Business Week (link requires subscription) had a troubling sidebar piece a week ago that, despite its age, needs exposure. In effect, it claims that we can no longer automatically assume that banks will reimburse account holders for debit-card and other account-related fraud or unauthorized-use losses.

The money paras:

Banks still absolve consumers of any losses from the fraudulent use of credit cards — even months later. Most also now waive even that modest $50 payment. That’s not the case for business cards, though. Federal laws that limit user liability apply only to consumers — and most banks make corporate customers assume far more liability for cards issued to their employees. Their reasoning: Employees may not treat a business card with the same care as their own, since it isn’t their money.

What’s more, while many banks indemnify consumers from fraud involving debit-cards and electronic funds transfers, that’s far from universal. Under federal law, banks can hold consumers liable for the first $50 of losses from cases reported within two days, and up to $500 in losses going back 60 days. And consumers who wait more than two months after receiving a statement to report fraud may be out of luck. Banks are under no obligation to reimburse them.

Two thoughts:

1. This is one more reason, if you needed one, to check your bank balances and activity regularly, to review statements as soon as you get them, and to complain to your bank immediately if you see unauthorized transactions.

2. Banks had better be careful at how aggressive they are at denying reimbursement. Besides the likelihood that they’ll be sued (somebody written up in the article is doing so–the bank doesn’t want to pay because the person’s virus protection was inadequate!), nothing will keep people from transacting business online like the knowledge that they’re exposing themselves to unreimbursed losses that are less likely if they keep doing everything offline.

Lots of news today about this, especially in McPaper (USA Today), which actually does a nice job on it:

- The core article leads with the Betamax case 20 years ago, when the Supremes (the ones in black robes) said Sony couldn’t be liable for copyright infringement because VCRs have substantial uses other than for illegal movie copying. That meant that law enforcement would have to go against individual VCR owners, which of course has almost never happened. Grokster and Morpheus, the file-swapping enablers who are defendants, are trying to get the Betamax approach applied to them. So far, to the astonishment of many, they have prevailed. Today the Supremes will hear arguments in the case.

- The interview piece quotes veteran artist Janis Ian, who supports file-sharing as a way to develop new buyers, and opponent Sheryl Crow. References are made to other notable supporters (Phish, Dave Matthews) and vocal opponents (Springsteen, Eagles).

- There’s a sidebar at the interview piece about two file-swapping startups that will be legit from day one: Snocap, which has Napster pioneer Shawn Fanning involved; and Peer Impact, which in addition to charging for songs directly, will enable enterprising users to earn commissions for convincing their friends to buy songs they bought. These are certainly worth watching.

- An interview with Andrew Lack, the head of Sony BMG Entertainment, which has dumped an average of 3 spams a day on me for the last 2 years despite several unsubscribe requests (I know that’s a dumb idea, but as part of my business I have to do these types of things from time to time), talking about the “morality” involved. I’ll start listening to him when the spam stops.

Missing from the piece is my big gripe: the acts that don’t make their music available in digital form, and who still moan about illegal downloads. A partial list of brain-dead artists who feel they’re too good for iTunes: Beatles, Led Zepellin, Jethro Tull, Metallica (y’know, the guys who complained the loudest about the original Napster), Paul McCartney, Wings, and old Rolling Stones (I mean pre-1968 or so; I know, it’s ALL old). Now what do you think a lot of people do when they can’t find the songs they’re perfectly willing to pay for legally? Even if the industry wins, the columns note that file sharing through instant messaging, iPod transfer, and other apparently untraceable means is growing.

Until the industry gets virtually all of its content online, it will run the risk of people going to the “dark side” when what users want isn’t available legally (including many users who would never have considered it if the content had been there when requested), no matter what tune the Supremes sing when they rule later this year.

UPDATE: Sony’s hypocrisy is almost too much to handle. Besides the obvious inconsistency between their position on Betamax as a defendant vs. today as music-industry plaintiff, it’s clear that this is a company that runs with other people’s ideas and dares people to catch them. This court ruling today is a perfect example:

TOKYO (Reuters) – Sony Corp. said Monday it was ordered by a U.S. court to halt sales of its blockbuster PlayStation consoles in the key U.S. market and pay $90 million in damages to a small U.S. tech company, Immersion Corp.

Sony Computer Entertainment (SCE), Sony’s gaming unit, said it would appeal the decision by a California federal court in the patent infringement case.

For the time being, Sony will keep selling PlayStations because the order — which covers the PlayStation and PlayStation 2, two game controllers and 47 software titles — will not go into effect before the appeal, an SCE spokeswoman said. Sony will be paying compulsory license fees to Immersion, she added.

……. Immersion, a California-based developer of digital touch technologies, claimed Sony Computer Entertainment infringed on its technology that makes a game controller vibrate in sync with actions in games, the Japanese game maker said.

And I’m supposed to give a rip (so to speak) when Sony cries “foul” over filesharing?

UPDATE 2: Politology has some interesting points and links on the topic.