Retailers Can Put Anything In A User Agreement, But There’s A Huge Catch

Written by Mark Rasch
May 16th, 2013

Attorney Mark D. Rasch is the former head of the U.S. Justice Department’s computer crime unit and today is a lawyer in Bethesda, Md., specializing in privacy and security law.

I recently received a $25 debit card as an honorarium for giving a speech. To “activate” the gift card from, I had to give them my name, address, telephone number, Social Security number, user ID, PIN, and answer to three security questions – all that just for 25 bucks. In fact, what I really did was to open a bank account with $25 and a monthly maintenance fee of $4.95. I apparently agreed to all of this on the website of under their terms of service. But that’s not all I agreed to.

Years ago, I got a Wachovia stored value card, which similarly had outrageous fees – fees for putting money in, taking it out, checking the balance, loading the card, not loading the card, as well as an annual fee, monthly fees, etc. It amounted to usurious interest rates and fees of over 3000 percent. When I called to dispute one of the fees, the person on the other end told me that my wife (who had just handed me the phone) had authorized the fee–she did not, and I know this because I was standing right there.

It was then that the Wachovia representative told me that they had recorded the telephone call. When I informed them that neither my wife nor I had consented to the recording (in Maryland, like about a dozen states, all parties must consent to the recording), the Wachovia rep told me that they didn’t need consent because they were a federally chartered institution. Of course, the law makes no such distinction. This resulted in a class-action litigation against Wachovia (no, I didn’t initiate it) for unlawfully recording conversations without the requisite “this call may be monitored for quality assurance purposes.”

Related story: The NRF has now come out against arbitration, but only if it doesn’t involve retail customers. Then it’s glorious.

But now, has gone one better. The user agreement, buried in pages of legalese, states that by activating my gift card, I have consented to their monitoring, recording or using the contents of my conversations with them. In other words, even though the Legislature has made a determination that these calls should be private, absent consent, Green Dot has decided to get my consent as a condition of activating my card. Of course, I had no choice. I couldn’t not activate the card and ask for my $25 in cash, since I hadn’t bought the card in the first place. I could have returned the card to the sponsor and hoped they could get their $30 back (they had to pay a $4.95 fee initially). But I couldn’t get my personal information back.


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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...

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