E-Receipt Bill Vexes Vendors

A bill circulating in the California State Assembly would prohibit businesses from providing paper receipts or proof of sale, limiting them exclusively to electronic documentation of transactions. The legislation, named AB 161 and nicknamed “Skip the Slip,” is an effort to reduce paper waste and preserve resources such as water, oil, and trees used to produce receipts. It was introduced by Assembly Member Phil Ting (D-San Francisco) in January and follows a new state law requiring restaurants to only provide plastic straws if patrons request one. Likewise, customers could still request a printed receipt under AB 161, but electronic proof of sale would become the default for California’s retail industry. But many businessowners believe the financial and logistical hurdles of implementation, especially for small and family-owned businesses, would outweigh the bill’s purported environmental benefits. Dozens of organizations including the California Chamber of Commerce, the California Restaurant Association and the California Manufacturers & Technology Association have formed a coalition to oppose the bill. A letter they sent to the Assembly last month cited high costs of compliance and data privacy risks for consumers as chief concerns. Nevertheless, the bill passed through the National Resources Committee in late March by a vote of six to three and cleared the Privacy and Consumer Protection Committee last week with seven votes for and five against. Of the Valley Assembly members with seats on the privacy committee, Jesse Gabriel voted yes, Jacqui Irwin voted yes but voiced her concerns about the bill’s personal privacy implications, and Christy Smith voted no. Now, AB 161 will proceed to the Appropriations Committee, which will have through May 16 to hear testimony, make amendments and vote on the bill. If passed, it would go to the Assembly floor between May 28 and 31. If it survives the Assembly and State Senate voting cycles, AB 161 would take effect in 2022 for all businesses with $1 million or more in annual revenue. Price of compliance The most obvious problem AB 161 would present for retailers is the forced overhaul of their point-of-sale systems. In the event of the bill’s passage, every business that hasn’t transitioned to digital POS systems would need to invest in e-receipt software that costs north of $40,000. For businesses with lots of registers, such as grocery stores – which already have low margins – costs could run higher. These incurred costs could result in either increased product prices or pay cuts for employees. “The cost of doing business in California is becoming too high,” said Smith during the committee session. AB 161’s consequences don’t stop at a one-time system upgrade. For fast-paced businesses such as restaurants, the collection of email addresses, cell phone numbers or other contact information from each patron would slow the sale process and cost owners both time and money. Consumers would feel the impact in the form of longer queues and lost time. And input mistakes or system errors could prohibit customers from returning defective goods and could lead to legal disputes. “I don’t think it’s well thought out,” Stuart Waldman, president of the Valley Industry & Commerce Association, told the Business Journal. “There are privacy concerns with putting (consumer) information into a database. … It’s rife with problems.” Data Risks With AB 161, data management would become a major focus and an expensive learning curve for mom-and-pop businesses. In addition to setting up infrastructure to store and protect the data they collect for each transaction, businesses would have to spend hours training employees how to operate new systems and how to answer inevitable questions from customers about what happens with their personal information. Some shoppers would surely be skeptical or the digital paper trail recording their purchases, especially in light of massive data breaches that rocked Target Corp. and Macy’s Inc. in recent years. Arik Hroch, owner of Motostyles Motorcycle Accessories & RC Hobbies in Granada Hills, says this is one of his main concerns with the bill. “When you buy something, it’s business between you and me. It’s not the business of the credit card company. Facebook is spying on everything you do and they’re going to start targeting you. They’re going to be stealing information without asking (the business) or the customer.” California’s Song-Beverly Credit Card Act currently prohibits businesses from requesting and recording consumers’ personal identification information for credit card purchases for just that reason. AB 161 exists in direct contradiction to that law. That brings up another blind spot for AB 161 concerning who is liable in the event of a consumer data breach — a wrinkle that goes without mention in the bill’s current iteration. Hroch has equipped Motostyles with SquareUp, an encrypted application that enables the sending of e-receipts and protects these forms with user-verified questions. But with this security and convenience comes yet another cost. SquareUp takes 2.75 percent of every swiped transaction — a major loss for some stores. Hroch also mentioned the potential for people to tamper with their e-receipts in order to score quick cash or free goods at his shop’s expense. A Photoshop-savvy customer could change the warranty terms for a broken motorcycle helmet, for example, or could change product prices to claim that they were overcharged and that the store was falsely advertising. “It’s very easy to do on a cell phone. People will do that,” he said. Digital divide VICA’s Waldman expressed concern that the business community at large is not ready for the overarching digital existence AB 161 assumes. “The reality is we do not live in a 5G world yet and we’re not going to for some time,” he said. “While Los Angeles might be more wired … there’s a whole segment of the population, whether it’s the elderly or just people who don’t want to be online, who get shut out in this whole process.” In addition to alienating customers without smart devices, the bill would punish traditional businesses in rural or underserved areas where internet connectivity is sparse. For those retailers unable to achieve compliance, AB 161 proposes a daily fine of $25, with a maximum annual fine of $300. That might sound workable, but “it’s a small number until it’s a big number,” said Waldman. “They’re going to increase the penalty to the point where people are forced to do it.” Waldman and Hroch say AB 161 is par for the course in regulation-heavy California. “They pass whatever laws they want without considering what we, the businesses, actually want,” said Hroch. He said he has even considered moving his business and family to Texas, where businesses face fewer regulations. “We are constantly put in positions where bad laws are being passed that don’t work,” said Waldman. “It would be another cost of doing business in California.”