“First, it is true that if you walk up to a cash register at an Apple Store with $399 in cash [to buy an iPhone], you will be told that you need a credit or debit card,” David Berlind blogs for ZDNet. “As I’m taking four $100 bills out of my pocket, the clerk informs me that I must pay with a credit card.”
“Just as interesting however is the fact that you don’t need a credit/debit card for the entire purchase. When it became clear that my $399 in cash was no good at the Apple Store (for an iPhone), the clerk that I spoke with suggested that I pay $1 of the purchase price with my credit card and the rest in cash. This of course makes it clear that Apple needs the information on your credit card for something important,” Berlind writes. “But what?”
“Apple apparently is in a bind right now. It’s in a cat and mouse game with hackers who have made it possible to divorce (”unlock”) Apple’s iPhones from the AT&T wireless service that Apple is contractually bound to keep the phones married to,” Berlind writes.
Berlind writes, “As far as unique indentifiers go, credit cards are a pretty good token for authenticating someone’s identity. At the very least, Apple is probably retrieving (from the credit card) and keeping the name of every person who buys an iPhone. This way, when you go to buy another one, they can see if an iPhone has already been purchased by someone with the same name. But then comes the question of whether they are retaining your credit card number as well. How could they not?”
“Although nobody has yet to go on record, as it turns out, there’s a security and privacy standard called PCI DSS that practically every participant in the credit card ecosystem is required to adhere to. As far as I can tell, the standard policy potentially yields two important results. First, it protects the privacy of cardholders. Second, it helps merchants and card issuers manage risk,” Berlind writes.
“If Apple is using credit card numbers for the purpose of tracking (as seems to be the case here) — that Apple might not only be in violation of PCI DSS, it could also be breaking some laws (some of which are based on PCI DSS) as well as breaching the terms of its agreements with card issuers and credit card companies,” Berlind writes.
Berlind explores if what Apple seems to be doing is legal in the full aritcle here.
Isn’t it possible that Apple has already asked their lawyers about the legal nature of this? With Apple’s penchant for detail, I would assume so.
I Apple is doing this then they are just one of 100,000s of companies worldwide that are doing exactly the same thing.
ANY company that accepts credit or debit cards for payment (not just shops!) can quite easily do this.
Why pick on just one company when you can pick on Microsoft or Joe’s Plumbing Emporium or any other company…
While I am familiar in detail with PCI (as I am a computer security consultant and auditor) there is a more fundamental issue here.
In every country I have travelled to (currently 37) it is actually illegal to refuse cash for a transaction executed in person provided the value of that transaction is less than various sums (such as USD 10,000) that are set for money laundering regulations.
If Apple are refusing cash for a purchase then they are in breach of the law. I really hope they reconsider before someone takes them to court and generates all sorts of negative publicity. I am a fan of Apple so this is from a positive perspective.
Cheers
Oddly enough – you can pay cash if you buy at an AT&T;store, but they verify your account and tie it to your phone number before you leave, FYI.
You have to use a credit card to rent a car. The value of the car extends beyond the value of the rental. Therefore, the merchant (Hertz, whatever) needs protection.
A similar case can be made for the iPhone and the service agreement.
What is the big deal if you don’t intend to break the user agreement?
No kidding, MDN word is “car”
Don’t pick on Apple on this one. Have you ever tried to rent a car using cash. They be sure to tell you where to go…
It is legitimate, under PCI DSS, for them to keep your name and part of the card number (first 4 and last 4 digits). This doesn’t disclose the card number, but would generate a pretty unique value for them to check for duplicate purchases.
Cash is good for all debts, public and private. Apple cannot legally exclude cash sales.
Rainy Day,
You couldn’t be more wrong. It is not illegal for Apple to have a no-cash policy. Apple could require payment only in jellybeans and it would be legal in the U.S.
@me,
As a matter of fact I have used cash to hire a car. However they do require additional identification as security against default of terms. It usually means an additional deposit and information such as additional proof of address and ID. All perfectly reasonable.
Can someone explain to me what the big deal is if someone wants to buy more than one iPhone and resell them? How would tracking credit card information stop that?
By the way, I bought two iPhones for cash in an Apple Store. I was informed that I would need a credit card in order to activate.
“Cash is good for all debts, public and private. Apple cannot legally exclude cash sales.”
Wrong: http://www.treas.gov/education/faq/currency/legal-tender.shtml
…what I understand is that the requirement to accept cash is only for paying debts. For instance, if I owed someone $20 and offered to pay him in cash, but he refused, I could claim the debt was paid off. On the other hand, if there’s no debt, the two parties can do business on whatever terms they like.
One way hashing algorithm anyone? As in: CC# -> Hash, it’s non-reversible. 3DES, MD5, etc. Non-event.
Rainy Day:
“Cash is good for all debts, public and private. Apple cannot legally exclude cash sales.”
Yes, but if Apple refuses to sell you the iPhone because you do not present a credtit card, there is no debt because there was no sale. Got it?
“Isn’t it possible that Apple has already asked their lawyers about the legal nature of this? With Apple’s penchant for detail, I would assume so.”
In other words, if Apple does … it must be legal?
Yeah, I’ll say the word: FANBOY!
Q: 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?
A: 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.
http://www.treas.gov/education/faq/currency/legal-tender.shtml
Here’s the exact answer from Kalel666:
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.
This whole issue seems unnecessary. When I go into a Verizon store to purchase a phone they require that I activate it during the purchase. No cell plan, no phone. Why doesn’t Apple activate the phones in the store before handing them to the customer? If a person chooses to unlock their phone they will be liable for the termination fee.
(That said… I’m all for divorcing phones from cell companies, but we are stuck with this system until the government gets a backbone. I like how Europeans can swap SIM cards and go with whatever company they choose.)
I agree with your take 100%…
Nobody is “required” to accept cash as payment in the US. I lived in apartments for many years before buying a house, and most of the complexes I lived in would not accept cash for the monthly rent payment. I had to pay with a check (personal or cashiers), or a money order. Their reasoning was that they didn’t want to have that much cash on hand (i.e. hundreds of people paying several hundred in cash on the 1st day of the month) because it would be a perfect opportunity for them to get robbed. I’m sure there are many other examples like that out there of places that won’t accept cash.
Besides, if you have a debit card, you’re an idiot for ever carrying more than $20 in cash on your person anyway. Debit cards are accepted virtually everywhere, and you’re just asking to get robbed if you’re carrying around a wad of cash.
@DBL
I never stated if Apple does then = legal. I stated that they would’ve checked it out thoroughly beforehand. Any reputable company would.
Can you read AND interpret at the same time?! Frickin’ numbnuts.
You cannot pay cash to get a room in most hotels nowadays. Tell me if that is legal or not.
You can’t use cash to bid for a hotel room on priceline. They use your credit card no, name, and address to ensure you are following the bidding rules.