In this week’s blog post, we discuss the problems with e-commerce in business litigation. For instance, the United States Court of Appeals for the Seventh Circuit held that injuries could be claimed against Barnes & Noble, Inc. “Scoundrels had compromised” its PIN pads used to verify payment information. They obtained names, card numbers, expiration dates, and PIN numbers.
Damages permitted include a California plaintiff’s loss of use of money for three days. The Court did not consider liability questions even though merchants may not be liable for “failure to crime-proof their point-of-sale systems”. Additionally, they did not consider 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 broker’s e-mail account lacked a security system? If the agent violated the standards of the agency? If the agent used his personal email account and that was how the hacker gained access?
Training and best practices can minimize the risk, and you should consider obtaining insurance. Until education and training are widespread, the courts are going to have to resolve these questions under the traditional theories of breach of contract and breach of tort duty. These are just some of the problems with e-commerce in business litigation.