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

August 1st, 2013

The same may be true for self-service POS terminals, including self-checkout, barcode-scanning apps and other remote payment options. A customer who attempts to use a self-scanner may face criminal charges for theft, shoplifting or worse if an item he tries to purchase doesn’t scan properly.

This may be particularly egregious in places like Montgomery County, Md., which discourages the use of store-provided plastic bags by charging a nickel for each one. Thus, a consumer is likely to simply pick up an item, run it past the scanner, and place it into his or her backpack or purse. If the item doesn’t properly scan, is the consumer then guilty of theft? After all, she put an unpaid item into her pocket or purse!

The problem is even worse when consumers provide the POS device themselves. Take for example Apple’s (NASDAQ:AAPL) EZ-Pay application. It permits consumers to use their own devices—iPhone, iPad or iPod—to scan and pay for items in the Apple Store.

Now, consumers may or may not have the sophistication to do this properly. If a consumer does not properly scan and pay for an item, or if the device, hardware, software or connection does not work as intended, is the consumer then guilty of shoplifting?

I think not. By expecting the consumer to be both consumer and merchant, and to fulfill the merchant functions, we eliminate an essential check and balance, and a clear assignment of roles, responsibilities and liability. When we blend these roles we create an untenable situation.

But not everyone agrees, which is clearly demonstrated by the arrest and sentencing last year of an 18-year-old college student for shoplifting at a New York City Apple Store under exactly this situation.

The problem will get worse as we embed payment technologies into devices. If a consumer swipes a payment device at a subway turnstile, and the turnstile fails to debit (or the device fails to acknowledge the debit) the fare, is the consumer guilty of theft of services? If the device has been altered or hacked, is the consumer (absent proof that they hacked or were aware of the hack) liable for theft?

Technology always blurs lines. The law needs to keep up. Until then, we are all going to be expected to do not only our jobs, but the jobs of the bank, the insurance company, the Apple store, and the meter maid. If I am going to do that, I want a bigger paycheck.

If you disagree with me, I’ll see you in court, buddy. If you agree with me, however, I would love to hear from you.


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Most Recent Comments

Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
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The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

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