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Will Warranty Enforcement Be Amazon Marketplace's Achilles' Heel?

When it comes to competing against Amazon, eBay or even Japan's Rakuten, one of the more challenging aspects is their third-party marketplaces, which give each a seemingly endless inventory at minimal risk. But the odds may be getting more even, as shoppers are starting to notice that some manufacturers are strictly enforcing their authorized reseller rules.

The immediate impact on shoppers is they may find that the expensive flat-screen TV, surround-sound speakers or refrigerator that looked like such a bargain on Amazon voids the warranty. The arguably-unrealistic expectation from consumer goods manufacturers—which sharply strengthens the hands of traditional e-tailers trying to fight against these third-party marketplaces—is that shoppers would not only notice the actual name of the merchant shipping the item, but would take the time to run that name on the manufacturer's site to see if they are truly an authorized reseller. Or they could just make the purchase from Target.com or Bestbuy.com and know for certain.

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Congress Wants To Regulate Customized Pricing. Yeah, That Will Certainly Work As Intended

August 15th, 2013
If legislation pending before the House Energy and Commerce Committee is passed and signed into law, online merchants will be severely restricted in their ability to use "big data" and behavioral advertising to help set prices, discounts or coupons for customers. Fortunately or unfortunately (depending on your position on the legislation) this being the current Congress, it is unlikely that anything will actually happen. Nevertheless, this reflects the growing unease about the concept that you and I will be charged different amounts for the same product or service based upon the data collected about us, pens Legal Columnist Mark Rasch.

Recently, Rep. Susan Davis (D. Cal.) introduced H.R. 2487: the Ensuring Shoppers Honest Online Pricing Act of 2013." In the world of cutesy acronyms, this is the E-SHOP Act. The law would require the Federal Trade Commission to promulgate rules and regulations "requiring an Internet merchant [with a total annual gross revenue of more than $1,000,000 indexed for inflation] to disclose to each consumer, prior to the final purchase of any good or service, the use of personal information in establishing or changing a price." This would not include additional costs associated with taxes or shipping based on the consumers’ address.Read more...


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London’s Recycling Bins Don’t Do Mobile Tracking Anymore. (Until This Week, They Did.)

August 14th, 2013
At a time when many retail chains are trying to navigate the public-relations minefield of customer tracking, disclosure and data use, a story from London is a useful reminder that nobody is getting this right. On Monday (Aug. 12), the government told a startup called Renew to stop using its recycling bins in London's financial district to track passers-by by way of their phone signals.

Wait, recycling bins? Yes, 100 very high-class recycling bins outfitted with large, Internet-connected digital screens that show advertising (the financial district's government—yes, it has its own government—gets 5 percent of the airtime to display public announcements). But recently Renew added a new feature to a dozen of the bins: the ability to capture any passing smartphone's unique MAC address if it has Wi-Fi turned on. (Which, these being financial-district yuppies, is pretty much a given.) You can see the possibilities—but not necessarily all the possibilities that Renew sees.Read more...


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Survey Finds Personal Recommendations Half As Influential As Comments From Strangers. What Can That Possibly Mean?

August 14th, 2013
In our ongoing looks at survey stats and why they often don't mean what you might think they mean, here's a fun one. A new report from comScore and Millennial Media has a chart that looked at "Influential factors when purchasing a product on a smartphone" and beyond the obvious findings (73 percent of all such purchases were influenced by price) was this non-intuitive gem: Personal recommendations (18 percent) were about one-half as influential as customer reviews from strangers (35 percent).

Our initial reaction was that the word "personal" was meant in a social media sense, such as LinkedIn considering every connection of every one of your connection as part of your network—or friends of friends on Facebook or anyone who follows you on Twitter. But apparently this isn't the issue, as one spokesperson for the report said it was considered true "friends and family."Read more...


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Is Domino’s Site Getting A Tad Bit Defensive?

August 13th, 2013

Automated Web responses to consumer comments are great time-savers, presuming the programming assumptions

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don’t get too defensive. This is not to suggest that Domino’s Pizza has reason to be defensive—although we continue to love this 3-year-old Colbert Report examination of Dominos quality—but their comment seemed to be a bit on edge when a shopper praised the product, posting “Best Pizza Ever! Pan Pizza (smiley face). Keep up the good work, guys!” The system replied “So sorry about that” and then asked for more details “so we can have this addressed.”

This was noted by Consumer Reports’ Consumerist site, which added the appropriate comment: “You know how some people are conditioned to believe that any statement directed at them must be a complaint, so they don’t know how to react when someone says something nice?” The story speculated the pizza chain’s online bot might have been trained to assume that a combination of exclamations points and smileys might be sarcasm. Although true, it might be even simpler than that. Such a combination is more likely to be from a negative comment than a positive one. Either way, what message does this send site visitors and prospective customers?…


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Harbor Freight Breach May Be Biggest Of 2013, Issuers Say

August 12th, 2013
What looked initially like a two-store payment-card breach may end up being one of the biggest breaches of 2013. In late July, the 425-store discount hardware chain Harbor Freight Tools posted signs in its stores, warning customers that there might have been a problem with some in-store card transactions. Now it appears thieves were using multiple kinds of malware to tap transactions between June 14 and July 20, and the breach has affected at least 30,000 card holders at just two card issuers. That's eventually expected to climb into the millions.

Harbor Freight itself isn't saying much except that it hired Mandiant to investigate and that the malware has been found and blocked. But card issuers and card brands are now sending out advisories about possibly compromised card numbers on nearly a daily basis, according to BankInfoSecurity, which has been tracking the breach. And it's only in the past two weeks that fraudulent transactions linked to the breach have begun to increase significantly—suggesting that the card numbers are just now beginning to be sold to cashers.Read more...


Sephora Buys A Software Vendor. Wait, Can They Do That?

August 9th, 2013
In the kind of move you'd expect from Walmart (NYSE:WMT) or Amazon (NASDAQ:AMZN) but not a retailer who couldn't make the NRF's Top 100 list, beauty products retailer Sephora has acquired a software startup. Last Wednesday (Aug. 7), the 1,300-store chain said it has acquired Scentsa, the company that developed Sephora's touchscreen Fragrance Finder in 2008 and its Color IQ system last year—a pair of in-store kiosk systems that have become signature features for Sephora.

While it's not surprising for a $2.6 billion retailer to develop in-store technology like that, no one seems to think of actually buying the startup as something most retailers can do. In part, that's because most chains are deeply marinated in the buy-don't-build concept, which makes perfect sense when it comes to ERP but no longer really holds for non-enterprise software. Besides, we're not talking about acquiring IBM here: Sephora said the acquisition will add eight or ten people to its payroll.Read more...


Court To Fed: Keep The (Inter)Change

August 8th, 2013
On July 31, a federal court in Washington sent shock waves through the merchant, banking, and credit/debit card industry by overturning the Federal Reserve's rules implementing limitations on the interchange fees banks can charge merchants for processing signature- and PIN-based debit cards. In doing so, the Judge ruled that the Fed had not reduced these fees enough to comply with the wording and the intent of Congress—and sent the rules back to the drawing board.

While this is good news for merchants and bad news for banks—or will be, once the new lower-fee rules are in place—how much the good news is worth depends on how much a debit card transaction costs, writes Legal Columnist Mark Rasch. And just as important is who gets to decide what a "cost" is.Read more...


Can VeriFone Actually Outsource PCI Problems?

August 7th, 2013
In theory, you can't outsource PCI issues, but VeriFone wants to try. On Monday (Aug. 5), the POS maker announced VeriFone Point, a payments-as-a-service offering that basically takes everything in the store except the PINpad out of PCI scope—and, as far as we can tell, the PINpad doesn't belong to the retailer, so that's somebody else's problem too.

This should be a really good idea, and maybe even a good product for some chains if it's implemented right (we haven't seen details yet). But let's imagine it is: The PINpad belongs to the service provider. Card data is encrypted and transferred via the service provider's network, not the merchant's. A token is kicked back to the store POS with the card approval, so the merchant can track customers and meet branded-cart transaction detail requirements. No card data ever comes near the merchant's systems. What could possibly be wrong with this plan?Read more...


CMOs, Not CIOs, Now Control 11 Percent Of Retail IT Spending

August 7th, 2013
Almost 20 percent of the $60 billion in annual North American retail IT spending isn't under the CIO's control. Who's spending most of that $11.6 billion? The chief marketing officer, according to a report that IHL released last Friday (Aug. 2). And instead of being just a few limited solutions areas, it looks like CMOs are using their 11 percent of total IT spend to dive into traditional IT operational areas. Translation: Yes, they're buying and running hardware, not just paying for software and services without IT's OK.

That kind of rogue IT activity isn't new, and IT departments in and outside of retail have been dealing with it for decades. What's different is the scale. "Hardware" used to mean a leased minicomputer sitting in a closet, running some specialized application cheaper than what IT would charge. Now CMOs are spending enough to create their own miniature IT shops, and the first the real IT shop will hear about it is after a catastrophe so bad that marketing can no longer hide it—which, with an in-department IT budget that big, can be one heck of an IT catastrophe.Read more...


When Replacing NFC, Tech Is Really Not The Issue

August 7th, 2013
Seems that the thing to say today, when discussing a retail mobile interaction method (be it for payment or loyalty or couponing)is to say it's an alternative to NFC (Near Field Communication). What a horrible thing to say about a technology (in the U.S., at least). But the characterization—or is it an insult?—misses the point about NFC.

More precisely, it misses why NFC has fared so extremely poorly in the U.S., especially for payment. The comparison of technologies—be it Light Field Communication (LFC) or using the touch-screen of a phone such as is being done by TouchBase—to NFC usually implies that if NFC phones were more plentiful or if the POS interface was simpler or if the phone connection was faster, then NFC would have flourished. The reality, though, is that while those tech issues are true and were obstacles, tech problems weren't anywhere close to NFC's biggest headache. It has always been the business issues—and none of today's much-touted approaches seem to have a solution for that.Read more...


How To Deal With Merged Channel Inventory?

August 7th, 2013
As merged channels (also known as omnichannel) become the default for an increasing number of retailers, the challenge of efficiently handling the supply chain and managing inventory becomes exponentially more complex. The goal in a merged environment is channel agnosticism, in that the chain’s management shouldn’t care whether a customer starts a transaction in mobile and completes it in-store or starts it with the call center and tenders the transaction online or if the research, purchase, payment and pickup are each handled with a different channel.

Store management should care as much about whether a transaction started in mobile or in-store as for whether an in-store entered the store through the South entrance or the West entrance. True merged channel thinking would say, "What do I care how they came into my store as long as they came in?"Read more...


SAP Exec Who Switched Barcodes At Target Cuts Plea Deal

August 7th, 2013

Remember that SAP exec who last year was arrested for slapping fake barcodes on products within a Target—and his defense was that he was simply testing his company’s systems? Seems he cut a plea deal this month with county prosecutors in California, agreeing to plead guilty to one burglary count. The plea deal recommends to the judge a sentence of one month in jail, five months of home detention and three years of probation.

If he was really just testing SAP systems as his lawyer argued in court, this suggested sentence and conviction might be unwarranted. But Thomas Langenbach, VP at the SAP Integration & Certification Center (ICC) at SAP Labs at the time of his arrest (LinkedIn still has him at SAP in that role), was said by police to have then sold the merchandise on eBay. If true, that rather strongly undermines the pure research defense. East Inflatable Rentals


Walmart’s Scan & Go Change Reminds Us How To Make Mobile Work

August 5th, 2013
One of the many advantages of mobile payment is significantly expanding CRM reach, getting to know about a far greater percentage of all of a shopper's purchases. Nowhere is this more attractive than with Walmart, which has never had (and still doesn't) a traditional CRM. In the latest upgrade to the chain's Scan & Go mobile payment/self-checkout hybrid, Walmart takes this all-knowing tactic to the next level, giving shoppers a reason to scan physical receipts.

At its most simple level, the upgrade merely allows shoppers to scan physical receipts from Walmart (more precisely, to scan the QR codes printed on such receipts)to receive an electronic version. For the shopper, it's a nice way to reduce paper clutter and also organize purchases in one place. For Walmart, though, it's much more.Read more...


Self-Service Shifts Legal Risks, May Let Customers Off The Hook

August 1st, 2013
One of the great things about the Internet and computer technologies is that they can empower consumers and businesses to do things that ordinarily require a middleman. Consumers can purchase their own insurance, engage in banking transactions, deposit checks, make purchases, etc. They can do this both online and in the brick and mortar environment.

But this means that when the technology fails, it is the consumer who must suffer the consequences, writes Legal Columnist Mark Rasch—when ordinarily the risk of loss would have remained with the merchant. And he has more than a few day-to-day examples to make the point.Read more...


Sen. Chuck Schumer Wants The FTC To Start Doing What The FTC Is Already Doing On Mobile Tracking. Um, Right.

July 31st, 2013
U.S. Sen. Chuck Schumer has finally gotten around to asking the Federal Trade Commission (FTC) to crack down on in-store mobile tracking. At a press conference on Sunday (July 28) in front of a Manhattan store, Schumer decried the Big Brother-like surveillance that retailers engage in, demanded that retailers send shoppers a message letting them opt out before they begin tracking, and called on the FTC to investigate.

If that sounds a bit familiar, it may be because Schumer was saying back in November 2011 that he was going to call the FTC because two shopping malls were tracking customers by way of their phones. It only took him 20 months to get around to it. And in light of the fact that the FTC has been warning retailers for almost a year not to engage in surreptitious tracking—and is getting increasingly aggressive in its efforts—Schumer seems like he's a wee bit behind the curve. He also doesn't seem to have thought through his proposed send-an-opt-out-message solution. But we're sure he'll get around to explaining all that—in another 20 months or so.Read more...


SIMs Pwned With One Message! (Only About A Decade Too Late)

July 31st, 2013
We were going to do an in-depth teardown this week of one of the scariest-sounding cyberthreats we'd ever heard of: the ability to take control of a mobile phone just by sending it a carefully crafted malicious text message. The implications for mobile commerce, mobile payments and even in-store use of mobile phones sounded catastrophic for retailers. And based on early media descriptions of the work of Karsten Nohl, a security researcher at SR Labs in Berlin, it looked like a quarter of GSM phones might be at risk.

Then it was more like 10 percent of all phones. Now it turns out that, in the U.S. at least, SIMs that use 56-bit DES encryption—the security weakness that the attack depends on—haven't been sold for "at least seven years" by T-Mobile, "nearly a decade" by AT&T, and never by Verizon or Sprint. That means there's still a potential risk to any customer with a decade-old phone, but there's probably not enough of them to make them worthwhile targets for thieves. That makes Nohl's talk at Black Hat this week in Las Vegas interesting, but largely academic—which is exactly the way we prefer our cyberthreats.Read more...


Now Asda, Morrisons And Europe Are Going After Visa And MasterCard Over Interchange Too

July 31st, 2013
First there was the $7.25 billion interchange settlement that big chains mostly detested, largely because it would outlaw future interchange lawsuits. Then came a flurry of retailer lawsuits against Visa and MasterCard, charging that the card brands' fee rules violate antitrust law. Now three major UK retailers—Walmart's Asda, Morrisons and apparel group Arcadia—have sued Visa over interchange in London, and eight other retailers sued Visa separately at the same time.

Not to be left out, the European Union's financial services commissioner, Michel Barnier, unveiled plans on July 24 to cut interchange fees in the EU to 0.3 percent for credit card transactions and 0.2 percent for debit cards, which will eventually cut the retailer fees to Visa and MasterCard by about $8 billion a year. The interchange caps will initially apply to cross-border transactions, then be expanded to all card payments after 22 months (but no start date for that has been set).Read more...


Why Did Gonzales Hackers Like European Cards So Much Better?

July 30th, 2013
Last Thursday's (July 25) indictment of five more Albert Gonzalez gang members by federal prosecutors in New Jersey is a reminder of how big that operation was (and may still be) and how far authorities still have to go before they have it wrapped up—after all, only one of the five is in U.S. custody, with a second one awaiting extradition in the Netherlands.

But a sharp-eyed Washington Post reporter noticed an oddity in the indictment that has less to do with cops and robbers than with mag-stripe and chip-and-PIN: Stolen European card numbers were sold for $50 each, while U.S. numbers fetched a mere $10.Read more...


Walmart Sales Tax Snafu: How Did They Get This So Wrong?

July 29th, 2013
In a sterling example of what big retailers' POS software is not supposed to get wrong, Walmart has apparently been charging too much sales tax on two-for-one coupon deals in Pennsylvania in violation of the state's law. Walmart insists the way it handles coupons in Pennsylvania has gotten an OK from the state—despite the fact that Pennsylvania law appears to spell out exactly the situation in which Walmart is accused of collecting too much tax.

According to a class-action lawsuit that was moved from state to federal court last week, when a Pennsylvania customer uses a two-for-one coupon, Walmart charges sales tax on both items, but it's only supposed to charge for one. Because Walmart gets to keep 1 percent of the sales tax it collects as a collection fee, the chain is being accused of unjust enrichment from every coupon sale it has made since June 2007.Read more...


Changing Terms of Service? Be Ready For A Class Action Lawsuit

July 26th, 2013
Think you have complete control of the terms of service (TOS) of your website? As a retailer, you probably assume that you can dictate terms to customers, especially about any services you offer them besides selling them merchandise. And when photo-sharing website Instagram changed its terms of service in mid-January of this year, it probably didn't expect too many people to even notice. Those who did might be displeased with the changes, and might abandon the service or go to another one. But what Instagram should have expected, writes Legal Columnist Mark Rasch, was a class-action lawsuit.

And just such a suit was filed on July 16 in California Superior Court in San Francisco.Read more...


A Patent On Clicking Website Images? Nope, Appeals Court Affirms

July 25th, 2013
For once, JCPenney has something to be happy—not just hopeful—about. On July 22, a federal appeals court delivered what should be the final blow to a patent-infringement lawsuit that dates from CEO Mike Ullman's first stint in that job—and one for which JCPenney served as a stand-in for the entire retail industry.

It was in October 2009 that a company called Eolas, claiming it had patent rights to any interaction with images using a web browser, sued more than 20 big companies, ranging from Apple and Perot Systems to Frito-Lay and Playboy. By the time the case came to trial in 2012, most had settled, but half of those who remained were retailers: Amazon, CDW, JCPenney and Staples. As the jury deliberated, only JCPenney, Amazon, Google and Yahoo hadn't bought their way out. Then the jury came back—and invalidated all of Eolas's patents.Read more...


A New Retail Twist On Copyright Defenses

July 24th, 2013
Part of any retailer’s effective brand protection strategy has to include an "Open Source Monitoring" program – you know, monitoring social media and webpages for anything that could impact your good name, from defamatory comments about your CEO to photographs of employees taking a bath in the sink. But a recent case suggests a new legal approach, one that can take advantage of a copyright loophole, pens Legal Columnist Mark Rasch.

What one crafty attorney did was sue an offender in a John Doe lawsuit. When the defendant doesn’t show up, he got a default judgment. Then, armed with the copyright in the offending posting, Goren sues to remove the offending materials as a copyright infringement. Guess what else? No need to prove actual damages or harm to reputation. It gets you into federal court, too. And, if you register the copyright, you can get statutory damages. The miracles of copyright law and copyright lobbyists.Read more...


Amazon And The Limited May Be Stripped Of Their Brands When It Comes To Vanity Domains

July 23rd, 2013
After a week of meetings in Durban, South Africa, focused on vanity domain names, it looks like Amazon's (NASDAQ:AMZN) application to use its own name is still being denied, while U.S. apparel chains Express (NYSE:EXPR) and The Limited won't be able to block other applicants from grabbing their names. But one of the vanity-domain decision makers also acknowledged this week that all these cases may yet end up in court.

The quarterly meeting of ICANN, which is selling new top-level domains (what comes after the last dot in a web address) for $186,000 each, did result in the first four vanity domains being officially awarded, but none were for retailers or in the English language. At least some of the new names sought by U.S. chains should be awarded by the end of the summer, ICANN says. But what initially looked like just a very expensive way to acquire their own .brand names is now turning into a process that's effectively stripping some chains of their brands.Read more...


PCI’s Not-So-Open Global Forum

July 22nd, 2013
PCI's Global Forum is an open forum in name only, at least as long as it continues to force changes on members that they are not permitted to even know about until someone who has been briefed chooses to tell them, pens GuestView Columnist Stephen Ames. What makes him say that? He spins a story about how PCI really works.

He had just wrapped up onsite PA-DSS validations with his PA-QSA this month and a question came up about PA-DSS Requirement 4.2.7, which aligns with DSS Requirement 10.2, which is all about user access. Ames' QSA tells him that PA-DSS Requirement 4.2.7 is now always in scope, regardless of whether or not there is a user database within the application. Both of these options would cause application vendors to take on more liability. He searched the PA-DSS for a security requirement that aligns with PCI DSS 11.5 – File Integrity Monitoring – and there is none. Ames is certain that most application vendors would not take responsibility for file integrity monitoring at merchant sites. He can't understand why the SSC is forcing that upon application vendors when they don’t even have that requirement written into the PA-DSS.Read more...


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