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Gauge of Innocence

Stiffer penalties prompt more convenience stores to explore electronic age verification technologies.

​By Debby Garbato

 

In the 1994 movie “Clerks,” Randal, a New Jersey convenience store employee with a bad attitude, is fined for selling cigarettes to a 4-year-old. While the scenario is farfetched, the resulting reality of stiff fines, poor public image and loss of license is not. 

No responsible retailer wants to illegally sell age-restricted products. For some, simply having clerks visually check identification works. For others, turnover may be high and employee reliability low, making compliance difficult. Since penalties in many jurisdictions have stiffened, more retailers are employing electronic age verification (EAV), now a standard part of most big POS packages.

“Fines for not complying ratchet up fairly quickly for every instance,” said Colin Haig, senior industry principal at SAP in Toronto. “You can lose your license, which translates to lost revenue. Can you ever be perfect? No, since somebody who is really motivated to scam you will. But you can protect yourself from the majority.”

In the state of New York, the fine for a first time alcohol violation is about $3,500, said Robert P. O’Leary, attorney with Robert P. O’Leary PC, which represents convenience stores and QSRs. “Twenty years ago, it was around $300 for the first violation,” he added. Over the past five years, O’Leary has seen a “sharp decline” in the number of fines. “While I can only talk about upstate New York, people understand how serious it is.”

Public image is a concern, particularly for retailers that attract families. “We view ourselves as a hometown store,” said Donovan Walsh, director of IT for Grand Island, Nebraska-based Pump & Pantry. “We have stores out on the plains in the middle of nowhere. Families come for ice cream. The last thing we want is to get raided for selling to minors.”

While many retailers sell age-restricted products, convenience stores are most vulnerable for stings. They tend to sell the largest quantities and variety of items including tobacco, alcohol, lottery and adult magazines. Some also offer gaming, ephedrine-based OTC items, ammunition and fireworks.

CHOOSE YOUR WEAPON
Opinions vary as to what type of age verification systems perform best under what circumstances. The most popular method is a cash register prompt that tells the clerk to input the purchaser’s age for restricted products. Transactions cannot be processed without that date since these products are flagged. This is followed in popularity by a barcode reader for driver’s licenses, which also works via prompt. Some retailers have also tried biometric readers or special smartphone apps.

The cash register prompt has been around a while. But it was not until the mid-2000s that Motorola and Data Logic began producing affordable barcode scanners that could read licenses’ magnetic strips. Convenience stores began adopting the technology about five years ago, said Haig. Still, it is not that widespread.

Marty Ramos, CTO, consumer products and services, at Microsoft, said scanning is more prevalent on-premise. Retailers may have been slow to adopt it because, up until 10 years ago, many licenses lacked barcodes. And retailers could not access DMV data to confirm information. “States are loosening up,” he added. “Before, databases weren’t really available to retailers.”

While exact statistics on how many c-stores employ these systems is unclear, VeriFone offered its own numbers as a barometer. Out of 135,000 gas and convenience store combo locations, half have VeriFone POS terminals, said Mike Tyler, senior director of marketing. Of that 50%, 70% have the ability to use EAV — not that all do.

One drawback has been that until recently, there has been little standardization of different states’ barcodes. Hence, readers could not always process licenses from multiple states. But many retailers are unaware of the change. “Maybe states and vendors need to get the word out,” said Dan Witkemper, product manager, POS, at Gilbarco Veeder-Root, whose Passport POS system offers age verification, mobile payment and lottery.

“Still, this will not help in states like North Carolina, where licenses are renewed every 10 years.”

Barcode readers are also not fully reliable in tourist areas where retailers see identifications from around the world. This is the case in Las Vegas, where age verification enforcement is particularly strict. “There’s an extremely active enforcement division,” said David Crawford, vice president of marketing operations at Green Valley Grocery. “Our chain is probably stung at least once daily. It’s in the forefront of everybody’s mind.”

Crawford believes swipe systems are “not worth it since they don’t do everything. We get licenses and passports from everywhere.” Employees, who must pass state certification, use the cash register date entry system. Green Valley passes “more than 95% of stings,” he added. Employees who fail a sting are immediately terminated.

For Pump & Pantry, a drawback to this system was that clerks constantly entered the same date to make it easier on themselves. So in February, it installed a new POS system incorporating Retalix 3D scanners. Walsh believes scanners afford more control since the retailer can actively monitor audit reports, accessing transactions by ticket, date, time, cashier and market basket. “We can also run by store location, district, cashier log or all.”

But Gene Edwards, CFO of Clyde’s Market in Glennville, Georgia, believes collecting journal data from manual register entries is just as effective — if data is regularly monitored. “There always must be interaction with the cashier, so we’re at the cashier’s mercy. It’s just as easy to scan a card that’s not a true ID as to enter a false birth date. It’s about management efficiency.”

Clyde’s collects journal data to test certain things. “We have 43 stores and a centrally managed pricebook that lets us flag certain departments. We can’t afford to lose our license and wouldn’t have chosen a POS system without age verification,” said Edwards.

Nice N Easy Grocery Shoppes in Canastota, New York, has tried several products. Ten years ago, it bought a barcode scanner. Then, New York changed license strips and the device was useless. So it programmed its Lotto machine to read strips. Then, it bought a Nucleus system with scanning capabilities. “It wasn’t what we thought,” said Ron Rowland, vice president of corporate store operations. “They rely on one server and we have multiple pay points. “We lost the system more than it was up.”

Then came a Retalix system. While scanning helped, customer reception was poor. “We had a backlash saying we were data mining and stuff like that,” added Rowland. “While asking for ID is mandatory, we only scan now if it’s questionable.”

THE OLD-FASHIONED WAY
Despite the excitement around EAV, some retailers still visually examine IDs and do nothing more. This is often the case for small retailers that may have older POS equipment. While it may sound risky, the control — and vested interest — of management is often far greater than that found in larger chains. Employees — who may be family — have often been working there for years and take their jobs seriously.

“We’ve never had problems,” said Rick Walth, owner of Main Street Beverage, a single-store retailer in Emmett, Idaho. “It’s a pretty experienced crew of five in their 40s and 50s who do a good job carding. I make sure they’re trained properly.”

Walth, a former 7-Eleven franchisee, said he understands what chain retailers are up against. “We’re only open until 8:00 pm. I can see why in the middle of the night big retailers would want to do everything they can. We get stings fairly regularly and have never failed.”

Like other small retailers, Walth uses WeCard’s tear-off birth date calendar near the cash register. WeCard president Doug Anderson said the calendar shows the date a person had to be born by to legally purchase alcohol or tobacco. “It tells the cashier what the license should show. Some retailers use them to calculate age; others have them facing customers as a deterrent if they’re using EAV.”

Another cost effective option for small retailers that do not want to invest in a new POS system are scanners that interface with existing technology. “We sell a good number of secondary scanners,” said Witkemper. But “you may also have a 1-D scanner that needs to be upgraded. It comes down to cost.”

Still, there is no silver bullet. If an irresponsible employee like Randal in “Clerks” does not follow procedure, the best devices are useless. “I don’t come down on one side or the other with EAV,” said Anderson. “An employee who’s trained and competent has all the tools to do their job. If they do it consistently, we are in favor of whatever tools they use to make it a seamless POS experience.”

Debby Garbato is an independent business journalist and research analyst who has covered retail for 25 years. She can be reached at dgarbatocheers@aol.com.