advertisement
advertisement
advertisement

This is page 2 of:

New Jersey Giftcard Law Is Much More Complicated For Retailers Than Even Its Critics Believe

April 12th, 2012

And let’s even ignore the technical problem of having to modify the part of each in-state retailer’s POS system that’s used for activating giftcards, so it can handle the buyer’s ZIP code. That’s annoying for big chains and a bigger problem for small merchants, but complying with the law is an expense, not a technical impossibility.

The really nasty problems are in the implementation details. An in-state giftcard vendor dealing with cards that could only be used at brick-and-mortar in-state stores? That’s relatively simple. It’s also a situation that doesn’t exist in merged-channel retail reality.

What happens when a New Jersey resident buys a giftcard from a chain’s E-Commerce site—say the customer goes to Target’s Web site and buys a giftcard to mail to an Illinois resident? Does Target have to collect the ZIP code and forward it to New Jersey? What if the giftcard is to be mailed to New Jersey? (American Express has stopped selling giftcards through stores in the state, but said it will still sell them to New Jersey residents online. Presumably AmEx doesn’t think it still has to collect ZIP codes.)

What happens if a giftcard is bought online and issued electronically? What if it’s bought online by a non-New Jersey resident and picked up in-store by a New Jersey resident who’s the recipient of the gift?

What if there’s an E-Commerce kiosk in the store and the giftcard is bought through the Web site that way?

Who’s liable if the person picking up the card lies about not being a New Jersey resident—the customer? The retailer? The card issuer? The difference between a giftcard lasting essentially forever or only two years may make a customer believe it’s worth lying about.

What happens if a chain sells a card (and collects a ZIP code) in New Jersey but stores the ZIP code at the datacenter in California, where privacy laws class ZIP codes as legally protected personal information and collecting or storing them is impermissible in most cases? Is the chain at legal risk?

Will there be a PCI impact? (Isn’t there always?) What if the state decides it needs to audit a retailer’s or vendor’s compliance by matching up Visa- and MasterCard-branded giftcards with account numbers and amounts?

And why are all these questions without answers? Because two years after law was passed, the New Jersey Treasury department hasn’t issued guidelines for how and when ZIP codes do and don’t have to be collected—or exactly how giftcard holders will recoup their two-year-old card’s value if it’s drained by the state.

One state spokesman suggested that the recovery process will involve filling out a state form. Another said last week that cardholders would still be able to use the card, but if New Jersey had already laid claim to the card’s value, the retailer would have to either jump through administrative hoops or eat the loss.

And doesn’t that make you want to sell giftcards in the Garden State?


advertisement

Comments are closed.

Newsletters

StorefrontBacktalk delivers the latest retail technology news & analysis. Join more than 60,000 retail IT leaders who subscribe to our free weekly email. Sign up today!
advertisement

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...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
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...

StorefrontBacktalk
Our apologies. Due to legal and security copyright issues, we can't facilitate the printing of Premium Content. If you absolutely need a hard copy, please contact customer service.