Evan Schuman's StorefrontBacktalk

This massive item-level selling-floor-to-the-stockroom project began as a pilot at the Bloomingdale's New York SoHo, which is a pilot-friendly place apparently—the chain is now using Bloomingdale's SoHo to test Google Wallet. As a practical matter, this rollout will give Macy's a wide range of technology options as the potential of full item-level RFID gets closer. But Macy's is officially focused fully on just one RFID function: faster and more accurate inventory.Read more...

As mobile payments inch along, retailers are trying to balance two concepts: the ideals of mobile-payment strategies with the mundane, practical logistics issues. And nowhere did those two concepts collide more clearly than in the one-location $3.5 million specialty store in Plantation, FL. How could someone at the door verify that the receipt is legitimate? For that matter, if the associate at the door is shown a digital receipt, how is he/she to know if it's a valid receipt—as opposed to a doctored image—unless the associate scans the receipt's barcode and runs a check to see if that item was indeed purchased in the prior 10 minutes?Read more...

Hard on the heels of a September 23 demonstration showed that Secure HTTP is no longer all that secure, Google and Microsoft have both recommended that Web sites dodge the problem by changing the encryption they use. (And how often do these guys agree on anything?) Many E-Commerce sites use the Advanced Encryption Standard (AES) for encryption, but AES is vulnerable to the security hole demonstrated last week. However, the older RC4 is immune to this particular attack, and that’s what Google and Microsoft recommend E-Commerce sites (and other sites receiving sensitive data such as payment-card numbers) use.

Does this demand an emergency fix? No, but it’s more serious than many experts thought before last Friday’s demonstration. Security researchers Juliano Rizzo and Thai Duong required only two minutes to break into a PayPal user’s encrypted session—fast enough to make their attack feasible for cyberthieves (although still extremely difficult, at least until some thoughtful hacker turns it into a script any 13-year-old can use). But switching from AES to RC4 is relatively painless for online retailers. The real fix will require upgrading security protocols on hundreds of millions of Web browsers and servers.…

But in light of this bill's lengthy exemptions and data breach size limits—public disclosure, for example, is only required when a breach impacts more than 5,000 people in one state—the National Retail Federation issued a statement saying it fears that with so many retailers having to report data breaches under this legislation people might get bored and start to ignore the notices. NRF dubs this scenario "notice fatigue." What does it say to the nation when the chief lobbying organization charged with protecting retail interests publicly trumpets the fact that it believes there will be a huge number of data breach reports if full disclosure is required? Yeah, that makes me want to go and buy stock in Wal-Mart and Walgreens right away.Read more...

The Federal Trade Commission is reworking its rules on how E-Commerce sites have to deal with children (12 years old and younger) who visit. Yes, “uh-oh” is the correct response. The FTC is officially soliciting feedback on its proposed changes to the Children’s Online Privacy Protection Rule. It might be a good idea to take a peek at its changes and offer some feedback.

Do they need help? One of the FTC’s questions was whether certain emerging technologies are “Web sites located on the Internet” or “online services.” Web sites located on the Internet? As opposed to what? One begins to wonder if the FTC understands that the Worldwide Web and E-mail and FTP and newsgroups and IP services are all part of the Internet. No matter. The issues being debated include parental consent methods, along with how it’s determined who is a child and who isn’t, given that some children might simply opt to lie. From an E-tail perspective, there are huge implications about verification, handling this data and delays before legitimate information can be gathered. The rules themselves look fairly benign, but the FTC needs to hear more comments from E-tail IT folk about the implications of various methods of authentication and collection. Better to help form the rules now then to complain about them later. (Note: As an IT person, you do have an obligation to do both.) …

The Big Y chain, with 61 stores in Connecticut and Massachusetts, announced this month that it would kill all of its self-checkout lanes. "In the battle of Service vs. Self Checkouts, service won," the chain said in a short statement. In a conversation with a chain executive, though, the decision sounded a lot more complicated. To be blunt, it didn't seem as if the chain had ever been all that fond of self-checkout, which it first deployed back in 2003. "We were one of the last chains to get into the self-checkout game. We were really dragging our feet," said Claire D'Amour-Daley, the chain's VP for corporate communications.Read more...

This means, writes Legal Columnist Mark Rasch, that Texas law would apply to the relationship between a retailer in Tuscaloosa and a consumer in Birmingham, AL, a retailer in Louisville and a consumer on Lexington, KY, a retailer in Albuquerque and a consumer in Santa Fe, NM, or a retailer in Sioux Falls and a consumer in Rapid City, SD.Read more...

In the real world, many retailers and franchisors (and franchisees) try to qualify to use SAQ C. PCI Columnist Walter Conway calls this the "anything but SAQ D" approach. In his experience, the biggest challenge of SAQ C is isolating the application server(s) from the rest of the merchant environment. Conway knows merchants who have devoted a lot of effort and changed their network so they can qualify for SAQ C. A recent clarification by the PCI Council, however, limits the ability of many retailers and franchisors to use this SAQ.Read more...

The good news: The security hole can be closed by upgrading E-Commerce sites to a version of the security protocol that has been available since 2006. The bad news: Most E-Commerce Web sites and most Web browsers are still using the version with the security hole. The security-guru consensus: The sky isn't falling yet, and browser makers may be able to implement a tweak that blocks the threat without a new security protocol.Read more...

Domino's enjoyed a piping hot multi-hour site outage that day, shortly after it launched a Facebook promotion—which was also shut down—to give away 100,000 pizzas in a new gourmet-style pizza line dubbed Artisan Pizza. The chain isn't saying exactly what happened to cause its outage, but it is saying that customers—presumably ultra-intent on winning the free pizzas—did something unfair. Ostensibly, it was some sort of denial-of-service variation where they would flood the servers with responses, thereby getting lots of entries in and denying others the ability to do the same. Domino's is declining to say precisely what it thinks was done. But the chain still apologized for it on Facebook on Wednesday (Sept. 21).Read more...

The problem isn't just that PayPal has apparently done nothing to pull together its pile of recently acquired technologies into a suite of payment services. It's that each of these services has real problems that have dogged retailers' efforts at mobile payments for years. And astonishingly, PayPal doesn't seem to have solved any of them.Read more...

Is the KFC chain now going to have to tell employees that it’s Finger Scannin’ Good? That’s a possibility, given a move announced Tuesday (Sept. 20) by two of its franchisees to abandon password access to POS and switch to a fingerprint biometric authentication system.

The advantages are initially compelling, in that it makes it so much harder for associates to impersonate managers for fraud, whether it’s for stealing money directly, manipulating payroll records or letting employees falsely sign in for each other. The problem is that bored, persistent and resourceful KFC employees—armed with almost unlimited access to these biometric devices and potentially lots of free time during slower parts of the day—are quite good at finding security holes. Will it be a piece of Scotch sticky tape that will fool the system? Maybe the system can be fooled into accepting a new—and non-existent—manager? Given that the fingerprints are not being stored (only a numeric representation of the fingerprint’s datapoints), could the number be faked instead? All in all, this biometric approach is probably a very good idea. But few things are secure enough to hold up to under-paid, young, bored QSR employees, especially when management will likely be slow to react, preferring to believe that fingerprint biometrics are foolproof. …

Consumers are now empowered to do genuine harm to retailers—harm that would otherwise be addressed through some legal recourse, writes Legal Columnist Mark Rasch. Consumers can commit commercial defamation (think Oprah and the beef industry). They can manipulate stock prices through online campaigns. They can shoplift or otherwise steal goods, products or services. They can release sensitive personal information about the company, its products or plans, its personnel or processes. They can hack into computer systems and steal information. They can infringe or disparage trademarks. They can infringe copyrights. They can modify hardware or software. They can start a grass-roots online campaign to literally destroy a business. They can organize online protest movements, flash mobs or other demonstrations. They can launch denial of service attacks. Consumers can even use your goods and services to harm others.Read more...

The SAQ is an excellent starting point, pens PCI Columnist Walter Conway. But it is not (and does not promise to be) an all-inclusive approach to achieving—not just validating—PCI compliance. In a previous column, Walt noted the PCI Council's point that slavishly (his terminology) completing a SAQ may not be enough to be PCI compliant.Read more...

The big news is where the Council says in the report that "it is expected that PCI DSS controls that will be applicable to a merchant's validation will include (but will not be limited to): Protection of media and devices; Maintaining information security policies and training for personnel; Processes for management of third-party providers (including P2PE provider); Incident response and escalation procedures." That means a retailer implementing approved P2PE might reduce its PCI compliance to just requirements 9 and 12 (and maybe 11.1). The Council's words "will include (but not be limited to)" are important. We have, effectively, a new PCI standard with the accompanying infrastructure: detailed hardware and software specifications, an independent P2PE validation process and two new flavors of specialized QSAs.Read more...

This is a very clever project, but I have to wonder whether it has any practical value. There is something ultra-sensitive about a bathroom mirror. Yeah, there's that naked thing and the video-streaming thing that may not play well together. When I think of all of the potentially creepy implementations of RFID, mobile geolocations and facial recognition, I think an interactive video-capable mirror using Microsoft Kinect has got to rank right up there.Read more...

Why such delays? First, the Council wants retailers to contract only for P2PE applications that appear on a Council list of applications validated to be PCI compliant. The problem? That list doesn't yet exist, and the list's creation is "targeted for Spring 2012," according to a draft copy of the Council's document. A second reason for the delay is PCI training of assessors. The Council isn't promising to identify the testing procedures until "the end of 2011" and "training opportunities" (which we assume means classes) won't be detailed until "Spring 2012." The report will say that the guidelines—even if perfectly followed—won't offer a path for a retailer to be considered out-of-scope. The best that a chain can hope for, according to the document, will be "reduced scope." But nowhere does the document say what exactly that would and wouldn't include.Read more...

For readers focused on any of those areas, the Monthlies provide an easy way to keep up-to-date and to make sure you don't miss any story important to your operation. The Monthlies also have two other helpful features.Read more...

As if QR codes weren’t having enough trouble getting traction among young consumers who should be their biggest fans, now it turns out that the codes are not only widely unused, they’re also unsafe. On September 9, mobile security blog Kaotico Neutral pointed out that because many mobile apps, when fed a QR code containing a URL, will immediately send the browser to that Web site—no questions asked—QR codes can easily be used to inject malware from an infected site into any phone or tablet that scans it.

Worse still, because the checkerboard codes are often on stickers or posters in public places, a QR on a retailer’s legitimate advertising can be turned evil by someone using a replacement QR that covers the original—even in-store. That means QR codes represent a triple threat (literally) for retailers: Many customers don’t know what they are. The ones who do are at risk if they read them. And cybercrooks can use your own advertising and signage to damage your reputation. Yeah, that certainly sounds like the mobile retail gimmick you need.…

The idea behind P2PE, pens PCI Columnist Walter Conway, is that an encrypting POS terminal encrypts the cardholder data (the first "point") immediately as the customer's card is swiped. A third-party service provider (the second "point," and often the merchant's card processor) manages both encryption and key management. The third party is the only one that can access the actual cardholder data. The result is that when P2PE is properly implemented, almost all the merchant's systems are out of PCI scope because the merchant has no way to decrypt the data or ever to get access to the clear-text cardholder data. Read more...

Although you got a telephone number and directions, Google got information about not only what people in general were searching for (people in Piscataway picked pizza) but also what a specific person was looking for (John Smith—or John's telephone—searched for the number for an AIDS clinic, then a drug store, then life insurance). Again, because Google isn't a phone company or particularly regulated in any way, it could use or sell this information in any way consistent with whatever privacy policy it wrote. But Google got much more than that. Read more...

The September 1 Visa Bulletin was primarily to tell merchants that five VeriFone units (Everest Plus units P003-400-01, P003-400-02, P003-400-03, P003-400-12 and P003-400-013) have been ruled "susceptible to compromise" and were indeed "used in tampering and skimming attacks" in the U.S. The list had already included other VeriFone units plus one from Ingenico (the eN-Crypt 2400, also known as the C2000 Protégé) and two from Hypercom (S7S and S8).Read more...

Although there are lots of factors at play here, the primary power benefit of mobile is its battery power supply and, to be quite cold about it, the fact that the customer's device is powered by the customer. The power benefit of M-Commerce is that its power supply is probably a long distance away, somewhere not impacted by whatever is causing a store's power outage.Read more...

The dream—and nightmare—of every E-Commerce head is to start over from scratch, scrap all the legacy kludges that developers have been working around for years and build a Web site that does exactly what the chain wants. Most retailers will never be able to cost-justify that greenfield approach, of course. Target's site, however, had to be built from scratch because its decade-long deal with Amazon to operate its online business had expired.Read more...

The great wine-vending kiosk experiment may be just about over, at least in Pennsylvania. Last week (Aug. 15), Wal-Mart told the state’s Liquor Control Board that the retail giant is no longer interested in putting the 10-foot-high machines in 23 of its Pennsylvania stores. That comes after the June announcement by grocery chain Wegmans that it was pulling the giant vending machines out of its 10 stores that had them. And the state now says that if the kiosks’ developer, Simple Brands LLC, doesn’t come up with a $1 million payment by September 19, the plug will be pulled on the remaining 21 machines.

The wine kiosks were an interesting idea, but they may simply have been impossible to get right. There were ongoing mechanical problems (all the machines were taken off-line for repairs temporarily in December) and liability issues, in addition to concerns about whether minors could be blocked effectively from buying wine by the kiosks’ technology for matching a buyer’s face to his driver’s license. But the biggest problem may still be that wine buyers generally like to browse wine labels before making a decision—not buy wine from a glorified Coke machine.…