ETD: 675 Chargebacks - credit or debit cards; POS &
flow-charting; Orbitz - terrible customer service; Benetton and RFID;
Sarbanes-Oxley for the small business
E-Tailer's Digest
etd_post@gapent.com
Tue, 08 Apr 2003 06:43:40 -0400
E-Tailer's Digest --- Everything for the Retailer
Issue #0675 April 8, 2003
George Matyjewicz, Moderator mailto:georgem@gapent.com
Published by: GAP Enterprises, Ltd. http://www.etailersdigest.com
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CONTENTS
[1] Greetings
[2] Chargebacks - credit or debit cards
[3] POS & flow-charting
----- ---- --- -- -> Important Offer <- -- --- ---- ---- --
[4] Orbitz - terrible customer service
[5] Benetton and RFID
[6] Sarbanes-Oxley for the small business
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[1] Greetings.
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Hi All:
I'm heading to Detroit today. So, I could use a special report for
Thursday. Anybody want to submit something? 2,000 - 2,500 words which will
be posted as a full edition and will remain at our resources site forever.
We have some more interesting information on RFID. It looks like it will
be the latest retail technological advance. Now the question is how secure
is it?
Some of our list members have some interesting information on chargebacks
and debit cards, which benefits all of us in retailing. And check out the
information on POS and flowcharting. Great stuff.
Today I had to share a poor customer service experience with Orbitz. I
can't believe they don't know about ship-to addresses. What do you think?
Finally, I have been doing a lot of work with companies subject to the risk
management associated with Sarbanes-Oxley and have come to the conclusion
that SOX will be coming to you in the near future. Just like Internet
sales tax, be prepared.
Now, let's get to everything for the retailer.
Sincerely
Dr. George Matyjewicz
Chief Global Strategist, GAP Enterprises, Ltd.
mailto:georgem@gapent.com
http://www.etailersdigest.com
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[2] Chargebacks - credit or debit cards
===================================================================
>+++ [Moderator's Comments] +++
>Interesting, John. I wonder if that applies only to MasterCard-labeled
>debit cards.
So far as I know, George, the same rule (equality of credit and debit cards
with respect to chargebacks) applies to both Visa and MasterCard.
>If I use my classic debit card, that does not have a Visa
>or MasterCard logo on it, can I have a chargeback? If so, by whose
>authority?
A "classic" debit card has no relationship or affiliation with Visa OR
MasterCard - it can only be used to withdraw money from a bank account (or
to deposit money TO the account, but that has no relevance here).
Accordingly, in the same way that there is no such thing as a chargeback
for a transaction carried out by check, no chargebacks can be granted for
transactions carried out by debit card. In fact, you can think of a classic
debit card as simply a "plastic check" device - with the use of a PIN to
move the transactions from the realm of "soft checks" to "hard"
transactions like money orders, bank drafts, etc..
>With a logo, the debit card can be used as both a debit and credit
>card. Without a logo, it is only a debit card. So what's the advantage
>of the classic debit card?
To my knowledge, no company has yet been able to arrange for transactions
involving *remote* removal of funds (e.g. mail order, phone order or online
payment) using a "classic debit card" (or using a debit card with a Visa or
MasterCard symbol, when it is being used as a standard debit card), for one
very simple reason. The banks have chosen not to release the PINs for use
in any remote transaction, so there is no way to withdraw funds using the
cards AND the corresponding PINs - because there is no way to check whether
the PINs are is valid, except when the cards are run through an ATM machine
or POP (point-of-purchase) device, both of which can actually *read* the
PIN stored on the magnetic stripe. This is obviously not possible for any
remote transaction.
On the other hand, and to answer your question, the classic debit card
*plus PIN* is the perfect combination for "card-in-hand" transactions; just
don't expect to be able to use it for remote transactions. That's what Visa
and Mastercard are for, right now.
Hope this helps,
John Vinokur
Payment Central Inc.
Tel: 514-946-8825
mailto:arti@securenet.net
"The TRULY-secure payment-acceptance specialists!"
+++ [Moderator's Comments] +++
John and I have been going back and forth with this. My original comment
to John was that I have a half a dozen debit cards that do not have either
logo (strictly debit cards) and I use them at ATMs and at any merchant who
accepts pin-based debit cards. John did indicate that they then must show
the MasterCard or Visa logo on them, and if they don't, then they are
"straight" debit cards, which can normally be accessed through the Cirrus,
Plus or other similar networks - but NOT through the_MasterCard or Visa
networks.
One company where I am a principal has debit cards which are backed by
gold. http://globalpaysystems.net That one goes through the
MasterCard/Maestro/Cirrus network. Others go through Visa/Plus/Interlink
network.
In both cases the card must be approved by Mastercard or Visa before they
are accepted. The approval process is usually 6-9 months. We got them
approved within 6 weeks because of relationships at both networks. One
client wants their own card, and we are in the approval process now.
These cards can be used at any ATM or POS merchant that accepts pin-based
debit cards. For example, I use them at BP petro stations and Kroger
supermarkets in Atlanta and at Stop N Shop supermarkets in NJ. By using
them at the supermarkets, we can pay for groceries, get cash back, and not
have to pay the fees normally found at ATMs for foreign banks.
Jules Kaplan found another (see next post).
George
+++ Next Post +++
Got this Spam today and does it not look similar to what you were wanting
to do with your gold company?
"Wired Plastic is a pre-funded, reloadable card that can be used everywhere
MasterCard is accepted. Add cash within minutes at more that(sic) 43,000
Western Union Agent locations using Swiftpay service."
Jules Kaplan
ChekFaxx Development Co. INC.- E-commerce Payment Solution Provider
Available NOW http://www.addressmanagerpro.com
Discover how to add your email address to Your Windows Address Book
admin@chekfaxx.com - 480-991-7025 OR 800-220-0468 - FAX 310-362-8746
Accept Check by FAX - PHONE - E-MAIL - INTERNET http://chekfaxx.com
www.eft-ach.com www.electronicfunds.com
Now on Line For EFT Processing www.ezpaymentservices.com
+++ [Moderator's Comments] +++
When we first approached Visa almost three years ago with the concept of
pin-based debit cards based on digital currency and not affiliated with a
bank, it was a unique and innovative concept. And it took a lot to
convince them of the merits of such a program (excerpts from my doctoral
dissertation helped). When they saw the opportunities, especially outside
the US where debit cards are far more common than credit cards, they
decided to offer similar programs to other companies, providing they go
through the banking world, i.e., you need to go through a bank such as
First Data or Wells Fargo or any of the others who process cards.
The problem is those banks are licensed to do business in a certain region
(six regions with Visa; four with Mastercard) and you can only do business
in that region. So, if you had a card accepted by Mastercard through First
Data, you could only operate in the US. If cards were shipped outside the
US, you could get a cancellation notice (that originally happened with
us). We have authorization to do business anywhere in the world.
The second issue is getting money into the system, since we (or Wired
Plastic above or any of the hundred or so others) are not a bank and need
to find innovative ways to get funds into the system. Wired Plastic is
using Western Union, and, unless they have approval from W.U. corporate,
they will be cancelled. Another company tried the same thing. They
offered two cards and had packages made up with reference to W.U. as
input. Lot's of money spent based on assumptions - that W.U. would love to
have the extra business. Wrong! That was/is a threat to W.U.
We spent a lot of time lining up banks to accept funding. It is a long
process, but well worth it, as there is no easy way to get money into a
system if you are not a bank.
FWIW
George
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[3] POS & flow-charting
===================================================================
John Husson's concern's are quite well founded, if I am inferring properly
from his posting of 3/26. What I gather is the concern that inventory
control is in fact a full circle of'; purchasing, receiving and selling. I
believe John's concerns are with the 'nuts and bolts' of how this was going
to be accomplished in his business. The answer is "discipline" or more
pointedly "direction" (to your staff). That is, every time an item is
received, it must be entered into the system to satisfy the PO that had
been opened to purchase it. That will close that PO, update your onhand and
give you the history that you are looking for in purchases, costs and sales.
I have been investigating 2 POS packages for you, QuickBooks and Retail
Edge. It seems Retail Edge has the ability to do the purchase orders, then
receive it in, print labels for the items, and update inventory. The
printing of labels for received merchandise identifies that merchandise to
the system. These labels will get scanned when the items is sold,
completing the circle. Retail Edge will also interface to QuickBooks. When
researching the QuickBooks POS system, the website only mentioned that
inventory can be adjusted to reflect the receiving, not elucidating a
seamless system as Retail Edge did.
If you submit to the Retail Edge formula, and discipline your folks to type
in purchase orders, receive them on the system, and print the labels, you
should be well on your way to the low-cost, effective inventory control and
business information that you seek.
Joe Dweck
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[4] Orbitz - terrible customer service
===================================================================
I don't know which travel service you use, but let me share some terrible
customer service from Orbitz. I usually use Travelocity, but found the
presentation of fares was better at Orbitz, so I started using them six
months or so ago. Now y'all know that my butt is glued to a seat on an
airplane, as I travel a lot. And I usually always get e-tickets.
My latest booking was for a flight from Newark to Chicago, and for some
reason Orbitz had to send paper tickets. Now, my credit card comes to our
home in Atlanta, but I was travelling from Newark where we also live. So,
where does Orbitz send the tickets? You got it - to the billing address.
I contacted them to find out why. And they gave me this cockamamie excuse
about security:
"In order to minimize the risk of fraud, it is the Orbitz policy to ship
paper tickets only to the billing address of the credit card used to pay
for the tickets. We recommend, you make appropriate arrangement to reship
the paper ticket back to the address you would like to receive."
As far as security is concerned, they have my information, and only I can
access my account with proper security. So, are they now saying that their
system is not secure and I run the risk of losing my confidential
information? And they never did recommend how I should re-send packages
when I am not there.
Can you imagine where we would all be if all businesses ignored ship-to
addresses? Retailing would fail!
So I thanked them for sending me back to Travelocity, where I was pleased
to see that they now present the fares in an easier to read manner.
Anybody else have similar issues?
George
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[5] Benetton and RFID
===================================================================
Clothing maker Benetton has clarified its plans regarding radio tags in
response to reports that it is preparing to place millions of the devices
in its products to help track inventory.
A company spokesman on Monday said the company has to date purchased only
200 radio frequency identity (RFID) chips and is still studying whether or
not it will use controversial technology to track its products.
Benetton has completed technology tests of radio frequency identification
to help improve its supply chain management. However, the clothing maker is
still testing the economics of RFID and whether it is cost-efficient to
replace the barcode-scanning technology it now uses.
The clarification comes after Philips Semiconductor, a division of Philips
Electronics, said in March that it would ship 15 million radio tags for use
in Benetton's Sisley line of clothing. The chipmaker announced it was
working with system integrator Lab ID and Psion Teklogix to create shelves
and mobile devices to bring RFID technology to Benetton.
RFID is considered the future for inventory tracking. Gillette, Wal-Mart
Stores and U.K.-based supermarket chain Tesco are also working to install
specially designed shelves that can read radio frequency waves emitted by
microchips embedded in millions of shavers and related products.
The use of RFID would allow Benetton to upload inventory information more
quickly and easily to its tracking system. For example, it could track a
box containing clothes of varying styles, colors and sizes all at once, as
opposed to having to checking in one piece at a time.
Despite the obvious merits, the ability to track a product's movement also
raises a disquieting concern about privacy. With RFID tags, it becomes
technically possible for marketers to obtain invaluable information on a
host of consumer preferences, ranging from the clothes they like to the
food they prefer.
In addition, there are worries that such a technology could be exploited
for government surveillance or be misused by hackers and criminals.
Details at...
http://news.com.com/2100-1020-995744.html?tag=cd_mh
+++ [Moderator's Comments] +++
I wonder just how far RFID can be used. If I wear a garment with RFID,
will they be able to track where I go and what I do? From a privacy POV, I
see issues. From a marketing POV, I love it.
I can also see a use for RFID-like devices as tracking devices for children
or seniors. Sorta like Lojack for humans.
What do you think?
George
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[6] Sarbanes-Oxley for the small business
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I'm writing a piece on the Sarbanes-Oxley Act of 2002, which, today, is
targeted to publicly-held companies. In analyzing SOX in detail, I'm
saying to myself that this act is definitely going to come on down to
privately-held companies, and don't be surprised if the IRS includes it as
part of your business tax returns.
There are eleven titles in SOX some of which deal with SEC issues, some
with auditor independence, some with criminal penalties for fraudulent
activities.
Title III - Corporate Responsibility -- states that you must act in a
manner that is not suspect to fraudulent activities and to report to
shareholders honestly. As such, this title requires that public companies
establish audit committees who are responsible for overseeing the accuracy
of financial reporting. It is ultimately the CFO and CEO who must certify
that the financial information is accurate, under penalty of jail time. It
establishes rules of professional responsibility for officers, board
members, auditors and attorneys.
What about privately-held companies? They may not have shareholders and a
board of directors. However, they will file tax returns and they may have
reporting requirements to other regulatory agencies, or to banks. Section
902 of Title IX states:
IN GENERAL- If 2 or more persons--
(1) conspire to commit any offense against the United States, in any manner
or for any purpose, and 1 or more of such persons do any act to effect the
object of the conspiracy, each person shall be fined or imprisoned, or
both, as set forth in the specific substantive offense which was the object
of the conspiracy; or
(2) conspire to defraud the United States, or any agency thereof in any
manner or for any purpose, and 1 or more of such persons do any act to
effect the object of the conspiracy, each person shall be fined under this
title, or imprisoned not more than 10 years, or both.
Note that section does not identify a particular agency within the United
States. Hence, it can apply to any organization, not just publicly-held
companies.
Title IV - Enhanced Financial Disclosures -- In particular Section 404
requires management assessment of internal controls. Management must
establish and maintain an adequate internal control structure and
procedures for financial reporting and management must attest as of the end
of the most recent fiscal year of the issuer, to the effectiveness of the
internal control structure and procedures of the issuer for financial
reporting.
And, each registered public accounting firm that prepares or issues the
audit report for the issuer shall attest to, and report on, the assessment
made by the management of the issuer.
So, why wouldn't this apply to privately-held companies? And why wouldn't
the IRS require this information?
IMHO, Sarbanes-Oxley will be coming to a tax return nearest you in the
not-so-distant future. You heard it first here.
George
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Links to follow
===================================================================
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Global Pay Systems LLC http://globalpaysystems.net
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Prior to 29 Dec 1999 http://etailersdigest.com/archives/index.htm
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