The Business Litigation Blog

Problems with E-commerce in Business Litigation

The United States Court of Appeals for the Seventh Circuit held that injuries could be claimed against Barnes & Noble, Inc., because “scoundrels had compromised” its PIN pads used to verify payment information. They had obtained names, card numbers, expiration dates, and PIN numbers.

Damages permitted include a California plaintiff’s loss of use of money for three days even though trifling and purchase of a credit-monitoring service by an Illinois plaintiff. The Court did not consider liability questions even though merchants may not be liable for “failure to crime-proof their point-of-sale systems,” and was not opining that the case was appropriate for certification as a class action.

The case is worth noting for its damages holding and bears watching as the District Court decides these other matters. 

Thieves are doing their best to ruin e-commerce.  Consider this hypothetical.  A home purchaser gets wire instructions that she thinks is from her broker.  She wires the funds and they end up in Russia.  Gone forever.  Liability?  Would it matter if the brokerage email account were used and it lacked a security system?  If the agent violated the standards of the agency?  If the agent used his personal email account and that was the reason he was hacked?

Training and best practices can minimize the risk.  Insurance should be considered.  Until education and training is widespread, the courts are going to have to resolve these questions under the traditional theories of breach of contract and breach of tort duty, but also under any relevant statutes existing now or in the future.  

For a copy of the Seventh Circuit’s opinion, or to discuss E-commerce and business litigation, contact Thomas E. Patterson or Patterson Law Firm at tpatterson@pattersonlawfirm.com and (312)-223-1699. 

 

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