Hunton Retail Law Resource

Brick and mortar retailers are rapidly diversifying checkout and payment methods to combat the erosion of sales to online channels and provide an improved shopping experience for consumers. From self-checkout kiosks, to store-specific mobile applications for payment, scan-as-you-go devices, and even ‘just walk out’ models, retailers are reinventing consumer’s notions of the traditional checkout line by going cashierless. Some estimates predict that these automated technologies could account for 35% of retail sales in the next 20 to 30 years.

There is no doubt that there’s a revolution coming to the way consumers buy goods at brick and mortar stores as retailers seek to better meet customers’ need for speed and create novel shopping experiences. However, with this revolution comes new risks. There are a wide range of potential issues that retailers should consider before launching cashierless technology, including the following:

• claims of discrimination by certain classes of people who are unable to fully access these technologies (e.g., persons with disabilities and those without access to mobile devices, bank accounts, or other prerequisites);
• labor disputes arising from the elimination of jobs;
• consumer privacy concerns (e.g., invasion of privacy claims in connection with the tracking of customers’ browsing, risks associated with the collection and processing of high volumes of intimate personal data, and unexpected behavior of artificial intelligences);
• compliance with regulations governing authentication technologies and other security controls (e.g., use of biometrics to authenticate customers entering retail locations);
• compliance with regulations involving the sale of age-restricted goods (e.g., alcohol, tobacco, firearms, etc.);
• loss management and fraud detection issues, including the allocation of liability among technology vendors in connection with technology failures;
• other issues relating to relationships with technology vendors, including ownership of customer relationships and customer data, data use restrictions, and participation in future revenues resulting from retailer contributions to the development and “training” of artificial intelligence engines;
• protection of intellectual property, including patents, trademarks and data;
• whether existing insurance policies adequately address this changed business model; and
• all of the more typical issues associated with procuring and deploying new technologies, such as technology use rights, implementation plans and costs, service levels and warranties, indemnities, and limitations of liability.