Evan Schuman's StorefrontBacktalk

An intriguing blog discussion over at the Verisign security site, with the suggestion made that MasterCard has rapidly started upping its fines for PCI compliance issues. As the post asks, “Who poked MasterCard hard enough to wake them from hibernation?”

“MasterCard traditionally fined post-breach and, in some cases, we learned that MasterCard would fine merchants small, but consistent amounts to get the attention of accountants and finance gurus inside the company,” the post said, adding that times have now changed. ” So Level 1 merchants are being fined, at most, $25K more from MasterCard than from Visa, and Level 2 merchants are being fined a whopping $315K more from MasterCard. If your company is actually made up of multiple Level 2 retailers, this potentially means that you could owe double, triple, or more. MasterCard rolled out another change to acquirers as well and will require newly boarded Level 1 & 2 merchants to provide a compliant ROC from a QSA before they are allowed into the network. So those Level 2 merchants that have been changing processors every year, it finally caught up to ya.”…

When working on its annual study of manufacturer Web sites that try selling directly to consumers, Forrester Research pretty much found what it expected to find: that manufacturer sites are great for research with brand-loyal consumers, but the purchases are invariably made elsewhere. Forrester’s Sucharita Mulpuru, the principal analyst for Retail eBusiness and arguably the sharpest E-Commerce analyst working HTMLs today, said that, sometimes, the market works just as it’s supposed to. Many manufacturers were originally scared about offering direct-to-consumer deals, fearing that they’d undermine their channel and cannibalize sales. Turns out that consumers are smarter than they look and the product-maker sites haven’t hurt retail partners one little bit.

As Hershey’s concluded this month, the E-Commerce community trusts manufacturers to make stuff, not to sell it. It’s the exceptions that make the rule, Mulpuru said, pointing to two rare manufacturers that actually do make some direct to consumer sales: Apple and Dell. Apple does it by an almost biblically strict adherence to price, making the prices same regardless of whether the product is purchased directly, while Dell has a lengthy history of only selling directly (although it now sells through the channel). Still, Mulpuru argues that manufacturers should still offer E-Commerce for the CRM data collection and customer feedback info it provides.…

The details include an early PCI attempt to try and walk back the certification, retailers complaining about their names appearing in a breach notification letter and the vendor bringing in General Dynamics, a familiar name from the data breach probes of both TJX and Hannaford. Plus a former IT manager with the company claiming that they retain credit card data a lot longer than they say they do.Read more...

We point to this delightful story in Consumer Reports' The Consumerist site, where a frustrated consumer unsuccessfully tried to buy a pair of air conditioners from Sears. The point of this for us, though, is that consumer placed the order on the phone—dealing with a Sears call center—and yet he was being charged a couple of hundred extra dollars because of fine print on Sears.com. But given that the order was placed on the phone and that the call center rep mentioned nothing about the consumer being expected to go online to read a lengthy "anything we do wrong is not our fault" document, it seems something that Sears can not reasonably enforce.Read more...

"Our goal is to have it be completely comprehensive, for both online and offline," said Zoe Strickland, the Wal-Mart VP who serves as the chain's Chief Privacy Officer. "We need to govern all the different ways that we collect and use information. Privacy is not just about using the Web site. It's everything that happens when you're interacting with the company." The new policy opens the doors to consumers being able to examine their full customer files. Or does it? Read more...

In those mandatory situations, who owns that data? Given that there are no laws or even strict guidelines today about such capabilities, what's to stop a retailer from using the data for one legally mandated purpose—such as collecting state taxes—and then using it for an unrelated purpose, such as marketing or sales? Let's look at a few non-intuitive examples: Live streaming of a blacked-out sporting event, selling age-restricted content, export restrictions, state taxes and an insurance company monitoring driving speed.Read more...

Amazon has long held a much-deserved reputation for stellar technological execution, which is why their dastardly diabolical and delicious digital download delete disasters are so damn depressing and destructive. (Fear not. That last sentence has satisfied by alliteration needs for the next month.) In short, digital downloads bring with them a huge number of unanticipated IT problems, in what is likely a preview of mobile commerce nightmares around the corner.Read more...

Marketing will also share in the pain, as the typical—albeit unauthorized—assumptions that tracking a credit card of customer #1234 pretty much tracks customer #1234. That assumption—and all of the data decisions that hang off of that—would be tainted.Read more...

The mandate is being criticized by the Internet & Mobile Association of India (IMAI), which issued a statement asserting the measure will do little to prevent online fraud, since it will pertain only to payment cards originating in India. What it might do more effectively is make life hard for India's online retailers, said the group. "India is in an evolutionary stage in E-Commerce and this RBI directive may end up being the biggest deterrent to E-Commerce in the country, rather than an enabler," said the IMAI statement.Read more...

"Our customers tell us that to differentiate ourselves we must be proactive, we must inspire them and we must make grocery shopping easier and faster," wrote Nick Lansley, Tesco's head of research and development. "Perhaps this new immersive experience needs to be a great mobile phone application or perhaps a 3D virtual store or shopping through the TV set-top box or a third party recipe site where ingredients can be added straight to your basket."Read more...

A quick folo on a pair of stories we ran last week, where an attorney specializing in high-tech issues complained that a promotion on Microsoft’s new Bing search engine took his personal information but then welched on the deal by not delivering about $185 in cellphone discounts. This week, an attorney for Microsoft agreed to pay the originally promised amount.

The problem was that Mark Rasch, the former head of the U.S. Justice Department’s high-tech crimes unit, was told he didn’t qualify for the discounts only after he’d given Microsoft and AT&T his personal information during the application process. Although Rasch said that he got the money this week, what he didn’t get were any assurances that the companies would delete from their databanks the information he’d provided. “A Microsoft tech guy said, `You can delete your Microsoft Live account,’ but that doesn’t indicate what happens with my information that’s probably being shared with third parties,” Rasch said.…

Sears.com registered about 14.9 million visits in May, a 7 percent decline in traffic when compared to May 2008, according to Internet Retailer. The publication said Sears was one of six top 10 E-Commerce sites to experience year-over-year traffic declines in May. Netflix.com’s traffic slipped by 8 percent to 14.4 million visits, and eBay saw a 2 percent drop to 51.6 million visits.

The Internet Retailer compilation, based on data from Nielsen Online, also found Amazon’s traffic sliding 1 percent, to 49.7 million visits, and Adobe’s decreasing 2 percent, to 27.8 million visits. Although the sluggish economy clearly had an effect on site visitation, not all retailers were in sinking boats. Walmart.com’s traffic for May increased 5 percent over the same month in 2008 to 25.6 million, Target’s rose 4 percent to 24.6 million and Home Depot’s jumped 5 percent to 13.6 million, said the report. …

Online sales in Taiwan are expected to reach almost $9.5 billion this year, an increase of more than 30 percent compared with 2008, according to a Taiwan News report. The findings come from a survey conducted by the Market Intelligence and Consulting Institute, which found that, while travel “will retain the lion’s share” of Taiwan’s business-to-consumer online market, online clothing stores and boutiques will, for the first time, surpass consumer electronics and attain the second-place spot among product and service categories.

The study found that the biggest online spenders in Taiwan are between the ages of 20 and 39 and that men of all ages spend nearly twice as much online as do women. Taiwan consumers told the survey-takers that they primarily value good after-sales service, online privacy protection and product quality. Interestingly, the report noted auction sites appear to be losing some steam in the country due to consumer impatience: “MIC also observed that direct-purchasing has become more popular recently as consumers seem to have run out of patience with the long waiting process on auction Web sites.”…

A statement from Visa said that a "temporary programming error at Visa Debit Processing Services caused some transactions to be inaccurately posted" and that the glitch "has been corrected and erroneous postings have been removed. "It simply posted the wrong amount into online statements and it was corrected within hours," one Visa official said, adding that the specific amount varied slightly from consumer to consumer, but that they were all "equally large amounts" and were "in some cases identical amounts."Read more...

Clearly, the nature of information-sharing with major retailers makes the erasure claim silly, generally because it's not practical—and sometimes not even possible—to get all partners to surrender the data. As the cliché says, it's impossible to get the data back into the toothpaste tube.Read more...

This was fueled by lawyer Mark Rasch's discovery when he was burned attempting to get a discount from Microsoft's new Bing search engine. When it didn't deliver, he realized that traditional retail procedures no longer apply.Read more...

Sitemorse tested the first 125 pages of the retailers' sites and ranked them using several criteria including function, accessibility, code quality, performance and metadata. The top score attainable by a site was a 10. The top-scoring site was that operated by UK furniture maker/retailer DFS, which scored 9.54. Alas, the much deeper-pocketed Amazon scored 1.86 and the similarly well-heeled eBay only managed a 1.56. Sitemorse Founder Lawrence Shaw said the low scores related to failure of some rudimentary site functions and features, such as page descriptions, problems Sitemorse repeatedly finds when testing both sites.Read more...

Following word of a “if breached, we’ll cover some of your costs” program from Heartland, fellow payment processor Mercury Payment Systems has launched its own program, one featuring $40,000 of reimbursement from any of its retail customers that are breached. Mercury officials stress that it’s far from a reaction to Heartland, as Mercury started its program in late June and Heartland is only promising it for later this year.

The Mercury program is limited to retailers who “have successfully completed their SAQ and quarterly scans and remedied any highlighted issues,” said Kim Mackay, Mercury’s VP of marketing. “This is as much as 15K towards a 3rd party forensic audit and as much as 25K toward fees and fines. Although 40K doesn’t sound like much, our research has shown that our typical (Level 4) merchant would be covered. And this is regardless of whether they use our PCI program or someone else’s from a list of approved ASV’s.” Will this soon become a processor must-have? …

On the deployment side, about one in every 20 of the largest E-tail sites now support mobile, according to figures released by m-commerce consulting firm Acquity Group. But those rollouts reflect a lack of standardization (or even basic consistency) and suggest a community that is overwhelmed by the radically different environments (screen resolution, size, OS capabilities, etc.) offered by the major phones today in the U.S..Read more...

The overwhelming majority of retailers today that use streaming video use it as a toy, a fun thing that looks cool on the site but doesn't have much practical purpose. (A rare major vendor exception was a Staples two-way streaming video kiosk trial in Canada last summer.) What is so powerful about what Gourmet Gifts is doing is that truly recreates the one-on-one interaction that would exist in a traditional in-store gift basket shop.Read more...

The Web is wonderful at replicating—and sharply improving upon—the brick-and-mortar experience when it comes to utilitarian shopping, but brick-and-mortar has a huge edge when it comes to an enjoyable experience. Yes, for some people, shopping is a recreational sport and a social outing. By the way, those people tend to spend a healthy amount of cash.Read more...

It's not a coincidence that, for the last couple of years, Sears has been at the forefront of several major technologies, almost all of which resonant overwhelmingly with Gen Y, including social networking, mobile and companion shopping. These include being the first retailer to support 2-D barcodes, a new approach called a GiveTogether gifting program and a GPS-based mobile commerce application.Read more...

But July has chosen to remind us of these sad realities anyway, with a very successful DOS attack on government sites, a processor that knocked retailers offline because of a building fire and, oddly enough, Michael Jackson's passing. Jackson's passing sent scores of news sites crashing, but for reasons that frighteningly mirror circumstances the large retailers will face in late November.Read more...

Concluding that “its current (E-Commerce) business model is not sustainable,” Hershey has shut down its direct-sale Web site, killing the jobs of about a dozen Web employees. But whether this is more of an E-Commerce issue for the $5 billion chocolate maker or a channel conflict issue is unclear.

Hershey’s chocolates will apparently continue to be sold by a wide range of online retailers, suggesting that the nation’s largest chocolate company was simply cleaning up its channels, finding little extra profit in selling product directly. The site closure is “a strategic decision. Our present business model is not sustainable and we will continue to evaluate all options in E-Commerce, including strategic partnerships and licensing agreements,” said Hershey spokesperson Kirk Saville. But with many major retailers—including Canadian Tire and Borders–stepping back from E-tailing altogether, it’s hard to not look hard at any multi-billion-dollar player pulling out of the Web business without some concern.…

Every couple of weeks, it seems, another state makes news for attempting to regulate, tax or otherwise control retailers and retail technology. The toughest part, for merchants, is that states usually tackle the issues with little regard to being aligned with the efforts of their colleagues in other states or for the hardships their one-of-a-kind provisions impose on retailers. The laws just keep on coming. Nevada, for example, passed a data protection law last month that goes into effect Jan. 1, 2010. In addition to forcing businesses to use encryption when data storage devices containing personal information are moved outside the company's physical or logical control, the new law also mandates compliance with the Payment Card Industry Data Security Standard (“PCI DSS”) for businesses that accept payment cards.Read more...