The Important Law Change Affecting Small Businesses
Businesses need to have the new PIN credit card readers to avoid liability for fraudulent cards.
Today a new law goes into effect that may change the nature of your business if you accept credit cards. This major change in credit card liability is impacting small businesses across the U.S. Even if you don’t accept credit cards on a regular basis, it’s still important to know in case you plan to do so in the future. Beginning today, October 1, 2015, a new law requires credit cards to have special chips that enable PIN numbers. The credit card companies are already issuing these, and you might have even received one.
Here’s the catch – businesses must get new credit card readers by today. What happens if you don’t switch to the new readers?
You know how credit card companies will take a fraudulent charge off your bill? That’s because they accept liability for security and have to eat the costs if someone fraudulently uses your credit card. However, if a business does not switch to the new card readers by October 1, then that business takes on the liability for fraudulent charges instead of the credit card company.
In other words, if you sell something and it turns out that purchase was fraud, then you’re not getting paid. This will hit retail shops and restaurants especially hard since they make lots of transactions.
Small Businesses are at Risk
A recent study found that nearly two-thirds of small businesses were not ready for the October change, so I wanted to make sure you were aware. It’s a potentially very large burden for a business to take on and could really affect the bottom line. Fraudulent credit cards are expected to amount to $3.6 billion in losses this year. Victims include about 10% of all U.S. small businesses. Not only are you losing a percentage of each sale to the credit card companies, but they’re not even taking on the risk of fraud any more.
What should you do?
Get a new credit card reader ASAP. Intuit, Square, and CapitalOne all sell the new card readers. At one point, Square was offering a limited number of free ones, but I’m not sure if that is still happening. And share this post with anyone you know that processes lots of credit cards and might be at risk.
I almost stopped accepting payments due to their robocall policy. I’m pleased to see they changed that –
New Orleans Entrepreneur Week
A couple months ago I gave a presentation at the New Orleans Entrepreneur Week (NOEW). The talk was called “Cover Your Assets: Asset Protection for the Small Business.” The talk went great and I got to meet some amazing people with some awesome businesses. Thanks to the Idea Village for putting this on and inviting me to participate. Finally got some pictures so I thought I would share them.
After KlearGear Tried to Fine Couple for Posting Bad Review, Court Awards Couple $300k.
We’ve talked about this case before ==> Here. Sometimes an update is satisfying, as it is this time. For those who don’t know, or remember, John and Jen Palmer posted a bad review about KlearGear.com for poor customer service. In retaliation, KlearGear fined them $3,500 for an obscure clause in their terms of service requiring users to not say anything bad about KlearGear. Never mind that the Palmer’s ordeal happened before those terms were implemented.
Obviously, the Palmer’s refused to pay the $3,500 fine for the review of the $20 item, so KlearGear then went about ruining the Palmer’s credit, to such an extent that they were unable to get a loan even to fix their water heater. So they sued KlearGear, who never responded and ended up with a default judgment voiding the $3,500 fine and setting a date for damages.
Now the damages are here and they’ve clocked in at over $300,000 for the Palmers. It’s satisfying to see behavior like this get its just deserts. We’ll see how likely they pay though. They may have a service of process issue to clear up first.
Public Citizen – Judge Awards Utah Couple $306,750 in Case Against Retailer That Tried to Impose Fine for Critical Online Review
SCOTUS Holds Against Aereo TV
The Supreme Court yesterday held that Aereo TV, the online television service that streams broadcast TV to your phone, violated copyright laws by not paying broadcast fees to the broadcast television companies. We discussed the case on LaaW earlier ==> here.
A Tale of Two TV’s
The case came down to two analogies of Aereo’s business model. On the one hand, the broadcast companies compared Aereo to a cable company, which must pay retransmission fees to the broadcast companies for rebroadcasting their shows. On the other hand, Aereo argued that it was no different that somebody sticking “rabbit ears” on their TV and sending the show through DVR, but with Aereo doing that hard work for them. You can pick up broadcast signals with an antenna without having to pay retransmission fees.
Ultimately, the majority went with the broadcasters’ analogy, and the dissent went with the rabbit ear analogy. This is a major blow for Aereo and its users. Aereo has stated that its business model cannot work if it has to pay retransmission fees, and has also stated it has no “Plan B” if it loses in Court. Aereo’s CEO Chet Kanojia stated that they “will continue to fight for our consumers and fight to create innovative technologies that have a meaningful and positive impact on our world.” Note that he doesn’t mention TV as part of that impact.
Wider Impact Lessened
The case was closely watched because of heavy emphasis during oral arguments on the potential effects on cloud computing. Under either analogy, the Court had to make decisions on settled copyright law and the worry was how far they would go. The question was how much would be tossed around to come to a decision. However, it seems Justice Breyer took note of the worries in his opinion by strictly limiting the holding to broadcast TV – not cloud computing, streaming, or anything else.
So probably no more Aereo TV. Another innovative company caught up in the law, but that’s the nature of the game sometimes.
CNN – What will Aereo’s TV watchers do now?
Following EU’s Right to be Forgotten, Canada Goes Anonymous
Last month we all watched the EU recognize the right to be forgotten online. The case told search engines that upon request, some links should be deleted (though not the original content). Of course, it was immediately abused, but the right remains.
Now our neighbors to the North have recognized the right to online anonymity. Essentially, it is a recognition that law enforcement needs a warrant to search online information. Unlike the US, where online information is generally not protected by the Fourth Amendment because it goes through a third party (your ISP), Canada is now saying that they will recognize the expectation of privacy in online activities.
Of course, law enforcement is upset, but it raises an interesting question. At what point does the expectation of privacy become more important than the actuality of privacy? Even here in the US, we have a split between the 5th and 11th Circuits about whether your location is private information, since your cell phone transmits it everywhere you go. Clearly, there is no actual privacy since data is constantly being sent to cell towers, but don’t we kind of expect it anyway?
Wall Street Journal – Canadians Have a Right to Online Anonymity, Nation’s Top Court Rules
Twitter Account Posts Every Time a Change is Made to Opinions
The Supreme Court has been under criticism lately for its habit of changing lines in opinions, sometimes years after the opinion has been released. While most changes are minor, even small modifications can lead to different outcomes in the lower courts. The worst part was, SCOTUS never announces a change, so the only way to identify one was to compare the original release with the official published release.
Fortunately, an enterprising attorney named David Zvenyach decided to create some code to fix the problem. The code compares published opinions with the original release, and immediately creates an alert on the Twitter account @Scotus_servo. This might be an important go-to for anyone citing a recent Supreme Court case, to make sure nothing’s changed.
Gigaom – Clever piece of code exposes hidden changes to Supreme Court opinions
Elon Musk Sharing Technology to Boost Innovation in the Industry
Elon Musk, the founder of electric car company Tesla, announced that Tesla is releasing its technology patents in an attempt to boost innovation in the electric car market. While the announcement was heavily coated in altruistic jargon about saving the environment, it just may be a great business move. First, open source software tends to be better, more secure, and more profitable for those who utilize it well. Why can’t the same be true of engineering technology?
Second, the electric car industry has not made the strides to the wider market many had hoped. Because of this, there is very little infrastructure and support for electric cars. This means Tesla is fighting a nation of combustion vehicles, and the lobby they bring with them, all alone. For example, Tesla’s business model of selling vehicles directly to customers has been banned in New Jersey.
Finally, it’s clear that there are numerous hurdles to entering the market due to the fear of patent litigation. A new study shows that patent trolling has a significant negative effect on a start-up’s ability to get funding. Musk cleared that problem by announcing that they would not pursue patent litigation. This allows for new innovations in the marketplace that Tesla can capitalize on. And hopefully make more demand for the product.
Remember, the original purpose of patents was to limit intellectual property ownership so that ideas would be opened to the public in a short period of time. The laws have changed drastically since then. Considering the overuse of patent litigation, and the value added by open source technology, it might make more sense today to invite collaboration rather than overly protect intellectual property.
Washington Post – Elon Musk: Take our Tesla patents, please!
NJ.com – Tesla Motors appeals NJ regulation banning car sales directly to consumers
ArsTechnica – New study suggests patent trolls really are killing startups
Clearspire No Longer Offers Legal Services, But May Just Survive Us All
People have been predicting the end of Big Law for some time now, and technology has promised to break it down. However, it’s tougher than it seems. One of the biggest players in the alternative legal field is Clearspire. It promised to use a virtual law office (VLO) model that provided cheaper legal services by focusing on limited activities and avoiding lavish partner pay. Founded in 2009, they claimed to be adding 100 new attorneys each year.
Now, it’s closing its doors. One of the nation’s largest VLO’s will no longer be doing any legal services. Calling it a “time to scale,” Clearspire let go of its attorneys and is trying to sell its software instead.
Is this a sign of the end-times for the VLO model? Probably not. First, other large players are still using it successfully, like Axiom. Further, more and more small firms and solo practices are adding online services and finding great success. Whenever new things come up there will be winners and losers.
If anything, Clearspire is a great example of how in technology, even a loss can end up a win. Rather than completely dissolve, they are now marketing their software to law firms to create their own virtual practices. And now that they’re no longer burdened by attorney ethics rules, they can raise all the money they want from outside investors. Who knows, in the end Clearspire may do even better this way.
ABA Journal – Once-confident law firm Clearspire closes its virtual doors, but its software will go global
Clearspire – Announcement
EU Court’s Vague Decision Already Leading to Confusion
On Tuesday, the European Court of Justice recognized a right to be forgotten, ordering Google to remove links to a man’s old debt records. It’s been barely a day, and things are getting crazy. Google has already received a number of requests for link removal. For example, a politician seeking re-election has requested links to an article regarding his past behavior in office be deleted. A man convicted of possessing child abuse images has sought the deletion of any mention of his record erased, and a doctor doesn’t want any more negative reviews from patients popping up.
So who decides what is worthy of deletion? The EU has set up regulators at 28 different agencies across the EU. This probably means there will be at least 28 different interpretations of what is deemed proper of erasure. Since the search engines and social media sites will be the targets of these requests, they will need new departments to sort through the paperwork. Ultimately, it will lead to severely restricted speech, as companies find it is cheaper to comply with requests than it is to fight them before the regulators.
I fully acknowledge that this is an American viewpoint. American’s First Amendment rights are very different that the rights in Europe, including the French right to be forgotten, “le droit à l’oubli.” Nonetheless, the Court’s decision was so vague that it will create a hindrance on speech in Europe that goes beyond their tolerance. Consider the examples noted above. Is this really the kind of thing that should be erased?
Remember, this is not just a European decision. Any online business with European customers will be subject to erasure requests.
BBC – Politician and paedophile ask Google to ‘be forgotten’
Wall Street Journal – What Is the ‘Right to Be Forgotten?’
NYTimes – One Court Ruling on Privacy in Europe, and 28 Regulators