounts.
The number of data breaches reported as of Aug. 22 of this year has already surpassed the total number in all of 2007, including a new one from Macy's impacting some 4,100 customers.
On the best-paid list of CIOs at publicly held companies, Best Buy's Bob Willett ($4.7 million), Home Depot's Bob DeRodes ($4.3 million) and Kohl's Thomas Kingsbury ($2.5 million) stand at the top, doing the pocket-protector crowd proud.
With the frequent product changes executed by any large e-tailer's site, the tech hurdles of launching a mirror site in another language can be daunting. But this challenge has created a small industry of companies that are trying to facilitate rapid globalization for e-tailers.
JCPenney is testing the Australian waters a bit with an online push. The retailer has a local URL and an Australian company handling all operations, but it's still shipping merchandise from the States and asking Australian shoppers to wait "12 to 14 working days. This "request" prompted one Australian publication to ask "whether Australians would be prepared to wait two weeks to receive something purchased online."
In an overall down market where the 150-store Nordstrom chain is seeing a 4.3 percent sales drop, online operations are accounting for 15 percent, hitting almost 8 percent of all sales. Company execs there now project online to soon top 10 percent.
The new version of PCI due out in October will let the outdated WEP wireless security standard stick around for almost two more years, while also reducing the required frequency of firewall rule reviews.
It's late on a Friday night and as Jane Smith walks into her local grocery frozen food aisle, she notices a neighbor walking away carrying a frozen pizza, right near a digital advertisement for 20 percent off of a Budweiser six-pack. Jane reaches into the freezer to grab her favorite Häagen-Dazs vanilla ice cream but notices that the digital ad instantly changes to hawk 40 percent off fresh apple pie in the bakery section.
It's generally accepted that any key economic issue—whether it's a housing slump, rising gas prices or tax refund checks—can have a sharp impact on business spending. But the IHL Group is floating an interesting theory that recent gas price hikes are going to have a very specific and direct impact on IT spending next year.
After years of trials with only the rarest evidence of CFO-friendly RFID ROI, shelf stock monitoring is quickly emerging as "the first major application of RFID in retail with a strong business case," according to a new report from London-based RFID analyst firm IDTechEx.
While North American retail execs are planning for trivial—if any—IT investment increases this year, with "more than one-quarter of retailers expecting lower IT spending," more than half of their Asian Pacific counterparts are preparing for significantly higher IT spending, according to new Forrester numbers released this week. A bit of the Tortoise and the Hare perhaps?
A gang of data thieves in Ireland has well learned the lesson that the best place to hide is in plain sight. The group hit a large number of retailers throughout Ireland and grabbed more than 20,000 payment cards by placing skimmers on card-swipes by wearing what appeared to be maintenance uniforms and saying that they were performing bank repairs.
These days, when U.S. government officials want to ask questions about privacy and data security, it's never clear if they want to protect consumers' privacy or learn the best way to violate it themselves. But retail execs who want hints can drop by a Sept. 22 hearing at the U.S. Federal Trade Commission's Washington, D.C., headquarters.
Retailers who are worried about RFID security problems will have more details available to them now that a federal judge has killed a gag order on MIT students who had identified flaws in Boston's contactless RFID subway cards.
Based on the PCI Standards Committee's official hints about what will be in the 1.2 release, it appears that clarifying when and how virtualized servers can be PCI compliant didn't make the cut. But before the server and security geeks start lighting their torches and getting all "vigilante" on the card brands, let GuestView Columnist David Taylor make his case for why it won't matter in the slightest.
As major chains are doubling up their focus on computer-savvy young consumers, some are finding their aversion to avatars giving in to their adoration of avarice.
A "persistent and mysterious technical glitch" has severely disrupted business operations at the massive online film rental site Netflix, "potentially affecting millions of its customers."
