Apple Arrest Puts Heat On Mobile Checkout Policies

Do the very nature of mobile checkout apps mean that retailers must radically rethink shoplifting policies? (Hint: The answer is "yes.") After Apple literally sent an 18-year-old Apple Store customer to jail in New York City last month—after the customer apparently failed to click the final complete transaction button—the broader implications for retailers are significant.

Shoplifting policies are based on a simply binary: Is the customer leaving the store with an unpaid-for product? But there needs to be proof of intent. And for the next year or two—while consumer-controlled mobile in-store purchases are very new—there had better be overwhelming proof of that intent.

What should be the policy if the customer absentmindedly—or sloppily or in haste—forgets to click an icon? Even more frightening, what if the shopper does properly process the transaction on his/her mobile phone but the application or the transmission glitches, for whatever reason?

One of the decisions Apple made with its in-store mobile purchase program (EasyPay) complicates establishing proof of intent. For example, EasyPay uses a payment card already on file (not dissimilar to how iTunes uses whatever card is already on file and solely asks for an iTunes password). If it required a card to be typed in—or swiped—each time, that could be a wonderful display of intent.

EasyPay also can only process the purchase of one product at a time. That's a hassle if the shopper wants to buy nine items. In the intent category, though, that restriction sidesteps the issue of someone taking nine items and only paying for five of them, which is a popular self-checkout theft tactic.

In the Apple case, a customer named Eric Shine went into a Fifth Avenue Apple store on August 20. He had a scheduled meeting with Apple tech support and, while waiting, bought some Bose headphones for $129.95, according to a New York City Police Department criminal complaint. He used EasyPay, and thought he had completed the transaction and had, therefore, paid. Shine then had his meeting with tech support.

After that, he asked a store associate for a bag for his purchase, which is what customers are supposed to do. The associate is then supposed to ask to see the digital receipt. In this case, however, the associate didn't ask and instead simply gave Shine the bag. That bag is supposed to signal to Loss Prevention that the product has been verified as purchased. (Oops!)

Shine then placed the bag into his backpack and tried to continue with his day.

The LP employee, John Conenna, asked to see Shine's receipt. Shine pulled out his iPhone, and it was only then that he realized the app had gone through every step except the last one. Instead of asking the Apple fan to please complete the transaction, the associate called the police and had Shine arrested on petit larceny (shoplifting) and criminal possession of stolen property. The New Jersey resident spent the night in a NYC jail and is awaiting a court date for next month.

Let's do a quick list of the ways this situation was handled in the worst possible way.Let's do a quick list of the ways this situation was handled in the worst possible way.

First, a store never wants to accuse a shopper of stealing unless the store is quite confident that the shopper was, in fact, stealing. If there's any reasonable doubt at all, commonsense dictates that it's better to let 10 possible shoplifters go than to arrest one innocent customer.

In this case, though, it's not even an issue of letting the customer go. You don't let him or her leave. You simply ask that the customer complete the transaction. For a nice touch of class, the LP person could even apologize; as in, "I am so sorry. This is a new app and it can be confusing at times. If you just click here and then here, you should be fine. My apologies for the inconvenience."

Second—and this is potentially a much bigger corporate issue—this is a new form of payment. As news of this arrest has spread across the country—and it has spread—how do you think that will impact other Apple shoppers who had been thinking about trying this app? "They arrested somebody for inadvertently not processing the purchase properly? There's no way I am going to try it. I'll either wait in line or check out these new Androids."

The problem with the mobile app is that the lack of intent cuts both ways. It makes it easy to pretend to pay for the product. But if LP asks to see everyone's receipt—in the way, for example, Costco does—or at least asks to see the receipt for anyone trying to leave with an RFID-tagged product the system doesn't think was paid for, that's a shoplift that won't succeed. And if customers are routinely made to go back and pay or to leave the product behind, minimal losses should result. (Customers can always slip by, especially if the store is crowded. Do you think the Apple Store in NYC won't be, say around December 15?)

StorefrontBacktalk Legal Columnist—and former federal prosecutor—Mark Rasch has argued before that mobile will force shoplifting processes to be rethought. But looking at the Apple incident raises new questions. "If you go to the grocery store and the clerk fails to ring up an item—or an item doesn't scan properly—are you guilty of theft when you pay the amount on the register?" Rasch asked. "Is there a legal obligation to report the undercharge to the associate? Does it matter if you know the item hasn't been rung up? Is the intent non-existent if you weren't really paying attention?"

What about glitches? What if a customer does everything properly but the app doesn't properly show a receipt? Or the receipt arrived and then was either deleted by accident or it deleted itself via a glitch? Will LP just follow orders and have everyone arrested?

This is not just an Apple issue. Walmart is trying out in-store mobile checkout, JCPenney is saying it will do so and many other stores are being pushed by PayPal, Google Wallet and others to do the same. Shoplifting policies need to be radically reworked in a mobile self-checkout world, unless chains want to discover what massive customer alienation feels like.