Evan Schuman's StorefrontBacktalk

Retailers must also stay abreast of efforts by states to restrict new technology, such as RFID. Even when retailers convinced one state to back off such efforts, other states tend to take up the cause. For example, although New Hampshire backed away from its controversial efforts to regulate RFID, and agreed to study the technology before acting, Washington State, in April, adopted a precedent-setting RFID law.

Meanwhile, revenue hungry state administrations are pushing to tax Internet sales and vote-conscious legislators, perhaps leveraging constituents’ fear of identity theft, are imposing various measures to protect citizens from data breaches.

“Not only do retailers have to worry about the state regulations but also, when they accept payment cards, they have to worry about PCI and requirements from Visa and MasterCard that are always changing,” said Philadelphia lawyer Andrew Baer, a specialist in technology, e-commerce and information security law. “I think we do need some sort of nationalization on a federal level. Retailers have to look to the states first now but hopefully they will get some federal legislation that will preempt all these state laws.”

Maureen Riehl, vice-president of the National Retail Federation’s government and industry relations council, doubted Uncle Sam will be soon coming to retailers’ rescue with over-riding federal regulation for most of the issues now being tackled individually by the states. Congress, often made up of former state politicians, is not keen about circumventing state sovereignty when it comes to regulating business, she said.

“As a retailer, when you decide to grow your footprint across more than one state line, it is more than likely going to be a major investment for you just to keep track of the business-related issues as you cross those state lines,” Riehl said. Most major retailers have full-time teams that keep track of legal and regulatory actions by states. These specialists “not only alert the company to things they should be sensitive about, with the disparate state laws, but they also provide, in many ways, an opportunity to build relationships (with state officials) so they can inform regulators and policy makers why something they want to do doesn’t make sense.”

But even the most skilled lobbying efforts often fall on deaf ears. For most states, “the rights to tax and to provide consumer protection are all very closely guarded,” Riehl said. “California is a really great example. California prides itself in this and has a reputation of doing things that are kind of firsts for states. As a result, because it’s such a big state, California has its own de-facto standard. California likes that role. It prides itself in that role.”