Apple, hackenomics, and the waning anonymity (and obsolescense) of cash

Apple, hackenomics, and the waning anonymity (and obsolescense) of cash

Summary: The noose is slowly tightening. A hundred years ago -- heck, even ten years ago -- for the most part, we didn't have to sacrifice our privacy just to participate in some transaction.


The noose is slowly tightening. A hundred years ago -- heck, even ten years ago -- for the most part, we didn't have to sacrifice our privacy just to participate in some transaction. Lots of merchants tried (some still do) to shake us down for our personal information before allowing a purchase. Radio Shack used to be notorious for this practice until it realized how many customers it scared away (including me.. that was one reason I hated going in there).

Earlier this year, while buying a digital photo frame at Micro Center in Fairfax, VA, I was accosted for all of my personal information (including e-mail address). When I declined to provide it (mostly fearing junk mail), the cashier conveniently didn't know how to continue with the transaction (as if no one else declines). A manager came over to take care of business. But it was an uncomfortable moment. As the minutes ticked away, the stares of the people in line behind me were burning holes in the back of my head. They no doubt felt as though my privacy wasn't worth nearly as much as their time. Screw them. If Micro Center doesn't want fidgety people in its lines, it knows what to do.

A lot of places ask for my zip code. I don't feel too violated when asked for this bit of data (it's probably for research). But to be honest, when I'm paying cash, I'd rather not be asked for anything but my cash.

I don't remember the exact context, but I think it was in the early 80's when I heard Johnny Carson crack a joke about how the day might come when cash wouldn't be accepted. Back then, he was kidding. Today, no one is kidding about it. For example, according to a recent InfoWorld report, Apple is apparently refusing to accept cash as a form of payment for its iPhones. Wrote IW's Elizabeth Montalbano and Steven Schwankert:

People looking to walk into an Apple retailer and buy an iPhone with cash will be out of luck. The company is now accepting only credit or debit card payments for the devices so that it can track who purchases the phone, according to an employee at the Apple Store in New York's SoHo neighborhood.

The new policy is Apple's attempt to prevent people from purchasing and then unlocking and reselling iPhones, a situation that has been a problem for the company. Apple won't let anyone without a credit card or debit card in their name purchase iPhones, according to an unidentified Apple Store employee in a phone interview.

The part about "tracking who purchases the phone" really caught my eye. When Radio Shack, Micro Center, or some other merchant asks(ed) for my personal data, it's not as much about giving them the information as it is about what they plan to do with it. If for example, the cashier said, "Hey, where ya from?," I'd be happy to tell him/her. But, when the data is being programmatically absorbed into some database, that's when I begin to envision all sorts of dasterdly usage scenarios. But tracking in the context of the iPhone unlocking debacle (which the IW story says is costing Apple millions)? Suddenly, Micro Center isn't looking so bad.

Unfortunately, the IW story doesn't contemplate Apple's rationale for this so called tracking and what might happen should a phone connected with a credit card end up unlocked or in the hands of someone other than the original buyer. What makes this even worse is Apple's complete lack of transparency regarding such an unorthodox policy. Nothing about Apple's credit/debit card requirement has been published by the company and the InfoWorld report says the following:

Apple's public relations team did not respond to multiple requests for comment on the new policy.

We're left to assume that the requirement is indeed about some form of tracking --- an idea which is quite frightening. What might Apple be thinking? Here are some guesses:

  • Ultimately, it's just a fear tactic. There isn't much Apple can do with this information from a tracking perspective. It would have to go through an iPhone's buyer's card issuer to get at anything more personal than your name and credit card number at which point the trail would end. But that doesn't mean Apple can't create a perception that it has more access to your personal information that it does, thus scaring away would-be abusers of the iPhone ecosystem.
  • Credit cards are a means of authenticating your identity which in turn serves Apple's current maximum of 2 phones per person policy. Theoretically, through its systems, the policy could be enforced by either (a) keeping count of the number of phones purchased by credit card or (b) keeping count of the number of phones purchased by name (the name that appears on the credit card). The latter would be less reliable because of (1) people with common names and (2) people with more than one credit card. But maybe Apple looks for it anyway and will red flag it until one John Smith can prove he's not the John Smith that's already in the system.
  • Whenever an iPhone is purchased with a credit or debit card, the serial number of the iPhone is married to that credit card in Apple's database. If that iPhone should become unlocked or should Apple discover that it's in someone else's possession, it will charge your credit card with some sort of penalty fee. I don't think this is legally allowable. But (1) Apple has traditionally been very litigious and (2) it could be contemplating a change to the legal language (if it isn't already there) that comes in the box with the iPhone that paves the way to legally impose such financial penalties.
  • Sort of a variant on the last bullet point, if you purchase one iPhone with your creditor debit card and Apple discovers that you've done something with the iPhone that it would rather you not have done, it can blacklist your credit card from (a) being used to buy any more iPhones or (b) being used in any Apple Store.
  • Another variant on the previous two punitive bullet points; Apple could share the credit/debit card data with AT&T which in turn could terminate the existing services that it's providing to any customer already associated with that credit card.

To better understand what Apple can and cannot do with your credit/debit card information, I've placed a call to my contacts at Visa who have promised to get back to me one way or another (so expect an update if not an entirely separate blog post on the issue shortly).

But, in the bigger picture, it's already bad enough that our governments (federal, state, and local) are able to, with near impunity, take advantage of our digital breadcrumbs. But forcing us to leave such breadcrumbs behind as a means of controlling buyers is an act of seller indignance and buyer abuse that deserves a swift and unbending response from buyers. What's next? Will Apple require credit cards to purchase both Apple systems and Leopard? That way, only authenticated owners of Apple systems can acquire Leopard (to offset the chances of it being hacked to run on a PC)? Under no circumstances should we allow such treatment by a merchant. Any merchant. Furthermore, Apple's move sets an ugly precedent that undermines the longstanding tradition of cash as legal tender and the freedom it not only exemplifies, but stands for. Shame on any company that, because of its own inadequacies, strips us of that right.

Just like the way hackers have proved fallible the digital rights management schemes used by Apple to protect its grip on the music industry and the portable digital media player market, Apple's technology has once again proven itself to be an impotent tool in the struggle to enforce its contractual obligations (for example, with AT&T). Strangely, it continues to make this bed and gets away with asking us to sleep in it. Go figure.

Update: I went to an Apple Store to double check the policy. See Undercover Video: Why Apple only takes credit cards for iPhones & the legal questions raised.

Topics: iPhone, Apple, Banking, Mobility

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  • cash etc....

    All my currency states that it is legal tender for all debts public & private. Does this mean that Apple is going against the policies of the US Government ?

    I also find it interesting that in order to post a reply to this article, I am required to logon so you can track me. Isn't this a bit ironic ??
    • It's not illegal


      Question: I thought that United States currency was legal tender for all debts. Some businesses or governmental agencies say that they will only accept checks, money orders or credit cards as payment, and others will only accept currency notes in denominations of $20 or smaller. Isn't this illegal?

      Answer: The pertinent portion of law that applies to your question is the Coinage Act of 1965, specifically Section 31 U.S.C. 5103, entitled "Legal tender," which states: "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues."

      This statute means that all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise. For example, a bus line may prohibit payment of fares in pennies or dollar bills. In addition, movie theaters, convenience stores and gas stations may refuse to accept large denomination currency (usually notes above $20) as a matter of policy.
      • Legality not the issue

        Just because it's legal doesn't mean it's not disturbing.

        This all goes back to why must I adhere to your rules about a product you sold. When you sell something, you give up all ownership rights, so what I do with it is not any of your concern. This is an attempt to make it their concern.

        I frankly don't care much because I have no intention of buying an iPhone. I worry that they will get away with it and other companies will follow suit.
        • Question for you

          Did you buy Windows Vista?
          • Nope (nt)

          • You can't "buy" or "own" ANY OS.

            you just get different terms depending on what you choose. Every one of them is licensed and you do not own the code in the strictest sense.
            And to answer what you were really getting at beyond thinking only Windows is licensed, which is wrong, is that because of such, windows knows who you are? How? Am I wrong to assume your question went there?
          • Who would "license" an OS?

            If they didn't own an OS to use?

            Are you implying that we do not own our
            automobiles because we have to have
            a "license" to operate it?
            Ole Man
        • Legality/ Protection of Personal financial data

          I wholeheartedly agree; no intentions to purchase an iphone, (holding out for the openMoko neo1973), yet, it would be disturbing if this becoems a wave of the future where other companies can/will follow suite. The legal issues that surround the matter are quite ambiguous... Legally, they can constitue what type of tender they accept; however, the usage and manipulation of people's data, specifically, credit card/ personal financial data, is a very very sensitive subject that should not go un-noticed.
        • I have to completely and utterly agree.

          It's not very often (well, actually quite rare) that i see a post on these forums with this level of sense, sobriety and absolute truth.

          This speaks only too well of how arrogant Apple Corporation seems to have become - especially as far as customer relations go. Having said that, like you, I have no intention (or desire for that matter) of ever buying an iPhone.

          As the saying goes: "... don't support them - you'll only encourage them."

          With Respect and Appreciation.
      • it's illegal.

        Mountains of case law bear this out. Apple is thumbing it's nose at the law. Just as Visa is with it's "cash is stupid" commercials.

        Hopefully this will bite them both on the but...soon.
      • It IS illegal

        At the very least, its discrimination. If I don't have a bank account or credit card, and want the Iphone, they are discriminating against me.
        Reiley 411
        • Not allowing cash as legal tender is illegal

          American currency used to say right on it: "Legal Tender For all Debts, Public and Private." Unless THEY changed the law, CASH MUST be accepted as a means for buying ANYthing.
          • No, it's legal

            That statement doesn't mean that paper or coin cash has to be accepted, it means that dollars have to be accepted.

            They can ask for any type of remittance they like.

            However, legal doesn't mean okay (okay in the sense of social acceptablity). It's legal to stand up and scream racial epiteths all afternoon, but that doesn't mean it's okay to. You may suffer the consequences for it, such as getting beaten up. Apple may suffer consequences for this, such as not selling as many as they would have otherwise (this may be unfounded, they may not suffer any ramifications, but they could, and if they do it's something that they've brought on themselves).

            I frankly don't care if they don't want to accept cash, it's the motivations that concern me. I don't want my purchases tracked (easy answer, right? Don't buy from Apple...unless other companies see it working for them with no consequences and start doing the same thing...). I don't have anything to hide, but I value my privacy.
          • Not it's not

            I remember back in the days when they used to require a credit card to rent a car but then (after an undercover news story ran)they were forced to rent to everyone whether they had a credit card or not. There is NO difference here...
            Reiley 411
          • Still says it, doesn't mean what you think it means...

            The treasury apparently gets asked this enough for it to make their FAQ..


            Companies do not have to accept cash.
      • It is illegal!

        The examples cited are not relevant here. They are cases where a particular denomination is not accepted for convenience purposes. In the case of buses, NY City buses accept coins, but not bills. However you can use bills to buy a Metrocard (bus pass).

        In Apples case they are refusing to accept ANY form of cash either directly or indirectly (like the Metrocard example). Legally debit cards are not the same as cash.

        There is also a discrimination aspect to this. What if someone doesn't have a credit card and their bank doesn't issue debit cards. Are they now barred from buying an iPhone?
        • No credit or debit card

          I am not sure that this is much of a problem, as you can't activate a cell phone without a credit card account. You can get pay-as-you-go phones, but not all phones are available for this, and the iPhone certainly isn't.

          Of course, when you open an account, they need information to determine if you are worthy of credit through them, as in - do you have the resources to pay the bill? But when you purchase an item, they have no need for this information. But I do see where if someone wants the phone, they can't get an account unless they have a credit or debit card, and if they want to use it without the phone features, they may as well save the money and buy an iPod Touch.

          I still don't agree with the practice. iPhone is a one-time purchase, no payments are necessary, so asking for credit/debit only is stretching the rights of the seller for the purpose of...what? Tracking? Data searching? Info gathering? To piss off potential customers? All of the above?
          • correction...

            "you can't activate a cell phone without a credit card account."

            Sure you can. You can use a debit card, which is guaranteed by nothing but the contents of a checking account. The credit card companies take NO risks and make BIG bucks on merchant account fees for debit cards (most consumers don't realize a merchant pays the Credit card company for EACH and EVERY transaction that comes through). I haven't had a credit card for many years because I refuse to fill the coffers of the credit card companies that do nothing but take advantage of consumers, and pay congress to pass laws allowing them to do more of the same. My credit score and my financial situation is much better because of it.
          • We Did

            They may have forgotten to ask and we had an account with a previous company for years but it did not take a credit card for either of our phones (different numbers, same account). All costs were on our first bill. OTOH it's almost impossible to rent a car without a credit card. However I can understand the need for that.

            In the cases cited where cash was not accepted there were legitimate reasons and the same is true in renting a car (they need collateral), but not a telephone.
          • Excuse that, please

            I left out the word debit in the post itself, but included it in the subject line.