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Judicial Branch Key to Issues Impacting Retail

BY CSA STAFF

In “Democracy in America,” political theorist Alexis de Tocqueville wrote, “there is hardly a political question in the United States which does not sooner or later turn into a judicial one.” Nearly 200 years later, this statement rings true — maybe now, more than ever.

The political landscape in 2017 remains uncertain but one aspect is clear: a fully functioning judiciary is vital to the health of our democracy. While all eyes may be on the executive and legislative branches of government — specifically during the first 100 days — our judicial branch holds the key to many decisions that impact virtually every economic sector. Retail especially.

As the nation’s second largest private sector employer, the retail industry supports a workforce of over 42 million Americans in thousands of locations nationwide. The breadth of the industry is wide and so are the areas we touch. From commerce and trade to labor and innovation, retail plays a vital role in growing our nation’s economy.

As president of the Retail Litigation Center (RLC), I believe in the importance of educating the courts about the retail ecosystem. The RLC has filed briefs in its name alone, led retail and business coalition briefs, and lent the retail industry’s voice to the amicus briefs of other significant organizations. Collectively, these efforts now total 100 briefs filed.

In its 100th brief, the RLC supported Macy’s petition for certiorari to the U.S. Supreme Court in Macy’s v. NLRB. At issue is whether the National Labor Relations Board (NLRB) properly certified a unit of cosmetics employees in a single store as an appropriate bargaining unit after a majority of the same store’s employees voted against the union’s bid to organize the whole store. In an effort to educate the Court, we explained the importance of the longstanding presumption that the “whole store” is the appropriate bargaining unit in the retail context, as well as the harm that will be caused to retail employees, customers and retail companies if the NLRB’s ruling is allowed to stand.

This is just one of the many examples of how court decisions impact the retail industry at large. As we focus on advocating for retail moving forward, it’s important to look back on some of the more pressing cases facing America’s retailers:

Kirtsaeng v. Wiley & Sons (U.S. Supreme Court). The RLC led amicus briefs both in support of certiorari and on the merits in this case that considered whether the “first sale doctrine” should apply to goods first sold overseas and then imported into the United States. Failure to hold that the doctrine applied could have subjected retailers to significant litigation for copyright infringement for the $2.3 trillion of goods that retailers import. The Court cited the RLC’s brief in support of its decision.

DMA v. Brohl (10th Circuit). The brief explained the significant disadvantages that “brick and mortar” retailers face under the U.S. Supreme Court’s outdated Quill (1992) and Bellas Hess (1967) precedents that today give large online retailers a significant tax advantage over their local retail counterparts. Supreme Court Nominee Judge Gorsuch wrote a concurring opinion in the 10th Circuit’s favorable decision in which he recognized the commercial advantage Quill and Bellas Hess give to online retailers but also noted that these particular precedents seemed designed to “wash away with the tides of time.”

Expressions v. Schneiderman (US Supreme Court). In a case challenging the validity of a state law that prohibits merchants from surcharging products for credit card fees, the RLC — joined by three trade associations — filed an amicus brief urging the Court to recognize that, regardless of the validity of the specific statute, merchant communication to consumers about credit card fees is “speech” subject to higher constitutional protection.

Although the Court did not reach the statute itself, Chief Justice Roberts, writing for a unanimous Court stated, “In regulating the communication of prices rather than prices themselves, [the statute] regulates speech.” The decision, thus, sets a high bar for government restrictions on merchant communication to consumers about credit card fees and surcharging.

With a new year comes new legal challenges and opportunities. Retailers deserve representation across all three branches of government – legislative, executive and judicial. Our industry should continue to focus on educating the courts to help them understand the retail community and the issues of greatest importance to it.


Deborah White is the president of the Retail Litigation Center and general counsel of the Retail Industry Leaders Association.

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ECOMMERCE

Study: E-commerce fraud increases more than 30% in 2016

BY Deena M. Amato-McCoy

As the industry makes the switch to EMV, data breaches and automation are driving online fraud more than ever.

In fact, e-commerce fraud attack rates have spiked 33% over the last year, according to the “2016 E-commerce Fraud Attack Rates,” from Experian. The report analyzed millions of e-commerce transactions and ranked the top states, cities and ZIP codes for shipping and billing fraud across the United States.

As EMV works to protect payment card information at store level, the process has prompted fraudsters to refocus their efforts online. By targeting card-not-present transactions, hackers are gaining access to consumer accounts, billing information and identity data, enabling more successful fraudulent attempts.

And fraud is happening everywhere across the country.

Broken down by region, billing fraud has increased 25% in the West, with shipping fraud jumping 32%. In north central U.S., billing fraud increased 16%, while shipping fraud spiked by 32%.

In the south, billing fraud attacks increased 32%, and shipping fraud jumped 41%. The Northeast reported billing attacks increase 25% while shipping fraud was up 44%.

Overall, 10 states — Alaska, Colorado, New Mexico, Idaho, North Dakota, Maine, Montana, Iowa, South Dakota, and Wyoming — saw an increase of over 100% in shipping fraudulent orders.

Meanwhile, Delaware, Oregon, and Florida, were the top-ranked states for billing and shipping e-commerce fraud in 2016. Both Oregon and Delaware saw an increase in e-commerce billing fraud attacks of over 200%. Three states, Florida, California and New York, accounted for more than 70% of total e-commerce billing fraud attacks.

South El Monte, California, was the top ranked city for both shipping and billing fraud in 2016. The billing fraud attack rate was nearly double that of the second-ranked city, Port Reading, New Jersey.

Miami, was home to the most ranked ZIP codes for e-commerce fraud, accounting for 17 of the top 100 for shipping fraud, and 20 of the top 100 for billing fraud, the report said.

"One of the major drivers for the increase in fraud attacks is the contin-ued adoption of EMV terminals for chip-and-pin credit cards,” said Ad-am Fingersh, Experian general manager and senior VP of fraud and identity solutions.

“While these cards reduced counterfeit credit card fraud at the point-of-sale, they have driven fraudsters online. This pattern is similar to what other EMV markets saw when transitioning to chip-and-pin cards," said Fingersh. "As more compromised data becomes available from breaches, it's easier for fraudsters to get their hands on identity data requiring con-sumers and businesses to stay diligent in protecting themselves."

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DESIGN/CONSTRUCTION

Hipster brand opens outpost in Brooklyn

BY Marianne Wilson

Shinola, the Detroit-based watch and leather goods brand with a cool edge, has expanded its presence in New York City.

The company has opened a store in the newly developed Empire Stores center in Brooklyn. The sprawling, renovated warehouse complex is located on the waterfront and is home to tech and advertising companies along with select retailers, including West Elm.

The new store features Shinola’s full collection of watches, jewelry, leather goods and bicycles, along with a customizable watch bar. The brand partnered with New York eatery Smile Café to open an on-site restaurant.

The 2,651-sq.-ft. store was designed in collaboration with Gachot Studios, which is also designing the upcoming Shinola Hotel in Detroit.

It was built by Schimenti Construction.

Shinola Brooklyn is the company’s 18th nationwide. Additional stores are due to open in downtown Manhattan, Denver, Dallas, and Troy, Michigan.

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