Michigan Developments
Eric Rule,
Director of Governmental Affairs

Truncation, skimming bills target credit card fraud
MRA is opposing proposed legislation that would cost retailers by requiring them to omit some information on credit card receipts.

House Bill 5435, sponsored by Rep. Ruth Johnson (R-Holly), would require merchants to “truncate” receipts for credit card transactions by deleting all but the last five digits of the customer’s credit card number.

Requiring truncation would cause problems when retailers need to recreate a batch due to terminal malfunction or error. In order to retain the customer’s complete card number, they would have to use a thermal printer to produce different receipts for the customer and the retailer.

Most Michigan retailers use printers that create two identical receipts on NCR (carbonless) paper. They would have to upgrade to thermal printers at a cost of $250 to $600 per terminal.

MRA is pursuing separate legislation to prevent credit card fraud and identify theft by fighting illegal “skimming” of credit card information. Skimming occurs when employees swipe a customer’s credit card through a mobile device that stores the data, which can be downloaded later to a computer for unauthorized use.

Rep. Mike Bishop (R-Rochester) has agreed to sponsor the legislation, which would make it illegal to possess devices for carrying out this fraudulent activity.

Theft-detection bills head to governor
A package of bills giving retailers more ammunition against shoplifting has cleared the Senate. HBs 5125 and 5126 will be sent to the governor for his signature.

Sponsored by Rep. Bishop, the bills make it illegal to possess, sell or manufacture tools or devices that are intended for defeating store theft detection systems.

House, Senate vie to raise unemployment pay
Two widely differing proposals to raise unemployment benefits have been introduced in the House and Senate, as Republicans sought to beat Democrats to the punch in championing the issue. Already, however, the proposals have caused friction in the Republican camp.

The House plan increases maximum unemployment benefits from the current $300 per week to $415 per week - a 38-percent increase - in return for a delay in paying benefits. Michigan’s cap on unemployment benefits has been frozen since 1995.

HB 5763, sponsored by Rep. Randy Richardville (R-Monroe), would require workers to wait a week before receiving their first benefits check. Introducing a waiting week would put Michigan in line with most other states and end federal funding penalties on Michigan’s Unemployment Insurance Trust Fund.

Rep. Robert Gosselin (R-Troy) reduced the maximum benefit to $362 in the House Employment Relations, Training & Safety Committee, which he chairs. The bill was set to be amended back to $415 on the House floor, but neither version seemed to have adequate support.

House Speaker Rick Johnson (R-LeRoy) then relieved Gosselin of his committee chairmanship, replaced him with Rep. Clark Bisbee (R-Jackson) and sent the bill back to committee.

Senate Bill 1126, sponsored by Sen. Glenn Steil (R-Grand Rapids), is considered the more business-friendly of the two proposals. It also requires a waiting week and calculates maximum benefits based on a worker’s number of dependents, starting at $315 per week for a single employee with no dependents.

Employees would be required to pay $3 every quarter to the unemployment system. Benefits would be cut off if the worker receives a severance package or refuses work that pays 70 percent of his or her previous wage.

MRA is part of a business coalition working to limit the impact of these proposals on employers.

Work comp and unemployment bureaus merge
Seeking to streamline state operations and cut costs, Governor John Engler created a new Bureau of Worker’s and Unemployment Compensation that combines three state agencies.

The new bureau is part of the Department of Consumer and Industry Services. It incorporates the Bureau of Workers’ Disability Compensation, the Unemployment Agency and the Wage and Hour Division, which oversees regulations on wages, fringe benefits and youth employment. Jack Wheatley, current head of the Unemployment Agency and former work comp director, will head the new bureau.

The merger is expected to eliminate administrative overlap but create few changes in services.

Update from Washington
James Goldberg,
MRA Washington Counsel

Court to consider copyright extension law
The U.S. Supreme Court has agreed to review the constitutionality of the 1998 Sonny Bono Copyright Term Extension Act. The law adds 20 years to the length of time copyrighted material is protected.

The stakes in the case, which could be argued as early as this spring, are high. Without passage of the federal law, the Walt Disney Co., for example, faced losing its exclusive rights to Mickey Mouse in 2003 and to Goofy, Pluto and Donald Duck in 2009.

However, the individuals and companies challenging the law argue that eliminating the extension would free up vast amounts of material for Internet libraries. They say Congress overstepped constitutional boundaries in passing the law, named for the late entertainer and congressman, who also held copyrights to many of the songs he wrote for the Sonny and Cher duo.

The law has been upheld by a federal trial court and a federal appeals court, and the Supreme Court could have let those decisions stand without comment. The fact that the high court agreed to review the case suggests to some observers that it might be inclined to throw out the law.

Although the same law granted certain exemptions from copyright restrictions to retailers who play music in their stores (see story on page 1), the Supreme Court case affects only the portion of the law extending the duration of copyright protection..

MRA joins terrorism insurance coalition
MRA’s Washington Office has joined the Coalition to Insure Against Terrorism, a broad-based group that includes real estate owners, professional sports leagues and others. The coalition is urging the federal government to make sure that terrorist acts are covered under insurance policies in the wake of the September 11 disaster.

In addition, the coalition plans to monitor insurance premium activity to ascertain the impact of the disaster on future coverage and cost.

FTC proposes national "Do Not Call" list
The Federal Trade Commission has proposed creation of a national “do not call” list that telemarketers would be required to check before they could make any unsolicited call.

MRA’s Washington Office has joined with a National Retail Federation task force to develop comments on the proposal.

The agency’s proposal does not provide an exemption for calls to individuals with whom a business has a prior relationship. For example, an MRA member could not call a customer who purchased a product, either to check on its performance or to offer an extended warranty or service contract, without having obtained written permission to make the call. This would limit retailers’ ability to contact their customers for legitimate business purposes.

Many states maintain “do not call” lists, and individual companies are required to maintain such lists upon an individual’s request.

IRS resolves frequent flyer issue
The Internal Revenue Service has finally made a decision on a long-standing problem: whether to tax the frequent flyer miles that employees earn from business travel but use for their personal benefit.

The agency stated that such mileage will not be subject to inclusion in an employee’s gross income. The decision grants relief from the possibility of retroactive tax liability.

The IRS announcement also said that if the policy is changed in the future, any new guidelines would not apply retroactively.

Administration seeks to simplify tax code
Treasury Secretary Paul O’Neill has called the Internal Revenue Code an “abomination” and said he wants to eliminate the corporate income tax in its entirety.

Don’t look for fundamental change in the tax code at any time soon, however. For now, O’Neill will content himself with White House plans to simplify the massive tax statute. Over the next several weeks, Treasury will publish a series of reports focusing attention on areas that are ripe for cleanup.

Among the possible targets in the corporate arena are the alternative minimum tax, excise tax simplification and business depreciation rules.

On the individual income side, possible targets include the alternative minimum tax, which has increasingly hit middle-income taxpayers; Individual Retirement Accounts; and income-based breaks such as education credits.

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