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Since the liability shift back in October, retailers are now liable for credit card fraud that occurs through them. This is to encourage them to move to the more secure chip and pin POS systems, but many retailers have not made said switch and instead have adopted more rigorous verification methodologies for the old system.

One such system I have seen requires the cashier to check the ID of the customer and match it with the card, as well as match the last four digits of the card with the last for digits that were read by the card reader. Other procedures require signature checking and other such things.

My question is this, if the cashier does not follow one or all of these steps (cashiers are required to maintain a certain speed, these procedures are very time consuming) and fraud occurs, then is the company able to transfer liability to its employee on the grounds that procedures were in place to prevent it, but were not followed?

  • The US is switching to chip-and-signature systems. Virtually nobody supports chip and pin. – phoog Mar 4 '16 at 21:47
  • I have too have seen store employees ask for ID. However, merchant agreements from Visa and MasterCard for the U.S. allow the merchant to ask for ID but prohibit requiring ID in order to complete a transaction. I won't show my ID for my own personal security reasons. – Dave D Mar 5 '16 at 15:19
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In theory, yes; in practice no.

At common law, an employer is vicariously liable for the negligent actions of an employee performed in the course of employment, and the employee is also liable to third-parties but can claim indemnity from the employer. The employer can sue the employee for breach of contract and win (see Lister v Romford Ice Cold Storage), however, such suits are rarely brought and even more rarely successful.

This is partly because of the bad publicity such cases generate but mostly because many jurisdictions have introduced laws to stop them like the NSW Employee's Liability Act.

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