State and federal authorities are ramping up civil and criminal enforcement efforts against merchants who use electronic sales suppression (“ESS”) software, also known as zappers and phantom-ware (collectively “zappers”). These devices are usually software patches that retailers apply to their Point of Sale (“POS”) software. POS software is designed to record every transaction, and its internal records usually cannot be altered by the retailer (or its employees). When zappers are installed (usually by a USB flash drive), some percentage of the business’ transactions are never recorded, thereby permanently altering corporate books and records from the outset. Given that zappers are usually only operational when a flash drive is plugged into the POS software, it is next to impossible for outside auditors to detect their use. Obviously, in a cash-intensive business, the use of a zapper makes recreating a paper trail impossible.
In the last few years, state governments have placed a greater emphasis on identifying merchants that use zappers. Their concern is real. Continue reading “Don’t Get Zapped: Enforcement against Businesses That Use Sales Suppression Software Is on the Upswing”