tl;tr Fuck these cards. Go team Depot. Walmart is suing too. [0]
As someone with one foot in retail, I can honestly say these cards are not doing anyone any favors. Fraud is rampant and there are shoppers that travel the world [0.5] with stolen cards just to spend stolen cards and gift cards [1].
During the transition to chip, Square had liability shift for non-chip cards [2], but we failed to meet the requirements for a few transactions because we insisted on entering the ZIP for security, which requires key entry even at an additional fee. There was no feature to enable ZIP code entry for swipes. In these cases, trying to heighten security with additional measures was the wrong move for us. We should have just let them swipe and Square eat the cost.
Apple has been burying a scandal of its own with Apple Pay fraud. Once after a shopper left, we immediately received negative feedback through Square from someone claiming they didn't just buy anything from our store. Well, when someone has a phone, there is nothing to check. Though Apple Stores seem to have been hit hard, which seems appropriate [3].
The main problems are, 1) as retailers we cannot treat every customer as a crook nor can we profile them [4], 2) if they jump through all the hurdles, we can't then not sell them something even if something seems odd, and 3) in the case of Apple Pay, gift cards, and some swipe transactions, retailers are actually covered so even if buyers appear suspect, there is zero incentive to call them out, 4) the police don't treat it as shoplifting, and 5) some of the worst offenders are not suspicious at all, and can even be contesting their own purchases on purpose.
This is just a fact, but most of the scammers that came through our store were from NY and were black (again, just a fact, not saying anything about race or NY, though something does seem to be going on there [4][5]).
As someone with one foot in retail, I can honestly say these cards are not doing anyone any favors. Fraud is rampant and there are shoppers that travel the world [0.5] with stolen cards just to spend stolen cards and gift cards [1].
During the transition to chip, Square had liability shift for non-chip cards [2], but we failed to meet the requirements for a few transactions because we insisted on entering the ZIP for security, which requires key entry even at an additional fee. There was no feature to enable ZIP code entry for swipes. In these cases, trying to heighten security with additional measures was the wrong move for us. We should have just let them swipe and Square eat the cost.
Apple has been burying a scandal of its own with Apple Pay fraud. Once after a shopper left, we immediately received negative feedback through Square from someone claiming they didn't just buy anything from our store. Well, when someone has a phone, there is nothing to check. Though Apple Stores seem to have been hit hard, which seems appropriate [3].
The main problems are, 1) as retailers we cannot treat every customer as a crook nor can we profile them [4], 2) if they jump through all the hurdles, we can't then not sell them something even if something seems odd, and 3) in the case of Apple Pay, gift cards, and some swipe transactions, retailers are actually covered so even if buyers appear suspect, there is zero incentive to call them out, 4) the police don't treat it as shoplifting, and 5) some of the worst offenders are not suspicious at all, and can even be contesting their own purchases on purpose.
This is just a fact, but most of the scammers that came through our store were from NY and were black (again, just a fact, not saying anything about race or NY, though something does seem to be going on there [4][5]).
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[0] http://www.wsj.com/articles/wal-mart-sues-visa-over-chip-ena...
[0.5] http://arstechnica.com/tech-policy/2014/11/authorities-arres...
[1] http://www.tripwire.com/state-of-security/risk-based-securit...
[2] https://squareup.com/news/why-square-sellers-can-rest-easy-a...
[3] http://www.nytimes.com/2015/03/17/business/banks-find-fraud-...
[4] http://www.ag.ny.gov/press-release/ag-schneiderman-announces...
[5] http://nypost.com/2016/04/26/rappers-used-stolen-credit-card...