Boston University School of Law
The common observation in the U.S. is that enforcement against technology-facilitated sales suppression has fallen through an intra-jurisdictional crack. Neither federal nor state auditors systemically target this area. But this is changing, and the change is coming from the state side. This paper has two main parts. First, it summarizes the current state of sales suppression enforcement in the U.S. Secondly, it reviews the international solutions that are attracting the most U.S. attention. A conclusion indicates likely directions for U.S. enforcement. Georgia is the first state to take action. On May 3, 2011 Georgia added code section 16-9-62 to Georgia statutes which made it illegal to willfully and knowingly sell, purchase, install, transfer, or possess any automated sales suppression device, zapper or phantom-ware in the state. On March 1, 2012 Utah followed Georgia. On March 10, 2012 West Virginia passed its version, and on March 13, 2012 Maine passed its version. Similar bills are pending in New York, Tennessee, Michigan, Florida, Indiana, and Oklahoma. Solutions range from technological to regulatory. On the technology side, solutions range from very cost-effective measures, like the INSIKA-developed smart card (€50), to Quebec’s far more expensive module d’enregistrement des ventes MEV (costing between C$600 and C$800). Blended applications, like BMC Inc.’s Sales Data Controller (SDC), offer the best attributes of both of these solutions (US$350). Technology solutions encrypt data and prevent it from being “zapped away.” Non-technology (regulatory) solutions approach the same problem differently. The Netherlands and Norway establish the government’s right to control POS system data, and then marshal market forces to preserve it. The Dutch persuade manufacturers to improve security; the Norwegians specify and demand the improvements. A final critical point for the states is the technology-assisted sales suppression is no longer just about cash skimming; this fraud has migrated to debit/credit card transactions. There are two indications that this is happening, one from Norway, and the other from the E.U. Fiscalis meeting in Ireland.
Richard T. Ainsworth,
An American Look at Zappers: A Paper for the Physikalisch-Technische Bundesanstalt, Revisionssicheres System Zur Aufzeichnung Von Kassenvorgängen Und Messinformationenthe,
Law and Economics Research Paper No. 12-14
Available at: https://scholarship.law.bu.edu/faculty_scholarship/51