It is February 2016, two persons walk into a shop and this place has all the nice goodies on sale, in this case a Blu-ray and a video game. One person picks up one of each and pays cash, the other one swipes his mobile for a game. His payment goes wrong, he frowns and checks his mobile, then tries again. Again a failure, now he transfers some cash to his mobile and pays, as he does that he learns that he had been swiped less than 120 seconds earlier. Neither noticed, neither saw any alarms, someone walked out with his mobile $75 and it went unnoticed.
In this day and age where this is still happening on a daily basis we get confronted with ‘A last hurrah for banknotes as UK switches to mobile and card payment‘ (at https://www.theguardian.com/business/2016/jun/04/uk-switch-to-cashless-society-contactless-payment), the subtitle gives us the question that matters: “if Britain is ready to become a cashless society“, that is the question and it is a rather tough one to answer. You see, technically we can implement this, yet, how can we guarantee security? In the old days a pickpocket had to interact with the person they were trying to rob, which is not a given in this case. Nowadays the thief needs to get within 10 meters, which means that the criminal could be a whole floor away swiping electronic wallets left, right and centre.
So why are we embracing a system that is actually empowering crime and criminals?
The guardian gives us this initial example: “When Transport for London banned cash on the buses in mid-2014, it was greeted with a backlash from some quarters; “passenger fury” said one headline, “ban hits the vulnerable” was another. Yet, two years on, behaviour has adjusted. TfL says it has saved £24m in cash-handling costs, and queues have improved“, which might be fair enough, but how are fare’s paid for? You see, the bus still costs and here we see that the Oyster card replaces money. Now, this is not a bad idea. You fill up the card and use it as you board the bus and tram. In Australia it is called the Opal card and there is wisdom having one. I do not oppose certain systems that take money out of the immediate equation. Yet, all this is a long way from a cashless society. In that regard I have been a victim myself and I know others would suddenly lose dollars of their card. Now, these things happen, we misplace a banknote, yet when it happens to a travel card, we do not find that money again. Should we therefore not do it? No! If we are becoming increasingly reliant on public transportation, having a streamlined system, including an Oyster card (or whatever it is called) seems to be the path to take.
Yet in all this, with organised crime being better equipped than the fortune 500, relying on a safe digital age is not the way to go for now. You see the news 2 days ago gave us “A Geraldton magistrate has called credit cards that offer contactless payments “rife for being exploited”, after a 29-year-old man appeared in court on 11 fraud charges for using an unlawfully obtained credit card“, this was a man on drugs, which is also likely why he got found out this quickly. He racked up $715 in fraudulent transactions in a three-hour period. So the victim would not have known this until much later, perhaps even days later. By the time it gets out into the light, there would be little to do against it. And the news is about to get worse.
The ABC in January this year reported (at http://www.abc.net.au/science/articles/2016/01/27/4392905.htm) “First, the criminals manage to install malicious software on the point-of-sale device in a restaurant, bakery or hardware store. This is very common. The crooks will use this information to make counterfeit credit cards that can be used to buy gift or debit cards, which in turn can be used to buy expensive stuff that can be resold for cash. Second, the hackers can compromise the network of a company that processes transactions between the various banks involved – such as the bank that issued your card, and the merchant bank used by your retailer. They can steal an enormous amount of card accounts in a very short time. Third, they can attack the database or website of an online merchant. The fourth method is an oldie but a Goldie — “skimming””
Four methods, still in place today and in many cases there is little to no protection, that money is just gone. Now, there are two sides here. One, should card usage stop? I do not think that this is a pragmatic approach or one that is even viable at this stage, but the transformation towards a cashless society is equally not an option. Not until the defences become a lot better. Now just electronically, but essentially a better system that gives levels of non-repudiation. That is something no one seems to want, for the mere situation that time is money and the USA is broke, bankrupt!
Why do you think that this push is happening now, even though many parties know that the switch is not an option at present? In my view this is in part because the USA needs to refinance 6 trillion dollars this year and it is not even close to getting that done. The switch to cashless sooner rather than later allows for shifts of cash from the real world into the virtual world, a place where no one can keep track of it. Yet that is not enough! The US mainly needs the shift to happen, so that the invested value can become a reality, the switch can be bought with ‘cash’ the US does not have and pay for it through the charge of every transaction that goes through this system.
It is a dangerous solution and the fact that the parties involved are willing to take a risk that organised crime would come out on top here is even more disturbing. Let’s take a look at the evidence here, because without that, it is a speculative rant at best.
- Here is the clip of a skimming device being installed, which took less than 3 seconds (at http://thehackernews.com/2016/03/credit-card-skimming-hack.html).
This could impact small businesses overnight, with the criminals laughing themselves into wealth.
- Here we see an employee skimming cards to increase his fortune, so fast-food comes at a price (at https://www.youtube.com/watch?v=oAP7sVh4smc), we see a few more examples which also gives us additional worries, most small business owners would be clueless that fuel pumps could be rigged in mere seconds. A cashless society and the funds that are supposed to be yours will be going somewhere else real fast.
Now, important to note is that in this non-cashless age, this is already happening and there is no clear way to protect one’s self, which clearly implies that in a cashless society we would be in increasing danger of losing our hard earned cash. In addition, as we are aware of these weaknesses, why is the drive to cashless so strong? When the press asks whether they good guys are winning the war, the cautious response form Steve Scarince from the US Secret Service is “It’s even right now“, which is not only not so reassuring, it is hardly a win and that is just within the US, where there are at least a few handles on Credit card fraud, yet the employee event only got the transgressor 2 years’ probation, giving a clear message to crime that for now, cashless financial crimes are still rewarding. In addition, in a similar place, how many employees have not been found out?
And this is just the small stuff!
The fact that courts aren’t treating cybercrimes more serious and deal out harsher penalties is equally disturbing. In addition, the courts are still a problem too. In most nations that practice common law the rules of evidence is still taking a seat back towards the digital age. This gives us two problems in that frame alone.
Let’s take a look at these three points:
- computer records and printouts may be tendered as documentary evidence or as business records to prove what they contain – this is an exception to the rule against hearsay, which would otherwise stop such material being relied on to prove the truth of its contents;
- it is possible to prove that particular processes are carried out on information and communications technologies (ICT) equipment and in some jurisdictions there is a rebuttable presumption that a computer works correctly; and
- Under expert evidence provisions, experts can give evidence about the operation of computers.
This now reflects back to the works of Smith, Grabosky and Urbas (2004) where we see on page 38 ‘that 75% of cases referred for prosecution to federal authorities were declined, primarily due to lack of evidence‘, this is why I mentioned the fact that the US has some credit card fraud, but the rules of evidence has not caught up which means that 75% walks away from this, which now gives additional concern when we consider the earlier employee in the fast food industry skimming client cards as well as shopkeepers ending up with a card reader containing a skimming device. At this point Crime pays a little too well. Yet it is my personal view that with the US is such deep financial troubles the banks will accept any option that continues their way of life, which is equally disturbing on a few levels.
We see this failure again on a second level of problems. This is seen when we deal with the issue of proportionality. When we consider the quote “In the case of cyber-crime this raises serious difficulties as the consequences of some types of offending can be devastating, such as the creation and release of a computer virus, and yet the conduct itself may involve no physical violence or even contact with other people“, the sentencing takes no consideration to the other hardships that a victim has to go through. New bank cards, new credit cards, filing documents regarding financial loss and the economic impact the fraud had. Apart from that there is the chance that misdoings will impact that person’s credit score with the possible continuation to even more economic hardship and even a realistic impact on their economic footprint. None of that is weighted properly in court. A person with a mere scratch could end up in a better position, a realistic situation that is immoral and a-moral.
This is maintained when we look at R v Boden [2002] QCA 164, here we see “a 49 year old hacker, Votek Boden was sentenced to two years’ imprisonment after being found guilty of hacking into the Maroochy Shire’s computerised waste management system. Boden was accused of causing millions of litres of raw sewage to spill out into local rivers and parks killing marine life and causing offensive smells“, which gives us the following
– In the first, system transgression tends to be too easy
– In the second, the fact that this person is established to have committed ‘ecological mass murder’ and it seems to be ‘punished’ with a mere 2 year’s imprisonment.
The law has not caught up in Australia, New Zealand, the United Kingdom and Canada. With these Commonwealth nations already falling short, whilst we can also clearly see that the US is not ready either, we see news that several places are now slowly gesturing towards a cashless society. The Guardian article gives us “A major milestone on the path to a cashless society was passed in 2015, the first year that consumers used cash for less than half of all payments, according to Payments UK, which represents the major banks, building societies and payment providers“, which is fair enough. The article does not clearly elaborate that it took the UK the better part of 25 years to get to this point. We then see “It predicts that cash usage will not be eclipsed by debit cards and contactless until 2021“, which is an earie ‘forecast’. It is earie because it is practically impossible to get the proper adjustments done to law within that term, if we all remember the Houses of Commons versus Lords Ping Pong Match, the adjustments required for Criminal Law Act 1967, the Serious Crime Act 2015, the Civil Evidence Act 1995, the Criminal Evidence Act 1898 as well as the Police and Criminal Evidence Act 1984 will take at least a few years more than that and these are just 5 points out of a list that is decently larger than this. This all becomes even more unsettling if the UK becomes a Bremain group, because in that case the UK will need to deal with the EU settled laws as well, which is unlikely to be a positive thing. It is almost certainly a Utopian disaster that is ready to happen.
There are additional sides, sides where cashless seems to have grown naturally, like in Sweden. Yet the misdirection we see when we see an entrance to their version of the underground with the text “Stockholm’s Metro does not accept cash payments“, you see that is in part true, you use their version of the Oyster/Opal card, a situation several nations are going towards, some are already there. The article (at https://www.theguardian.com/business/2016/jun/04/sweden-cashless-society-cards-phone-apps-leading-europe), where we see “cash transactions made up barely 2% of the value of all payments made in Sweden last year – a figure some see dropping to 0.5% by 2020“, whilst the article ends with ““Even if, in the next few years, Swedes use almost no cash at all, going 100% cashless needs a political decision,” he said. “The idea of cash, even in Sweden, remains very strong.”“, which is a separate truth, moving away from currency will forever be an issue, and when we see that one nation being at that point for 98%, we see these people having an issue of becoming a cashless society, we better believe that the Commonwealth at large will not be ready for a long time to come.
Yet, the other side is also there. Although finding anything decently reputable is almost a non-option. I am surprised that we see increasing mentions of the cashless society. The quote we see (at http://www.financemagnates.com/fm-home/moving-towards-cashless-society/) gives me a few issues “The transition towards a cashless society seems inexorable. The incredible rise of fintech payment companies like Square, WePay and TransferWise, along with the increased popularity of Bitcoin and cryptocurrencies, are making traditional banks and old payment systems obsolete, with cash becoming less important“, there is truth here, but there is also another issue, the risk of economic degradation and the legalisation of slavery.
That part I have to explain!
We have moved from a balanced book world towards a GDP ruled world, where the interest payment of debt is set against the GDP, so that the total amount of borrowing could be raised again and again. Yet in all this there were limits because total debt remains an issue, especially for the US as it will have to refinance 6 trillion this year alone, meaning that if it fails, the US becomes bankrupt! In defence we see mentioned: “Yes, America has a long-term debt issue, but no, it is not going bankrupt. Just ask the rest of the world that is scooping up US Treasury bonds by the hundreds of billions“, which could be fair enough. Yet in all this, why would these government buy ‘bad’ bonds, especially as those nations are just as deep in debt? In my view, the view that was proven with the Greek deficit situation is because those who make the decisions get a lot more out of this deal, they get to continue their comfortable way of life. If that falls away they will be in hardship, just like everyone else! So as we see additional debts getting set up to deal with previous debt, that path leaves a nation with nothing. Should you doubt me, then consider when has the US kept its budget and what steps are clearly in place to pay off the debt it has?
So when we consider those people buying US bonds, we need to realise that this act could cost the US an additional $30-$60 billion depending whether the US can offer those bonds at 0.5% or 1%, the question becomes who is willing to take that risk at 1%? To counter this every American resident would have to make a $92-$195 donation to the state and that is just the additional cost of a bond. Yes, not taxation, but donation, because all the tax money has already been spend and the US, unable to keep their budgets in check has already spent next year’s budget. This is why a cashless society works for the US government and it works for those in power within the US. With the link between existing cash and debt removed, it becomes a virtual world. A world ruled by econometrists, economists and banks. I wonder if the US population realise that they did not elect these people, those people who keep on deciding how trillions are wasted. At that point, a point that is uncomfortably close by, the US crosses the critical boundary where its population is categorised into who are either a Benefit or a Burden. We to those who are not a Benefit, because they will lose a lot more than we all bargained for. That fear will also reside within the EU and the UK is no different for now. It is that fear, additional to the responsibilities and the needs of the people that needs to address this. We end up being a group of people to work solely to remove the debt handed to us by irresponsible people who are not held to account (evidence: see previous Greek administrations), we become a legally defined workforce in what could be regarded as slavery.
Yes, cashless might be the path of the future, but in this age of irresponsible spending, the backlash would be massive and it tends to come out after the spenders are gone and they are not held to account, they will live their life on a mansion in luxury. An option that is not there for you and me, moreover that person will be doing it using our money and our savings. Did you sign up for that?
The cashless path is coming somewhere in the future and until proper preparations, checks and balances are in place the slogan becomes: ‘abandon all hope ye who enter that path!‘
Lawrence van Rijn - Law Lord to be 