Author granted license

Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International

Document Type

Article

Publication Date

7-2018

Publisher

Boston University School of Law

Language

en-US

Abstract

Electronic sales suppression (ESS) is a fraud that has been a (prominent) feature of the North American retail business since at least 1996. The first EES case in the US dates from 1981. ESS is a global problem. Depending on the jurisdiction, and the research study consulted, ESS is estimated to be present in 34% (of Canadian), 50% (of German – two studies), and 70% (of Swedish and Slovenian) businesses. It may be the case today, that “you cannot leave home without” encountering (or participating in) ESS.

The most common types of sales suppression technology are Zappers and Phantomware programming. In some instances, sales suppression is a personal (hands-on) service offered by installers or ECR/POS sales representatives. This is Sales Suppression as a Service or SSaaS. Recently suppression has entered the Dark Cloud, a fully automated manipulation of sales data that (physically) takes place off shore and uses internet-based data transfers.

The common solution in all cases is digital security, or fighting technology with technology. In the US, ESS has funded common criminals, organized crime syndicates, foreign and domestic terrorist organizations. US suppression cases have involved celebrity chefs, sitting members of Congress, the funding arm of Hezbollah, popular grocery store chains, restaurants, bars/ strip clubs, and small owner-operated pizza parlors. The technological response in the US has been weak. For some reason, the US has been very slow in taking up the technology-with-technology fight.

Given that the State of Washington collects 47.3% of its revenue (not including local government taxes) from the retail sales tax, and that technology has been the backbone of the State’s economy for years, it is only natural that Washington would take a US leadership position in this effort. Washington still trails by a wide margin the international efforts. The US has a lot to learn from jurisdictions like Belgium, Brazil, Canada (notably the provinces of Quebec and Ontario), China, Croatia, Italy, Russia, Rwanda, Sweden, and by January 1, 2 each of the members of the Gulf Cooperation Council (the United Arab Emirates, Bahrain, Saudi Arabia, Oman, Qatar and Kuwait).

Comments

Published as: "Washington’s Problematic Sales Suppression Enforcement Regime," 87 State Tax Notes 995 (March 12, 2018).

Find on SSRN

Share

COinS
 
 

To view the content in your browser, please download Adobe Reader or, alternately,
you may Download the file to your hard drive.

NOTE: The latest versions of Adobe Reader do not support viewing PDF files within Firefox on Mac OS and if you are using a modern (Intel) Mac, there is no official plugin for viewing PDF files within the browser window.